PNHP

Medicare Part D drug program wide open to conflicts of interest

Medicare Part D drug program wide open to conflicts of interest

Gaps in Oversight of Conflicts of Interest in Medicare Prescription Drug Decisions

Office of Inspector General
Department of Health and Human Services, March 2013
Objectives
1. To assess sponsors’ Pharmacy and Therapeutics (P&T) committees’ conflict-of interest-definitions.
2. To determine whether sponsors’ P&T committees established objective processes to determine and manage committee members’ conflicts of interest.
3. To determine whether the Centers for Medicare & Medicaid Services (CMS) oversee sponsors’ P&T committee compliance with conflict-of-interest requirements.
Findings
Most sponsors’ P&T committees had limited definitions of conflicts of interest, which could prevent them from identifying conflicts
* Half of P&T committees’ definitions did not address conflicts prohibited by Federal regulations
* P&T committees’ definitions did not always address relationships with other entities that could benefit from formulary decisions
* More than two-thirds of P&T committees’ definitions did not address employment
Many sponsors’ P&T committees allowed members to determine and manage their own conflicts of interest
* Nearly two-thirds of P&T committees relied on members to determine whether financial interests constituted conflicts
* More than three-quarters of P&T committees relied on members to recuse themselves from discussions and votes
CMS does not adequately oversee sponsors’ P&T committee compliance with Federal conflict-of-interest requirements
* CMS does not review P&T committee conflict-of-interest information
* Data discrepancies would prevent CMS from identifying with certainty the members of each P&T committee
Conclusion and Recommendations
Our findings reveal that both sponsors and CMS conduct limited oversight of P&T committee conflicts of interest, compromising their ability to ensure that financial interests do not influence formulary decisions. Specifically, we found that without direction and oversight from CMS, many sponsors’ P&T committees have limited oversight of members’ conflicts of interest. Additionally, we found that CMS does not adequately oversee compliance with the Federal requirement that at least one physician and at least one pharmacist on each committee be free of conflict.
To address limitations in how P&T committee members’ conflicts are defined, determined, and managed, we recommend that CMS:
* Define PBMs as Entities That Could Benefit From Formulary Decisions
* Establish Minimum Standards Requiring Sponsors To Ensure That Safeguards Are Established To Prevent Improprieties Related to Employment by the Entity That Maintains the P&T Committee
* Establish Minimum Standards Requiring Sponsors To Ensure That an Objective Process Is Used To Determine Whether Disclosed Financial Interests Are Conflicts
* Establish Minimum Standards Requiring Sponsors To Ensure That an Objective Process Is Used To Manage Recusals Because of Conflicts of Interest
* Oversee Compliance With Federal P&T Committee Conflict-of-Interest Requirements and Guidance
Agency Comments and Office of Inspector General Response
CMS did not concur with our first and second recommendations, concurred with part of our third and fourth recommendations, and concurred with our fifth recommendation.
CMS maintained that it is not necessary to conduct additional P&T committee conflict-of-interest oversight because current formulary reviews and P&T committee audits appropriately protect beneficiaries from any adverse effects of potential conflicts of interest.
If conflicts of interest among P&T committee members are not addressed, beneficiaries may receive inferior therapies when safer or more effective therapies are available, limited Medicare dollars may be wasted to pay for inappropriate treatment, and public confidence in the Federal Government may be undermined. In contrast, CMS asserts that conflicts of interest would not disadvantage beneficiaries or the Federal Government because it believes that formulary decisions influenced by conflicts would result in higher premiums and the plan would be priced out of the marketplace.
https://oig.hhs.gov/oei/reports/oei-05-10-00450.pdf

When the conservatives enacted the Part D drug program for Medicare, they designed it as a private sector solution, using private insurer sponsors and private pharmacy benefit managers (PBMs), while specifically prohibiting any competing public drug plan.
An important function of these intermediaries is to select the drugs to be covered through their formularies, balancing the adequacy of drug selection with the opportunity for profit not only for the insurer sponsors and the PBMs, but also for the pharmaceutical firms supplying the drugs. This function is carried out by the sponsors’ own Pharmacy and Therapeutic (P&T) committees, and not by the government.
The potential for conflict of interest within these P&T committees is enormous. This is why this report from the Office of the Inspector General (OIG) is so important. The committee members are in a position to advocate for the interests of the insurer sponsors, or the PBMs, or the pharmaceutical firms. Decisions which benefit any or all of these would likely be detrimental to the patients who pay premiums and a portion of the Part D drug costs, and to the taxpayers who help fund the Part D program of Medicare.
But don’t worry. This program was set up to allow the free market to work its magic. Apparently this is not only the agenda of the conservatives who established this program, this laissez-faire approach is also being followed by the current “liberal” administration.
In her letter in response to the OIG report, acting CMS administrator Marilyn Tavenner wrote, “… if a P&T committee were to create a formulary while operating under a potential conflict of interest, because a discriminatory formulary would not be approved, the only potential impact would be that the bid could be more expensive and, therefore, less competitive. Beneficiaries could easily evaluate these higher premiums in the marketplace and choose a more efficient plan to meet their needs. As a result, we could expect that any authentic conflicts of interest, given our level of formulary review, would disadvantage the sponsor and not the beneficiary or Medicare program.” Note that this is the exact opposite of what is stated above.
Have you tried to shop for Part D plans? Though the premium might be the first feature you see, the complexity of the various benefits, and especially the differences in the formularies are very difficult to make sense of. How can you look up medications that may be prescribed for you next year when you don’t even know what those medications are? And are you really going to carry a formulary with you each time you see the doctor?
How nonsensical this dependency on the power of the market is can be understood by comparing the prices we get through the privatized version of the government Medicare Part D program, with the prices we get through the government purchases of drugs for the VA system. The VA pays about 40 percent less for drugs than paid under Medicare Part D (Austin Frakt). It seems that the only magic in the marketplace is the increased revenues that these intermediaries can glom off of us pathetic saps.
With HHS Secretary Kathleen Sebelius pushing private Medicare Advantage plans (yesterday’s message), and soon-to-be-confirmed CMS Administrator Marilyn Tavenner pushing private Medicare Part D drug benefits, we have the private sector pretty well covered. One more step to the defined contribution premium support proposal and the private sector will have it locked up.
Our love of the marketplace brings to mind Puck’s comment to Oberon, “Lord, what fools these mortals be!”

Vermont report: Pre-existing conditions

By Leslie Wright
Vermont Life, Feb. 20, 2013

In May 2011, Gov. Peter Shumlin signed legislation that set the state on a path toward its own brand of health care, a made-in-Vermont “single-payer” system that would leave no Vermont resident without insurance. Many hurdles remain, but the target date is 2017. If successful, the plan would be the first of its kind in the country and a historic change in the way health care is delivered in the United States.

Why did this happen in Vermont?

Part One: A Steady Drumbeat

In 1990, Ethan Parke was dairy farming in Irasburg, running a small operation with 35 head, 12 miles south of the Canadian border. It was a hardscrabble existence at best. He couldn’t afford health insurance. His wife had a difficult childbirth that, after several trips to the hospital and 40 hours of labor, required a caesarean section that came with complications.

The hospital bill induced another kind of pain and some frustration. Since he’d be paying every penny, Parke scrutinized the invoice, which was yards long. Some of the charges seemed astronomical; others were puzzling, like $20 for slippers they never saw.

Five years later, his 5-year-old daughter landed in the emergency room with a broken leg, and he got another unpleasant look at the cost of health care. “We had to pay three different doctors for the diagnosis of broken leg — even though the emergency room doc showed me the X-ray, and it was plain to see,” Parke recalled. “We paid an amount for the hospital diagnosis, another amount for the radiologist’s diagnosis and a third amount for the orthopedic doctor’s diagnosis. These are things you never see or never worry about if you are well-insured. But when you are a self-pay patient, you are acutely aware of the overcharging and unnecessary stuff that goes on.”

Parke didn’t need an X-ray to see problems in the health care system. While searching for remedies, he discovered a book called “In Critical Condition.” “The final chapter of that book gave a very detailed conclusion that the country needed a universal, publicly financed health care system, and although I don’t think the book uses the term single-payer, that’s exactly what he described,” Parke said. The book, by Sen. Edward Kennedy, was published in 1972.

In a single-payer system, hospitals, doctors and other health care providers are paid for their services by one entity, typically a government-run organization, instead of multiple insurance companies, as is now the case.

Proponents believe single payer is more efficient, more affordable and a more equitable way to cover the entire population than today’s multi-payer system. Opponents view single payer as creating an unnecessary and inefficient government bureaucracy with high-risk consequences for taxpayers that would also erode the quality of health care.

Whatever the benefits and drawbacks of single payer, the fact is that Vermont is vigorously pursuing it. An act of legislation signed in 2011 aims to deliver a single-payer health care system to all 626,000-plus Vermont residents by 2017. Many important aspects, including how such a system would be financed, are still to be determined. But if it unfolds as envisioned, Vermont would be the first state to divorce the only health care system most Americans have known, replacing it with one much more familiar in other parts of the world, and, some believe, paving the way for the country.

“If Vermont can pass a strong single-payer system and show it works well, it will not only be enormously important to this state, it will be a model,” said Vermont Sen. Bernie Sanders, an Independent who has pushed single-payer for decades. “If we do it and do it well, other states will get in line and follow us, and over years, it will take years, we will have a national system.”

That Vermont is trailblazing may not be so surprising, at least to students of Vermont history. Vermont has led the way on many major social changes, dating back before statehood, when the Republic of Vermont’s constitution abolished slavery in 1777. (Vermont wouldn’t become a state for 14 years, and slavery wouldn’t be outlawed for another 88.) Vermont was a leader in environmental regulation when Act 250 was adopted in 1970, a law still in effect today. The state was the first to recognize civil unions in 2000.

How Vermont came to be at the forefront on single-payer health care is a tale of a passionate, persistent and sometimes quixotic group of activists. Among them are a dairy farmer, a doctor and a college professor who kept up a steady drumbeat — hosting forums, mailing newsletters, organizing rallies, arranging dinners in their homes, testifying to lawmakers and even helping draft legislation. They rode out early attempts at change that failed miserably and kept trying until slowly, eventually, over decades, the stars began to align and their dream was within reach. From the late 1980s through to today, a core group never stopped writing and meeting and speaking and believing that change could happen.

Parke was one of the core activists. He was in on the ground floor, motivated by his experiences with his family’s health care. A lanky, soft-spoken Vermonter, Parke immersed himself in learning about the health care system and possible alternatives. In the 1990s, he would serve as a low-income representative on a state board that scrutinized hospital expenditures. He didn’t consider himself an activist like some single-payer advocates who had been organizing on other progressive issues. He just felt compelled to act because the system seemed so dysfunctional and he saw the potential for change. He saw strength in numbers because he was not alone in his struggle to pay medical bills. “It was a lot of the people I knew in the Northeast Kingdom, a lot of self-employed people, farmers, small-business people, loggers. They all had their stories of dealing with the health care system, and I just felt, as Sen. Kennedy’s book made clear, there is a better way to do this, a more equitable way,” Parke recalled on an evening after work in the book-lined living room of his modest two-story home in Montpelier. No longer dairy farming, he works for Vermont Housing and Conservation Board, conserving farm land.

“I started looking around, listening to other people’s stories, and felt like something is politically possible because the people I was talking to certainly didn’t have the skepticism or the fear of socialized medicine or government control. What you hear from the typical opposition, I wasn’t hearing that from the people I knew. Certainly not from farmers and the self-employed. I thought maybe we could work on something in Vermont,” Parke said.

Part Two: Footholds and Failures

In the 1970s, as Sen. Kennedy’s book appeared, health care was just incubating as a national issue. Still, Congress was concerned about rising costs, and in 1979, as a result of federal legislation, Vermont stepped up scrutiny of new health services and hospitals’ major building projects. Eight years later, single payer blipped on the radar screen in Burlington. The city’s wild-haired and obstreperous socialist mayor, Bernie Sanders, dispatched a task force to look to Canada’s government-run system for ideas on how to tamp down health care costs.

Sanders, who was the single-payer activists’ biggest political ally, said he knew then that a single-payer system was not a likely outcome at that time, but working toward that goal and educating people about alternatives was important. “The purpose was to say to the United States and Vermont, we’re behind the rest of the world in terms of guaranteeing health care as a right,” Sanders said. He would continue to draw attention to single payer throughout his political career, as mayor, as U.S. representative an
d as U.S. senator.

Near the end of the ’80s, Parke founded Vermont Consumers Campaign for Health, along with about a half dozen others. Because most Vermonters had never heard the term single payer, let alone pondered the concept, initial efforts were focused on getting the word out through newsletters, lectures and meetings.

While winning supporters across the state was important, systemic change could not happen without the Legislature.

In 1991, Sen. Cheryl Rivers, a progressive Democrat from Stockbridge, sponsored a single-payer bill that Parke had a hand in drafting. The bill never made it out of its legislative committee, but awareness that the system needed repair continued to grow. That same year, with 62,000 Vermonters, or 11 percent of the state’s population, uninsured, Republican Gov. Richard Snelling named a blue-ribbon commission to come up with a plan to cover all Vermonters. Snelling died in office at age 64 from a heart attack on Aug. 14, 1991. Lt. Gov. Howard Dean, a physician and Democrat, became governor.

Dean was a proponent of health care reform and a recognized expert on the matter. He was, however, against financing reform with income tax, a view that clashed with single-payer activists. He pushed for reform within the multi-payer system.

The next year, Rivers again introduced a single-payer bill. It lacked the support for passage, and Rivers agreed to scrap it, but Parke said Rivers made sure that as the state considered reform, single-payer was on the table. Indeed, Act 160, which created the Vermont Health Care Authority, called for study of both single-payer and multi-payer systems to determine the best way for the state to provide health care for all Vermonters. Act 160 passed.

The Health Care Authority was beset with troubles, according to Howard Leichter, a professor at Linfield College in Oregon, who analyzed the state’s health care reform efforts at the time. Internally, two of the three board members were in different camps on reform. Externally, interest groups on all sides complained they were not included. The single-payer activists felt that the Authority didn’t have a handle on how much money single payer would save. Dean’s administration started to work on a plan of its own, seemingly undercutting the work of the Authority. By 1994, the Legislature had a menu of reform plans to consider that ranged from single-payer to employer-mandated insurance coverage to coverage focused solely on the uninsured.

Rivers again introduced a single-payer bill. This time, she didn’t go it alone. Rep. Ann Seibert sponsored a bill on the House side. The Rivers and Seibert bills won 35 co-sponsors, a dramatically improved reception over Rivers’ attempt three years earlier. One of the sponsors of Rivers’ bill was Sen. Peter Shumlin.

With so much activity on health care reform, Parke’s group, Vermont Consumers Campaign for Health, saw an open window and began feverishly working to get a referendum on single payer on the ballots for Town Meeting Day, Vermont’s iconic exercise in grassroots democracy. The matter was far from being on ballots in all 246 town meetings across the state, but a majority of residents in 50 Vermont towns voiced their approval of single payer.

In the Legislature, Gov. Dean’s plan, which went through many iterations, was the one to survive for a vote in the House. In a Hail Mary move, representatives of the Progressive Party offered an amendment to Dean’s bill calling for a single-payer system. This was the first time that government-run single payer would be voted on by the Legislature. The amendment failed 112–29.

As Leichter noted in his analysis, “The prospects of Vermont’s going to a single-payer health care system in 1994 were remote: Republicans, who controlled the Senate, and Gov. Dean (‘I would never do a Canadian-style single payer’) both opposed the model.”

Stalled and with a lack of consensus on the best way to proceed, health care reform foundered after 1994. So did grassroots activism on single payer. By the end of 1995, Vermont Consumers Campaign for Health no longer had a paid staff person, and “discussion on single-payer strategies lacked the enthusiasm of earlier years,” Parke noted in an analysis he wrote on early reform efforts. “I was definitely discouraged. I kept looking for other avenues. My thinking at that time was, We are not going to get publicly financed universal health care, but maybe there are some things we can do that would help people that would be incremental steps toward a better health care system, but that would not disillusion people,” Parke said.

Part Three: Blowing in From Buffalo

About five years after the meltdown in 1994, a physician from Buffalo, N.Y., moved to Vermont. Dr. Deborah Richter was focused on single payer like Ahab searching for a white whale.

“Dr. Deb” sought out Parke to learn what was happening on single payer. Not much, was the answer. Richter was not dissuaded.

“It never dawned on me it wasn’t a good idea,” Richter recalled recently over the Sunday afternoon din at a popular Montpelier coffee shop. “They had already done a lot of the legwork, and I thought, OK, we’ll get it going again. I consider it kind of like trying to get a patient to quit smoking. It doesn’t just happen after one try. It happens after seven tries, and we’ll keep trying until it works.”

Self-assured but not brash, Richter possesses the tenacity of a salesperson working on commission softened by the listening skills and empathy of a healer. The source of her conviction came from a decade of treating poor, uninsured and predominantly minority patients in Buffalo. “I had people dying from preventable conditions like diabetes, high blood pressure, undiagnosed cancer with obvious signs. And they were young, in their 20s, 30s, people in their 50s, dying,” Richter said.

She had given up trying to change her home state. Politicians were inaccessible, and steering reform in a state so large was more than one doctor could manage. Vermont was another story. Right away she saw that things were different here. The state’s part-time lawmakers don’t have offices in the state capitol. They don’t even have staff. That meant, literally, there were no closed doors or protective gatekeepers for legislators to hide behind.

In 1999, Richter assembled an ad hoc group, Vermont Health Care for All, which would become a formal entity in 2003. Parke was among the original board members, and others from Vermont Consumers Campaign for Health would also join the emerging group. Searching for new strategies on single payer, Vermont Health Care for All made a bold proposition — amend the state’s constitution to declare health care a civil right. The proposal, which was Parke’s brainchild, drew little attention and had no hope of being taken up by the Legislature. Nevertheless, Vermont Health Care for All was in motion with its sights set on winning over doctors and business leaders.

Richter, meanwhile, was just revving up. She practiced medicine three days a week in Cambridge; the rest of the time, she advocated for single payer. She spoke to every Rotary Club in the state, sometimes rising well before dawn to make 7 a.m. breakfast meetings. Rotarians were in her sights because she believed businesses were an essential ally in the battle for single-payer. She gave 500 talks over 11 years.

When she wasn’t on the road, she was in the Capitol cafeteria, lobbying legislators as they grabbed coffee or ate lunch. Richter was surprised to learn that some of these lawmakers — many of whom were farmers, self-employed or the like — didn’t have health insurance.

As this second wave of activism gained traction, changes in the health care landscape cast single payer in a more favorable light. In the ’90s, the issue had been coverage for the uninsured. At the millennium, the und
erinsured became part of the equation. Inadequate health care wasn’t just about the marginalized — it was about the college-educated with jobs and mortgages. By 2000, health care spending by Vermonters had nearly doubled in eight years from $1.3 billion to $2.3 billion, a trajectory that would continue.

Sanders, meanwhile, continued to draw attention to the issue. Continuing his crusade for single payer, he began taking busloads of Vermonters to Canada to buy cheap prescription drugs, a move that garnered considerable media attention. At a rally in 2001, organized by Richter and other activists, more than 1,000 people turned out. That same year, the state-commissioned Lewin Report concluded that single payer would save $118 million annually, or 5 percent.

While support was growing, many were still unconvinced, particularly Republican Gov. Jim Douglas, who took office in 2003. Douglas was opposed to government-run single-payer health care and said he would veto any single-payer initiative that crossed his desk.

In 2005, with 10 percent of the state’s population without health insurance and health care costs growing by nearly the same percentage annually, controlling the spiraling cost of health care and covering the uninsured had the Legislature’s attention. Another single-payer health care bill was introduced. Although the activists felt it was weakened as it moved through the Legislature, the bill did pass, only to meet Gov. Douglas’ veto. That same session, yet another measure was adopted calling for a single-payer study.

That study was done in 2006 by Ken Thorpe, whose findings echoed the Lewin Report. Single payer was the most cost-efficient way to cover all Vermonters, the study said.

“Every study concluded that single payer would save money and cover everyone. Every single study. Lewin is not a progressive group, they just came to the conclusion. It’s not like they are pro-single-payer,” said Ellen Oxfeld, a single-payer activist and Middlebury College professor, who added that Thorpe was not particularly single-payer friendly either.

Part Four: The Velvet Hammer

An anthropology professor, Oxfeld helped found the state’s Progressive Party and has been a major organizer on single payer from the early days. Slight of stature, Oxfeld speaks in a gentle cadence that belies her laser-like focus. Oxfeld’s velvet hammer style makes activism personal. She wins people over in intimate settings like, for example, a lasagna dinner in her home where she invited Richter to give a presentation to local lawmakers and key community leaders on both sides of the issue.

She nudged Ann Ross, a retired schoolteacher, to hold a meeting at her house in Cornwall in the mid-2000s. Sensitive to the gap between the haves and have-nots, the 81-year-old Ross has long been active on social issues, helping to found the local United Way and regularly joining a Saturday morning peace vigil in Middlebury. Ross and her husband, Jim, retired business manager at Middlebury College, were what marketers would call opinion leaders in the community where they raised four children. About 20 carefully selected invitees attended the Rosses’ gathering, including the head of the local hospital. Small gatherings like these were a key component of the single-payer movement, and Oxfeld had a hand in many of them.

Meanwhile, the tides of Vermont politics were moving steadily leftward, and by 2008, Democrats had reached ironclad majorities in the Statehouse. A new approach to single payer took shape among lawmakers. Instead of aiming to transform the entire system, this time the plan was to institute single payer just in hospitals. (Canada’s system started this way in 1947 when the rural province of Saskatchewan instituted government-run health care in its hospitals.) Sponsorship came from an unlikely source — a maverick Republican representative named Topper McFaun, from Barre. McFaun introduced a bill, which Richter helped craft. It went nowhere, but kept the single-payer flame flickering.

While the activists continued to plug away, the movement was about to get a big boost from a small union-organizing group. The Vermont Workers’ Center had just two employees but was adept at leveraging the groups it had supported, such as the nurses at Fletcher Allen Health Care in Burlington, the state’s largest hospital. The Vermont Workers’ Center, which had worked alongside Richter’s group, was tired of the legislative logjam on single payer.

“Most legislators said it made a lot of sense, but year after year they said it just wasn’t politically possible. We wrestled with that,” said James Haslam, director of the Workers’ Center. “How do we make it in their best interest to do it? It’s not going to take a few people, a dozen people. It’s going to take thousands of people to make it possible.”

The cost of health care was affecting a broad swath of workers in the state, and the Workers’ Center sensed there was critical mass if only the masses were organized. Organizing the masses was something the Workers’ Center knew how to do. The group launched Health Care Is a Human Right, which played a key role by humanizing the issue and getting attention in a way that legislators couldn’t ignore.

A rally on May 1, 2009, drew more than 1,000 people, a similar turnout to the 2001 rally. As Health Care Is a Human Right was building, Vermont Health Care for All held a panel discussion with businesses. Shumlin, who by then had risen to Senate President Pro Tem, was there. Oxfeld, who keeps a library of legislative bill numbers in her head and an archive of single-payer articles and editorials in her computer, was stunned by Shumlin’s remarks. “I remember this like — I don’t know what like — but just so clearly in my head because he said, ‘They are not going to solve this in Washington. They are not going to come up with a solution, and we’ll have to do it here in Vermont,’” Oxfeld said.

Shumlin reiterated the message in June at another panel discussion the group held at a packed Congregational Church in Middlebury. Two months later, in August 2009, Gov. Douglas announced he would not seek re-election. It would be a wide-open race for governor in 2010, the chance of a lifetime for several Democrats, including Shumlin.

Part Five: A Rock Star, and the Final Star

As Oxfeld went about organizing forums and dinner parties, she also had a hand in bringing a big-name player to the state. William Hsiao, an economics professor at the Harvard School of Public Health, was a rock star in single-payer circles. He had designed the single-payer system for Taiwan, among other places, and his appearance before the state Legislature was a watershed moment in the single-payer movement.

Hsiao might never have appeared in Vermont at all but for a chance meeting between Shumlin and Oxfeld’s husband, Frank Nicosia, a history professor at the University of Vermont. In December 2009, as Shumlin was pondering a run for governor, Nicosia and Shumlin crossed paths in a Winooski restaurant. Nicosia told Shumlin that single-payer advocates were ready to get behind him, and suggested he talk to Hsiao. As Nicosia recalled, Shumlin “immediately reaches in his pocket and takes out a little notepad and says, ‘How do you spell his name?’”

After hearing about her husband’s encounter, Oxfeld followed up with Shumlin by e-mail, sending him contact information for Hsiao. She didn’t stop there, checking in to ask whether he got in touch with Hsiao. It turned out Hsiao missed a scheduled phone interview, Shumlin told her. She wished him luck, nudging him to keep trying. Shumlin did and invited Hsiao to speak to the Legislature. Hsiao declined.

“He said, ‘I’ve given up on America. I can’t help you.’ I said, ‘What do you mean?’” Shumlin recalled. “He said, ‘I work in countries that I can actually get some
thing done.’ I said, ‘Dr. Hsiao, I actually think we can get something done here in Vermont.’ I sort of pleaded with him to come talk to us, and he came up.”

In the wake of Hsiao’s appearance before the Legislature in March 2010, a bill passed that session calling for a study of three options for reform: government-run single payer; multi-payer in which public and private plans compete; and a public/private single-payer system administered by a competitively selected entity. This time the political will was there to make something happen. Hsiao won the contract to do the study. He concluded that the public/private single-payer model was the most cost-efficient way for Vermont to reform health care and the most politically appealing, saving 8 to 12 percent immediately and 12 to 14 percent over time.

The final star aligned in the single-payer constellation when Shumlin was elected governor in November 2010. Shumlin had survived a five-way primary by 203 votes, which was the margin by which he won Oxfeld’s home county, Addison County, Oxfeld noted. She believes the single-payer advocates delivered Shumlin the primary and the general election, which was also close.

Shumlin agreed.

“When I entered the five-way Democratic primary, I was the last candidate in, and I was polling fourth out of five. Most people thought it was a fruitless effort. I was the only candidate in America to make ads that said, ‘If you elect me governor, we are going to pass single-payer health care,’” Shumlin said. “The grassroots support I got from single-payer advocates made it possible for me to be governor. They knocked on doors. They poured their hearts out. They saw an opportunity, and I would not be here without them.”

After squeaking out a victory in 2010 and signing the milestone health care legislation in 2011, Shumlin faced the electorate again in November 2012, this time winning by a wide margin. Asked at his first post-election news conference about the outlook for health care, Shumlin said the push toward single payer would continue, with “a transparent discussion with every Vermonter who wants to participate about how we best move in 2017 from a premium-based system to a publicly financed system, where we all pay our fair share, and we get it off the backs of businesses and grow jobs and economic opportunities. That’s the plan.”

http://www.vermontlife.com/special-report-pre-exisiting-conditions/

GAO finds CMS negligent in risk adjustment for Medicare Advantage plans

Medicare Advantage: Substantial Excess Payments Underscore Need for CMS to Improve Accuracy of Risk Score Adjustments

United States Government Accountability Office (GAO)
Report to Congressional Requesters, January 31, 2013

What GAO Found

GAO found that the cumulative impact of coding differences on risk scores increased from 2010 through 2012 and was greater than the Centers for Medicare & Medicaid Services’ (CMS) risk score adjustment of 3.4 percent for each of the 3 years. In updating the analysis from its January 2012 report, GAO estimated that cumulative Medicare Advantage (MA) risk scores in 2010 were 4.2 percent higher than they likely would have been if the same beneficiaries had been enrolled continuously in Medicare fee-for-service (FFS). For 2011, GAO estimated that differences in diagnostic coding resulted in risk scores that were 4.6 to 5.3 percent higher than they likely would have been if the same beneficiaries had been continuously enrolled in FFS. This upward trend continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.

CMS’s adjustment to risk scores for 2010 through 2012 to account for diagnostic coding differences was too low, resulting in estimated excess payments to MA plans of at least $3.2 billion. CMS’s annual 3.4 percent reduction in risk scores is equivalent to $2.8 billion in 2010, $3.0 billion in 2011 and $3.2 billion in 2012. According to GAO’s estimates, the amount of the excess payments to MA plans after accounting for CMS’s adjustments was $0.6 billion in 2010, between $1.1 billion and $1.6 billion in 2011, and between $1.5 billion and $2.9 billion in 2012. Cumulatively across the 3 years, this equals excess payments of between $3.2 billion and $5.1 billion.

For 2013, CMS continues to use the risk score adjustment of 3.4 percent it used in 2010, 2011, and 2012. To conduct its data-based analysis, CMS officials reported that they used the same methodology used in 2010, but they incorporated more recent data.

CMS officials stated that they believed there was policy discretion with respect to the most appropriate adjustment factor but did not identify the specific source of their authority to consider factors other than the required data analysis when determining the adjustment amount. While CMS did not change its risk score adjustment methodology for 2013, agency officials said they may revisit their methodology for future years.

Concluding Observations

Risk adjustment is important to ensure that payments to MA plans adequately account for differences in beneficiaries’ health status and to maintain plans’ financial incentive to enroll and care for beneficiaries regardless of their health status. Our work confirms that differences in diagnostic coding caused risk scores for MA beneficiaries to be higher than those for comparable beneficiaries in Medicare FFS in 2010, 2011, and 2012. CMS’s decision to use a 3.4 percent adjustment to risk scores for 2010 through 2012 instead of the higher adjustments called for by our analysis resulted in excess payments to MA plans. The existence of such excess payments indicates that CMS’s adjustment does not accurately account for differences in treatment and diagnostic coding between MA plans and Medicare FFS—the stated goal of the statute that required CMS to develop a diagnostic coding adjustment. In our January 2012 report, we recommended that CMS take steps to improve the accuracy of the adjustment to account for excess payments due to differences in diagnostic coding. We noted that CMS could, for example, account for additional beneficiary characteristics, include the most recent data available, identify and account for all the years of coding differences that could affect the payment year for which an adjustment is made, and incorporate the trend of the impact of coding differences on risk scores. CMS’s adjustment for 2013 is the same as it used in 2010, 2011, and 2012. However, given our finding that this adjustment was too low and resulted in estimated excess payments to MA plans of at least $3.2 billion, we continue to believe that it is important for CMS to implement our recommendation that it update its methodology to more accurately account for differences in diagnostic coding.

http://www.gao.gov/assets/660/651712.pdf

And…

Medicare Advantage remains strong

U. S. Department of Health & Human Services (HHS), September 19, 2012

“Thanks to the Affordable Care Act, the Medicare Advantage and Prescription Drug programs have been strengthened and continue to improve for beneficiaries,” said (HHS Secretary Kathleen) Sebelius.

For the third year in a row, the Centers for Medicare & Medicaid Services (CMS) used authority provided by the Affordable Care Act to protect beneficiaries from significant increases in costs or cuts in benefits.

http://www.hhs.gov/news/press/2012pres/09/20120919a.html

Comment:

By Don McCanne, M.D.

The private Medicare Advantage plans, offered as an option to traditional Medicare, have been cheating taxpayers by selectively enrolling healthier, lower-cost patients, though being paid at full rates, and more recently by coding patients as having more complicated conditions in order to qualify for higher, risk-adjusted payments. The GAO now provides us with further evidence that Secretary Sebelius and HHS/CMS have been complicit in this fraud.

The Affordable Care Act included provisions to reduce the overpayments to the private Medicare Advantage plans. This GAO report shows that HHS/CMS ignored GAO’s recommendations to improve their risk adjustment methodology, recommendations that should have reduced overpayments due to the embellished diagnostic codes being submitted by the Medicare Advantage plans. HHS/CMS refused to improve the accuracy of their adjustments, which has already resulted in overpayments to these private plans of between $3.2 billion and $5.1 billion.

Why would they do this? Secretary Sebelius has repeatedly touted the Medicare Advantage plans, and has made efforts to expand enrollment in them, even though they cost the taxpayers more money. Overpaying them allows the plans to offer greater benefits in order to entice individuals to enroll. This is leading to further privatization of Medicare, opening up opportunities for Paul Ryan and other members of Congress to push future Medicare beneficiaries into his “premium support” proposal – a voucher plan to privatize Medicare.

Although the Medicare Advantage programs are more expensive, the intent is to expand enrollment and then make a simple change – convert the financing to a defined contribution (premium support), shifting more of the costs to Medicare beneficiaries through higher premiums and then through greater cost sharing (higher deductibles, etc.) to keep the premiums from skyrocketing beyond the means of most seniors.

President Obama has said that he is quite willing to put Medicare on the table as part of the austerity program being advanced by the budget hawks. Secretary Sebelius is advising him on “strengthening” Medicare. Be afraid. Be very afraid.

GAO finds CMS negligent in risk adjustment for Medicare Advantage plans

Medicare Advantage: Substantial Excess Payments Underscore Need for CMS to Improve Accuracy of Risk Score Adjustments

United States Government Accountability Office (GAO)
Report to Congressional Requesters, January 31, 2013
What GAO Found
GAO found that the cumulative impact of coding differences on risk scores increased from 2010 through 2012 and was greater than the Centers for Medicare & Medicaid Services’ (CMS) risk score adjustment of 3.4 percent for each of the 3 years. In updating the analysis from its January 2012 report, GAO estimated that cumulative Medicare Advantage (MA) risk scores in 2010 were 4.2 percent higher than they likely would have been if the same beneficiaries had been enrolled continuously in Medicare fee-for-service (FFS). For 2011, GAO estimated that differences in diagnostic coding resulted in risk scores that were 4.6 to 5.3 percent higher than they likely would have been if the same beneficiaries had been continuously enrolled in FFS. This upward trend continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.
CMS’s adjustment to risk scores for 2010 through 2012 to account for diagnostic coding differences was too low, resulting in estimated excess payments to MA plans of at least $3.2 billion. CMS’s annual 3.4 percent reduction in risk scores is equivalent to $2.8 billion in 2010, $3.0 billion in 2011 and $3.2 billion in 2012. According to GAO’s estimates, the amount of the excess payments to MA plans after accounting for CMS’s adjustments was $0.6 billion in 2010, between $1.1 billion and $1.6 billion in 2011, and between $1.5 billion and $2.9 billion in 2012. Cumulatively across the 3 years, this equals excess payments of between $3.2 billion and $5.1 billion.
For 2013, CMS continues to use the risk score adjustment of 3.4 percent it used in 2010, 2011, and 2012. To conduct its data-based analysis, CMS officials reported that they used the same methodology used in 2010, but they incorporated more recent data.
CMS officials stated that they believed there was policy discretion with respect to the most appropriate adjustment factor but did not identify the specific source of their authority to consider factors other than the required data analysis when determining the adjustment amount. While CMS did not change its risk score adjustment methodology for 2013, agency officials said they may revisit their methodology for future years.
Concluding Observations
Risk adjustment is important to ensure that payments to MA plans adequately account for differences in beneficiaries’ health status and to maintain plans’ financial incentive to enroll and care for beneficiaries regardless of their health status. Our work confirms that differences in diagnostic coding caused risk scores for MA beneficiaries to be higher than those for comparable beneficiaries in Medicare FFS in 2010, 2011, and 2012. CMS’s decision to use a 3.4 percent adjustment to risk scores for 2010 through 2012 instead of the higher adjustments called for by our analysis resulted in excess payments to MA plans. The existence of such excess payments indicates that CMS’s adjustment does not accurately account for differences in treatment and diagnostic coding between MA plans and Medicare FFS—the stated goal of the statute that required CMS to develop a diagnostic coding adjustment. In our January 2012 report, we recommended that CMS take steps to improve the accuracy of the adjustment to account for excess payments due to differences in diagnostic coding. We noted that CMS could, for example, account for additional beneficiary characteristics, include the most recent data available, identify and account for all the years of coding differences that could affect the payment year for which an adjustment is made, and incorporate the trend of the impact of coding differences on risk scores. CMS’s adjustment for 2013 is the same as it used in 2010, 2011, and 2012. However, given our finding that this adjustment was too low and resulted in estimated excess payments to MA plans of at least $3.2 billion, we continue to believe that it is important for CMS to implement our recommendation that it update its methodology to more accurately account for differences in diagnostic coding.
http://www.gao.gov/assets/660/651712.pdf
And…

Medicare Advantage remains strong

U. S. Department of Health & Human Services (HHS), September 19, 2012
“Thanks to the Affordable Care Act, the Medicare Advantage and Prescription Drug programs have been strengthened and continue to improve for beneficiaries,” said (HHS Secretary Kathleen) Sebelius.
For the third year in a row, the Centers for Medicare & Medicaid Services (CMS) used authority provided by the Affordable Care Act to protect beneficiaries from significant increases in costs or cuts in benefits.
http://www.hhs.gov/news/press/2012pres/09/20120919a.html

The private Medicare Advantage plans, offered as an option to traditional Medicare, have been cheating taxpayers by selectively enrolling healthier, lower-cost patients, though being paid at full rates, and more recently by coding patients as having more complicated conditions in order to qualify for higher, risk-adjusted payments. The GAO now provides us with further evidence that Secretary Sebelius and HHS/CMS have been complicit in this fraud.
The Affordable Care Act included provisions to reduce the overpayments to the private Medicare Advantage plans. This GAO report shows that HHS/CMS ignored GAO’s recommendations to improve their risk adjustment methodology, recommendations that should have reduced overpayments due to the embellished diagnostic codes being submitted by the Medicare Advantage plans. HHS/CMS refused to improve the accuracy of their adjustments, which has already resulted in overpayments to these private plans of between $3.2 billion and $5.1 billion.
Why would they do this? Secretary Sebelius has repeatedly touted the Medicare Advantage plans, and has made efforts to expand enrollment in them, even though they cost the taxpayers more money. Overpaying them allows the plans to offer greater benefits in order to entice individuals to enroll. This is leading to further privatization of Medicare, opening up opportunities for Paul Ryan and other members of Congress to push future Medicare beneficiaries into his “premium support” proposal – a voucher plan to privatize Medicare.
Although the Medicare Advantage programs are more expensive, the intent is to expand enrollment and then make a simple change – convert the financing to a defined contribution (premium support), shifting more of the costs to Medicare beneficiaries through higher premiums and then through greater cost sharing (higher deductibles, etc.) to keep the premiums from skyrocketing beyond the means of most seniors.
President Obama has said that he is quite willing to put Medicare on the table as part of the austerity program being advanced by the budget hawks. Secretary Sebelius is advising him on “strengthening” Medicare. Be afraid. Be very afraid.

HHS approves private plans for Arkansas Medicaid patients

Arkansas’s unusual plan to expand Medicaid

By Sarah Kliff
The Washington Post, February 28, 2013

The Medicaid expansion has emboldened Republican governors to strike all sorts of deals with the Obama administration. They’re willing to make the program larger, the thinking tends to go, only if they can make it more conservative in the process.

The most interesting deal though may be coming out of a state with a Democratic governor: Arkansas. There, Gov. Mike Beebe must get 75 percent of his legislature to sign off on any funds necessary for the Medicaid expansion — a tough sell when Republicans control both the state House and Senate.

What the legislature could be sold on, they told the governor, was this: Using billions in federal Medicaid dollars to buy private health insurance coverage for the state’s lowest income populations.

To the surprise of many — Beebe included — Health and Human Services has given that plan the go-ahead.

Keep in mind, this is really different from what Florida did. There, Gov. Rick Scott received a waiver to move nearly all of the state Medicaid recipients into a Medicaid health plan, run by a private company, to manage their care.

What Arkansas is doing is using Medicaid dollars and sending people to the private health insurance exchanges, where they will shop for a plan like millions of other Americans expected to receive subsidies.

A  private insurance plan tends to be more expensive than Medicaid. The Congressional Budget Office estimates the difference between the two, for an individual, is $3,000.

Right now, that doesn’t matter for Arkansas: The federal government will pay 100 percent of the costs for the Medicaid expansion up until 2017. But after that, the match drops to 10 percent — and then the price tag for coverage does have an effect on the Arkansas budget.

I asked (Beebe spokesman Matt) DeCample why buy the more expensive health plans, which will ultimately cost their state, and the federal government, more money.

“These policies are going to be pricier than strictly through Medicaid expansion,” he replied, “But this is the kind of option that our legislature asked us to look for. Our primary hope is that, we can do this, and this is one way to pursue it.”

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/28/arkansass-different-plan-to-expand-medicaid/

Comment:

By Don McCanne, M.D.

Did I get this right? Health and Human Services has granted Arkansas a waiver to allow Medicaid dollars to be used to purchase private health plans in the state insurance exchange, even though they are much more expensive (and have more limited benefits than Medicaid). And they are doing this only so that state legislators can brag about using private insurers for a public program.

Insanity.

Winning Medicare for All? 'I Like Our Chances'

Despite insights, Time magazine's cover story falls short on remedy

By James Kahn
CommonDreams.org, February 28, 2013
 
In his recent Time magazine article, Steven Brill paints a vivid and rather depressing picture of the perverse malfunctioning of our health care system – overpriced and technology-addicted – and he acknowledges some of the advantages of Medicare.

Sadly, however, he shies away from an endorsement of the obvious solution: an improved Medicare for all, i.e. single-payer national health insurance.

I’ll come back to that a little later. However, let me first say that Brill masterfully illuminates much of what’s wrong with U.S. health care.

Take, for example, the “chargemaster” list: an archival, bizarrely hyper-inflated price list in each hospital based on some long-lost secret formulas and automatically inflated over time.

As a physician and health policy researcher, I’ve long known about the massive charges offered to non-contract payers (read: individuals not covered by a public or private insurer), charges that are completely meaningless for costing studies because they’re almost never paid in full and don’t represent the real resources used to provide care. However, what Brill lays out brilliantly (pun intended) is the following:

•    Some very poor (lower-middle income) people actually do pay the sky-high chargemaster rates.
•    There is a cottage industry (growing, I’m sure, if nothing else due to this article) to help those hapless souls negotiate steep discounts on these ridiculous bills.
•    Hospital administrators either refuse to discuss the chargemaster list or offer up the most heinous, transparently nonsensical justifications for using it.
•    Perhaps worst of all, the CEOs of large not-for-profit providers are paid literally millions of dollars (OK, not tens of millions like big for-profit companies, but still …), thereby introducing into a supposedly public-good-oriented setting the compensation (and marketing) tone of for-profit industry.
•    When these not-for-profits list their “charity” care they value it at the price levels in the chargemaster, even though the cost to produce those services is less than 10 percent of the chargemaster price.

In these and other instances, Brill performs an outstanding public service. However, he regrettably stops short (or his editors stopped him short) of explaining why a single-payer health care system is the only effective remedy for the mess we find ourselves in today. This despite the fact that much of what he says would lead you directly to that conclusion.

He goes so far as to quote others, including John Gunn, Sloan-Kettering’s chief operating officer, who says, “If you could figure out a way to pay doctors better and separately fund research … adequately, I could see where a single-payer approach would be the most logical solution. … It would certainly be a lot more efficient than hospitals like ours having hundreds of people sitting around filling out dozens of different kinds of bills for dozens of insurance companies.”

Yet Brill characterizes single payer, the most logical solution, as “unrealistic” and fraught with the danger of government overreach and intrusion, summarily dismissing it. Need we mention insurance-company overreach and intrusion in the doctor-patient relationship? Need we note the freedom of Medicare beneficiaries to choose their own doctor and hospital, something that would also characterize a single-payer system?

Incidentally, Brill sharply undervalues the government role in paying for health care. He says that the federal government pays $800 billion per year out of our $2.8 trillion health bill, with the remainder mainly picked up by private insurers and individuals.

The $800 billion federal spending on Medicare and the federal portion of Medicaid is right. However, when you add in other federal programs, the state portion of Medicaid, other state and local programs, health insurance for government employees, and tax subsidies, the total government contribution is over 60 percent of total health spending, and rising. Our government already spends enough to pay for universal single payer!

Single-payer health reform is clearly the answer. We need to create the meme and the momentum and the aura of inevitability to do the right thing — despite the opposition of individuals and organizations with massive vested financial interests in the private health industry. They can be overcome.

Think Lincoln and the 13th amendment. As he said (or at least Daniel Day-Lewis said in the movie), regarding prospects of passing the amendment out of Congress, despite doom-saying by his advisers — “I like our chances” (slight smile).

I like our chances on single payer because it’s now so obvious how irremediably broken our system is, and the house of cards will eventually fall. It’s all about perseverance and timing.

James G. Kahn, M.D., M.P.H., is a professor at the Philip R. Lee Institute for Health Policy Studies, Global Health Services, and the Department of Epidemiology and Biostatistics, all at the University of California, San Francisco. He is also past president of the California chapter of Physicians for a National Health Program.

HHS approves private plans for Arkansas Medicaid patients

Arkansas’s unusual plan to expand Medicaid

By Sarah Kliff
The Washington Post, February 28, 2013
The Medicaid expansion has emboldened Republican governors to strike all sorts of deals with the Obama administration. They’re willing to make the program larger, the thinking tends to go, only if they can make it more conservative in the process.
The most interesting deal though may be coming out of a state with a Democratic governor: Arkansas. There, Gov. Mike Beebe must get 75 percent of his legislature to sign off on any funds necessary for the Medicaid expansion — a tough sell when Republicans control both the state House and Senate.
What the legislature could be sold on, they told the governor, was this: Using billions in federal Medicaid dollars to buy private health insurance coverage for the state’s lowest income populations.
To the surprise of many — Beebe included — Health and Human Services has given that plan the go-ahead.
Keep in mind, this is really different from what Florida did. There, Gov. Rick Scott received a waiver to move nearly all of the state Medicaid recipients into a Medicaid health plan, run by a private company, to manage their care.
What Arkansas is doing is using Medicaid dollars and sending people to the private health insurance exchanges, where they will shop for a plan like millions of other Americans expected to receive subsidies.
A  private insurance plan tends to be more expensive than Medicaid. The Congressional Budget Office estimates the difference between the two, for an individual, is $3,000.
Right now, that doesn’t matter for Arkansas: The federal government will pay 100 percent of the costs for the Medicaid expansion up until 2017. But after that, the match drops to 10 percent — and then the price tag for coverage does have an effect on the Arkansas budget.
I asked (Beebe spokesman Matt) DeCample why buy the more expensive health plans, which will ultimately cost their state, and the federal government, more money.
“These policies are going to be pricier than strictly through Medicaid expansion,” he replied, “But this is the kind of option that our legislature asked us to look for. Our primary hope is that, we can do this, and this is one way to pursue it.”
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/28/arkansass-dif…

Did I get this right? Health and Human Services has granted Arkansas a waiver to allow Medicaid dollars to be used to purchase private health plans in the state insurance exchange, even though they are much more expensive (and have more limited benefits than Medicaid). And they are doing this only so that state legislators can brag about using private insurers for a public program.
Insanity.

4 things to know about Medicare's overhead costs

By Bob Herman
Becker’s Hospital Review, Feb. 27, 2013

Many statistics and numbers are thrown around when health care policymakers and leaders discuss Medicare’s administrative costs, but an article set to appear in June’s Journal of Health Politics, Policy and Law attempts to alleviate the confusion associated with Medicare’s overhead costs.

Kip Sullivan, JD, part of the Minnesota Chapter of Physicians for a National Health Program, wrote the article to examine the debate over Medicare’s administrative expenditures and how CMS’ figures should be used.

Here are four things to know, based on the article.

1. There are two different measures of Medicare’s administrative costs. One figure comes from the Medicare Board of Trustees’ annual report, while the other comes from CMS’ National Health Expenditure Accounts. According to the latest trustees’ report, Medicare’s overhead represented 1.4 percent of its total expenditures. According to the latest NHEA, Medicare’s overheard was 6 percent of expenditures.

2. The discrepancy between the two figures is due to Medicare Parts C and D. Mr. Sullivan wrote that the difference between the trustees’ measure of overhead and the NHEA measure “is due almost entirely to the fact” that the NHEA figure includes administrative expenses incurred by health insurers that participate in Medicare Advantage (Part C) and Medicare’s prescription drug program (Part D). In essence, the overhead associated with the private insurers involved with Medicare raise the program’s overhead by almost 5 percent, or $24 billion in 2010.

3. All groups across the political spectrum have been confused about, or misused, Medicare’s administrative costs. According to the article, conservative think tanks, liberal authors, health insurance lobbyists and others have all misrepresented Medicare’s administrative costs.

4. The Medicare Board of Trustees and NHEA figures are comprehensive. Some have criticized the government’s definition of Medicare’s overhead, but Mr. Sullivan writes that both governmental figures include other expenditures incurred by CMS, the IRS, Social Security and others to administer Medicare. When it comes to “traditional” Medicare, the trustees’ measure is the more accurate one, according to the report.

http://www.beckershospitalreview.com/racs-/-icd-9-/-icd-10/4-things-to-know-about-medicares-overhead-costs.html

Census report on employment-based health insurance

Employment-Based Health Insurance: 2010

By Hubert Janicki
United States Census Bureau, February 2012
 
• The likelihood of employment-based coverage declined from 64.4 percent (± 0.5) in 1997 to 56.5 percent (± 0.5) in 2010.
 
• In 2010, 71.1 percent (± 0.5) of employed individuals aged 15 and older worked for an employer that offered health insurance benefits to any of its employees.

• 42.9 percent (± 1.8) of individuals who did not complete high school worked for an employer that offered health insurance to any of its employees, compared with 78.9 (± 0.5) percent for individuals with a college degree.
 
• Of workers aged 45 to 64, 75.7 percent (± 0.7) worked for an employer that offered health insurance benefits, compared with 60.0 percent (± 1.4) for workers aged 19 to 25.
 
• Among married couples with only one member employed in a firm that offers health insurance benefits, 68.7 (± 1.7) percent provided coverage for the spouse.

http://www.census.gov/prod/2013pubs/p70-134.pdf

Comment:

By Don McCanne, M.D.

The Affordable Care Act was designed to avoid disruption of employer-sponsored health plans since employer plans covered the largest number of individuals and employer contributions to their health plans provided the largest source of health care funding in the United States.

Taking advantage of these funds that were already in place was a natural for those writing the legislation, especially since the expansion of Medicaid and the introduction of health exchange plans would require additional federal funds at a time when considerable concern is being expressed over our current government expenditures (even if the concern should be primarily about inadequate revenues instead).

This Census Bureau report adds to the data which show that employer offers of health care coverage continue to decline. It is uncertain what impact the Affordable Care Act will have on this trend since employers will face conflicting incentives for continuing coverage. It certainly will be tempting for them to discontinue their coverage, enabling their employees to enroll in the government subsidized exchange plans or Medicaid.

The impact of these subsidies will have to be weighed against the loss of deductibility for employer-sponsored plans, though that theoretically should be neutral to the employer as forgone wages for health benefits are then paid to the employees, and it would be the employees who would have a higher tax obligation. (Do you believe that the behavior of employers actually would follow the common wisdom of the economists in this matter?) Also, larger employers would have to weigh the impact of the assessment (penalty, tax, or whatever) for not providing coverage to their qualified employees.

There is a wide range of opinions on this matter, but it is likely that there will be little tendency to increase the numbers of individuals with employer-sponsored coverage. In contrast, it is more likely that other employers will follow the lead of those who early on decide against providing coverage as they play games with the rules that determine whether there would be penalties or how much they would be.

Also employers will likely continue with the current trends to shift more health care costs to their employees, with the alleged premise that it would make them better health care shoppers. They really don’t care about their employees’ shopping habits. Employers are adopting these plans for one reason only. High deductibles and other innovations reduce their costs – the employers’ costs – for these plans, with the trade off of increasing costs for employees who actually need health care.

It seems clear that more people will either be pushed into the underfunded Medicaid program or the underinsurance plans of the exchanges, or they simply will go uninsured.

The Affordable Care Act isn’t fixing our system, and employers understandably are losing their enthusiasm for filling the gaping void in the adequacy and allocation of our inefficient private health plans. You would think that employers would be ready to get on board with an improved Medicare that covers everyone. It would certainly get rid of one big headache for them.

Saving on health care at the cost of people's health

Health care spending in the U.S. has slowed because fewer people can afford health services

By Margaret Flowers, M.D.
Al-Jazeera, Feb. 27, 2013

In his recent State of the Union speech, President Obama remarked in one short sentence that “Already, the Affordable Care Act [ACA] is helping to slow the growth of health care costs.” That was the extent of his comments on the historic health care bill he signed into law in March 2010 after more than a year of pushing health reform through Congress. It is true that total health care spending in the U.S. has slowed, but it does not have much to do with the ACA. Instead, it is another symptom of the ailing market-based health system in the U.S. which is causing poor health outcomes and growing inequality.

The U.S. is unique among industrialised nations when it comes to health care. All other wealthy nations have some type of national universal health system that is publicly financed. The U.S. relies primarily on a market-based health care system in which most private health insurance is tied to employment. There are public programs, Medicaid, for those who are in extreme poverty, but these are subject to state-balanced budget pressures and struggle to meet the needs of their populations. And there is a public-private system for people 65 years of age and older, Medicare, that is financed through taxes at the federal level. Overall, health coverage is private except for many people who do not qualify for public programs and find private health insurance unaffordable.

Privatized health system: A failed experiment

The U.S. health system is a failed experiment. Since the 1980s when the U.S. moved aggressively to privatise the financing and delivery of health care, the cost of care, health disparities and the number of people without insurance have climbed. The U.S. spends more per capita on health care than any other country and has excellent health facilities, but in the U.S., patients receive the amount of health services they can afford rather than what they need.

In fact, health care spending per capita in the U.S. is two and a half times what the average OECD (Organisation for Economic Co-operation and Development) nation spends. Total health spending constitutes a greater piece of the Gross Domestic Product (GPD), currently at 17.9 percent, than the OECD average of 9.5 percent. Yet, nearly 50 million people in the U.S. have no insurance at all. And tens of millions more are under-insured, meaning they have insurance but suffer significant financial barriers to care and face bankruptcy in the event of a serious accident or illness.

U.S. health care law leaves millions without coverage

A study using data from 2007 found that 62 percent of all personal bankruptcies were due to medical illness and costs and nearly 80 percent of those who experienced medical bankruptcy had some sort of health insurance. In the U.S. it is not uncommon for communities to hold fundraisers when someone is diagnosed with cancer or other significant health conditions. It is also not uncommon for parents to forgo care when they have a terminal illness and die prematurely rather than leaving their family behind with no home or other assets.

In a 2009 study, it was estimated that there are 45,000 excess deaths among uninsured adults in the U.S. each year due to lack of access to care. That adds up to more than 120 adults each day. And uninsured children are more likely to die as well. The total number of preventable deaths is probably higher. Another study estimated that there would be over 100,000 fewer preventable deaths in the U.S. each year if we had a high-functioning health system like France, Australia or Japan.

Considering the amount of money invested in health care, the U.S. reaps a poor return in health outcomes. A recent report by the Institute of Medicine indicates that life expectancy in the U.S. for both men and women is falling. And the U.S. fares poorly in a number of categories such as infant mortality, chronic diseases, disability and violent and drug-related injuries. The report points to a number of causative factors such as the lack of a universal health care system and lack of a social safety net. It also points out the severe degree of wealth inequality in the U.S. and the social effects on health that coincide with that such as lack of education, drug abuse and violence.

Wealth inequality in the U.S. is worsening. The most recent U.S. Census Bureau data show that one in three people in the US are living in poverty or are low income. The Gini index which measures inequality grew for the first time since 1993, by 1.6 percent, pointing to rising inequality. This is not surprising. Following the economic crisis of 2008, the purported recovery has only been realised by the wealthiest 1 percent who received 121 percent of the income gains due to falling income in the bottom 99 percent. In real terms, what this means is that two-thirds of US families do not have a safety net to see them through personal emergencies. And the U.S. may be entering a double-dip recession.

Rising out-of-pocket costs lead to self-rationing

The majority of families in the U.S. routinely have to make financial choices about necessities. When it comes to keeping their homes, putting food on the table and meeting their children’s needs, seeking health services is a low priority unless it is an emergency. This results in self-rationing, and it is the cruelest form of rationing because it is not based on the needs of the population but on ability to pay.

Over the three years following the economic crisis of 2008, total health care spending slowed in the U.S. to just below 4 percent each year, down from around 6 percent each year. This decrease in spending began before the ACA was passed and continues at the same pace, so far being unaffected by the ACA. Rather, the decrease in spending is the result of greater shifting of health care costs onto individuals who are unable to afford it and so are using fewer services.

Since 2008, there has been a steady decline in the number of people who are seeing their doctor. One reason is that people lost their jobs and with that their employer-sponsored health insurance. But even those who have private health insurance have been making fewer physician visits. That trend started to revers
e in 2012, but only for preventative health services, because the ACA requires greater coverage for those. Of concern is what these patients will do if a serious health condition is diagnosed because in the U.S., having health insurance does not guarantee that necessary care will be covered and most people face significant deductibles that they must pay before their benefits begin. So, the effect of more preventative care on actual health outcomes remains to be seen.

There is a debate currently over whether we are in a temporary downturn in the use of health services and health spending or whether this is the new normal. I argue that unless there are significant changes in the financing of health care, we are reaching a new normal in the U.S. of under-insurance. There has been a consistent trend of rising costs of health insurance premiums and pharmaceuticals while a greater proportion of the burden is being shifted onto the individual.

A root cause of this trend is that private health insurance corporations are first and foremost responsible to their investors to provide income. This is achieved by charging high prices for insurance premiums and avoiding payment for health services. A new tool to accomplish this, called Consumer-Driven Health Plans (CDHPs), entered the market about 10 years ago.

Publicly the CDHPs were promoted as common sense plans that would prevent overuse of health services by putting more financial responsibility in the hands of patients who were then expected to make wiser decisions about how to spend their dollars on health care. This was called “having skin in the game.” But in reality, CDHPs have only created greater financial barriers to care and increased the number of people who experience medical bankruptcy while private insurance corporations’ profits have soared.

Studies show that patients are not able to discriminate well between necessary and unnecessary care, and so they avoid both. The consequence of avoiding or delaying necessary care is that conditions are then more difficult and expensive to treat and have worse outcomes, unless of course the outcome is death which leads to overall cost savings. And a recent study described the toll that cost-sharing takes on families, writing: “We found that high levels of cost sharing precipitated considerable anxiety and substantial debt problems, as well as disruptions of medical care.”

U.S. health law increases under-insurance

The ACA will increase the number of people who have insurance, but most will have CDHPs with low levels of coverage. The highest quality health plans have traditionally been those that are employee benefits. But under the ACA fewer employers are planning to offer health benefits. Some will drop coverage altogether and pay a fine instead, which ends up costing less. Other employers are shifting more positions to less than full time or to consultants in order to avoid providing health benefits. And other employers are planning to offer funds for their employees to purchase their insurance individually. More than half of the plans purchased in the individual market are lower benefit plans.

Beginning in 2014, states are required under the ACA to create health insurance exchanges where individuals will purchase health insurance or face a penalty for being uninsured. The exchanges will sell tiers of plans, ranging from those that will pay for 90 percent of covered health services (Platinum) to those that only cover 60 percent (Bronze), and insurance lobbyists are pushing for even lower coverage. Federal subsidies will be available for people whose income is below a certain level and for whom premiums would cost more than 9.5 percent of their income, but these subsidies will only apply to the “Silver Plans” which pay for 70 percent of covered services which is grossly insufficient.

I emphasise covered services because one way that insurance companies avoid paying for care is to say that a service is not covered. And it was recently revealed that the 9.5 percent cut off only applies to individual coverage. This means that if a person’s individual coverage is less than 9.5 percent but family coverage is higher, they do not qualify for the subsidy. The IRS will not charge the employee a penalty for their uninsured spouse and children.

The ACA has only added more complexity and bureaucracy to an already overly complex and bureaucratic health care system in the U.S. Over a third of health care spending goes to administration and marketing for the multitude of health plans. And this will grow under the ACA due to the costs of the new exchanges, the new regulations for insurers that must be enforced and the new tax penalty that will be assessed for those who do not purchase insurance. In fact, the state of California which is suffering huge budget difficulties and is struggling to fund health care, just received a $674 million federal grant to market and administer its state exchange. Imagine what that would mean if instead those dollars were invested in new health facilities or payment for health care.

Discussing U.S. health care reform

The rise in administrative costs, as well as the failure to include proven cost controls, will lead to the ultimate failure of the ACA. In the meantime, as prices rise and coverage shrinks, we can expect increased self-rationing. This may mean a slower rise in overall health care spending, but at what cost to the population. More people will find themselves unable to afford necessary care. This will lead to greater suffering, greater disability and more people dying from preventable causes. This will be the new normal in the U.S.

Future of global health systems: Public or private?

There is another path. The U.S. could recognise the failure of its market-based health system and instead adopt evidence-based health reform. The U.S. could join the rest of the civilised world and create a universal, lifelong, comprehensive and publicly financed health system. In the U.S., we call this Single Payer (meaning the health system is financed by the government through taxes) or Medicare for All.

Current health spending in the U.S. is sufficient to cover a single-payer system. And the majority of people and health professionals support this approach. The major barrier is corporate influence over the U.S. political process. Health insurance, pharmaceutical and private hospital corporations spend millions to lobby and elect legislators who are favourable to their interests. Legislative staffers are often hired from these industries and lobbyists for the industries are often former legislative staffers. For example, staffers and lobbyists were very successful in making certain that the ACA would protect their profits.

It is not likely that the U.S. will move to Single Payer unless a strong grassroots movement demands it. And corporate forces, including corporate political parties, do what they can to prevent this. During the health reform process, tens of millions of dollars were given to grassroots groups and labor to support the ACA and the White House made sure that they complied with the Democrat’s messaging. Now, these same groups are allying with the health insurance corporations to promote the purchase of their products.

Instead of learning from the rest of the world, the U.S. is pushing its failed market-based system on other countries. The new Trans-Pacific Partnership is expected to degrade top health systems in Australia and Japan. The president announced in his State of the Union address that he is pushing a new and similar trade agreement on the European Union. And, unfortunately, many EU nations are privatising their systems due to pressure from international financiers despite popular protests.

We are at a crossroads globally. There is a long-term body of strong evidence that publicly financed universal health care systems improve health and control costs. But as transnational corporations gain greater power, they will expand their reach throughout the globe in order to profit from those who have the means to pay for care. What will be the human cost of this path? As one colleague said about the current environment: “If you aren’t exploitable, you’re expendable.”

Margaret Flowers, MD, served as congressional fellow for Physicians for a National Health Program and is on the board of Healthcare-Now. She is co-director of It’s Our Economy and co-host of Clearing the FOG Radio Show.

http://www.aljazeera.com/indepth/opinion/2013/02/201322671734465929.html

Woolhandler, Himmelstein and Relman on the right path for Medicare

Sunday Dialogue: The Future of Medicare

The New York Times, February 23, 2013

Readers weigh in on problems with the health care program:

Canada’s Medicare program — phased in at the same time as the American version — shows how we can make Medicare simpler and thriftier, while simultaneously upgrading its coverage. Canada’s program covers all Canadians (not just the elderly) under a single public program in each province, and bans co-payments and deductibles.

Patients can choose any doctor and hospital. Cutting out private insurers and the complexity and fragmentation they impose has simplified paperwork for patients, doctors and hospitals. Administrative costs are roughly half United States levels, saving more than $1,000 per capita.

Over all, Medicare spending on the elderly has grown three times faster in the United States than in Canada since 1980, while life expectancy (for the elderly, as for all age groups) has grown faster in Canada. If American Medicare costs had risen at Canadian rates, we’d have saved more than $2 trillion by now, and Medicare’s trust fund would show a healthy surplus.

STEFFIE WOOLHANDLER
DAVID U. HIMMELSTEIN
New York, Feb. 20, 2013

The writers, internists and professors at the CUNY School of Public Health at Hunter College, co-founded Physicians for a National Health Program.

***

Medicare is headed for bankruptcy because it depends largely on open-ended fee-for-service payment of almost any services providers choose to deliver, at prices mainly determined by the providers. Compounding the problem, most providers act like independent businesses seeking to increase their income, regardless of whether they are for-profit or investor-owned.

An effective Medicare fix would require a new payment system that prospectively pays providers for comprehensive care at a rate set by a single public payer. It would also need a not-for-profit medical care system based on multispecialty doctor groups that pay physicians by salary, thus minimizing incentives to deliver duplicative or unnecessary care.

The new system would have to be mandatory for all citizens, including legislators, and it would have to be financed by a progressive, earmarked health care tax.

Obviously, such reform would be slow and difficult, but so would any other change that threatened vested interests. All reform will depend on an aroused public opinion.

ARNOLD S. RELMAN
Tucson, Feb. 21, 2013

The writer is professor emeritus of medicine and social medicine at Harvard Medical School and a former editor in chief of The New England Journal of Medicine.

http://www.nytimes.com/2013/02/24/opinion/sunday/sunday-dialogue-the-future-of-medicare.html?ref=opinion&pagewanted=all&_r=0

Comment:

By Don McCanne, M.D.

At a time when Congress and the Obama administration are contemplating a reduction in Medicare spending as a means of paring down our national budget deficit, it is important to remind the nation of the beneficial changes that we could be making to the Medicare program that would bring affordable, high quality care to everyone under a single payer Medicare budget that we could afford. The messages of Steffie Woolhandler, David Himmelstein and Arnold Relman need to drown out the messages of those who would send Medicare down the wrong path.