PNHP

Explaining regional variation in private health care spending

Explaining regional variation in private health care spending

Health Status and Hospital Prices Key to Regional Variation in Private Spending

Research Brief by Chapin White
National Institute for Health Care Reform, February 15, 2012
Differences in health status explain much of the regional variation in spending for privately insured people, but differences in provider prices — especially for hospital care — also play a key role, according to a new study by the Center for Studying Health System Change (HSC) for the nonpartisan, nonprofit National Institute for Health Care Reform (NIHCR).
Based on claims data for 218,000 active and retired nonelderly unionized autoworkers and their dependents, the study found that health spending per enrollee in 2009 varied widely across 19 communities with large concentrations of autoworkers, from a low of $4,500 in Buffalo, N.Y., to a high of $9,000 in Lake County, Ill.  The autoworkers’ health benefits are essentially uniform nationally, so spending differences do not reflect benefit differences.
Differences in service quantities accounted for two-thirds of the overall spending variation, while differences in prices accounted for one-third, according to the study.
On the quantity side, differences in health status and other demographic factors explained most, but not all, of the variation in quantity. About 18 percent of the total variation in spending was a result of unexplained differences in service quantities. On the price side, the cost of doing business explained very little of the price differences, with almost all of the differences in prices unexplained, the study found.
http://www.nihcr.org/news_Spending_Variation.html
From the Research Brief:
Sources of health care spending variation across autoworker communities, 2009
Differences in spending due to quantities
37% – Differences in health status
10% – Differences in age and sex
18% – Differences in quantities (excess)
Differences in spending due to prices
2% – Differences in providers’ cost of doing business
33% – Differences in prices (excess)
Comparing Private Prices to Medicare
Physician office visits. The prices paid by the autoworker plan for physician office visits, on average, are only 3 percent higher than what Medicare would have paid for the same services.
Hospital inpatient care. The prices for inpatient hospital care paid by the autoworker plan are, on average, 55 percent higher than what Medicare would pay, and the price gap varies widely across communities.
Hospital emergency department care. The prices paid by the autoworker plan for hospital emergency department care are, on average, more than double the Medicare price, and the price gap varies even more widely across communities than for inpatient care.
Research Brief
http://www.nihcr.org/Spending_Variation.html
PDF version
http://www.nihcr.org/Spending_Variation.pdf

Policy wonks likely will download this Research Brief since it will prove to be a landmark study explaining the wide variation in spending amongst privately insured patients – very useful information when designing policies to improve our health care financing.
We already have several landmark studies demonstrating the wide variations in quantity of services and in pricing of those services – both factors in determining the variations in health care spending.
What has not been so clear is whether the quantities vary based on the health status of the patients or based simply on variations in intensity amongst populations of comparable health (i.e., providing excess services to drive up revenues, though deficient services when system capacity is inadequate is an important but separate concern).
What also has not been so clear is whether price differences are primarily due to differences in costs of health system resources, or simply due to charging higher prices where private insurer market control is weaker.
This study provides very convincing data to explain the differences. Look at the percentage differences listed above.
Health status (37%) and age and sex (10%) explain almost half (47%) of the differences in spending. These are entirely appropriate differences and do not require policy intervention. The 18% that is not otherwise explained may well be excess quantity of services that perhaps could be moderated by judicious application of health policy.
But let’s not kid ourselves. Those who suggest that, based on the Dartmouth studies, close to 100% of the difference in quantity of services is excessive tend to support policies that would come as close as possible to eliminating the differences. Since this study shows that the excess quantity is only about 18% of the difference in spending (only slightly over one-fourth of the increased quantity in higher spending areas), it would be very difficult to design policies that would tease out this modest amount while leaving in place the other services that are clearly beneficial. That doesn’t mean that efforts shouldn’t be made to do so, but it does mean that great care must be taken to be certain that people still receive the services that they should have – a much more important priority than budget trimming.
Excessive prices (33%) appear to account for most of the differences in prices for services since differences in the providers’ costs of doing business account for a mere 2% of spending differences. Most of this excess pricing is found in hospitals and in their emergency departments. This finding screams out for a better method of controlling prices. All other wealthier nations use some form of government pricing to eliminate these excesses. We should too.
Uwe Reinhardt has provided convincing evidence that an all-payer system, such as the hospital price-setting system in Maryland, would capture much of this excess in pricing. That is true, though it would be more difficult for an all-payer system to address the problem of excess quantity.
Our objection to all-payer systems is that they address only this one issue and leave out the many other advantages of a single payer national health program. When we have a solution that would fix so many problems at once let’s go with that.

Vermont adds bronze plan

Vt. would allow 'bronze plan' to encourage health

cbsnews.com
February 6, 2012

Vermont Gov. Peter Shumlin and legislative leaders said Monday they wanted to make it possible for more of the state’s small businesses to offer lower premium health insurance plans sometimes known as “bronze plans” until the state can implement its single payer health care system.

Speaking Monday in Montpelier, Shumlin and leaders from the House and Senate, all Democrats, said they would also allow businesses with more than 50 employees to remain outside the federally-mandated health care exchange until 2016.

“This was a hard decision, a very hard decision because there are people who will not have the opportunity to get into that market and they’ll have to wait two years and their employees will have to wait two years as well,” (House Speaker Shap Smith) said.

http://www.cbsnews.com/8301-505245_162-57372163/vt-would-allow-bronze-plan-to-encourage-health/

Comment: 

By Don McCanne, MD

Vermont is providing us with very important lessons on just how difficult it is to set up a single payer program on a state level. The legislation that passed – hailed as the first single payer system in the United States – is primarily an enactment of a state health insurance exchange as called for in the Affordable Care Act, along with future proposals that are not much more than a wish list at this point.

When they enacted the insurance exchange, they deliberately eliminated the bronze plan since it has an actuarial value of only 60 percent, which would leave 40 percent of covered health care costs to be paid by the patient out-of-pocket, minus income-related subsidies which are inadequate to prevent financial hardship for many of those with health care needs. They wanted better coverage than that.

The problem they faced was that the premiums for the silver and gold plans (70 and 80 percent actuarial values) would be too expensive for many individuals and small businesses in Vermont, thus the trade off of lower premiums for spartan plans.

What doesn’t appear in this article is that these high-deductible bronze plans are very profitable for insurers, and they certainly would want to maintain and grow this sector of their market. It is likely that the insurers’ message to the governor and the legislature was that they couldn’t provide silver and gold plans at the level of premium that many businesses could afford, and the insurers likely didn’t need to resort to threats of withdrawing from markets. (BlueCross BlueShield of Vermont is the dominant insurer and can write its own ticket, and, though a nonprofit, it still depends on profits.)

The governor and the legislature are to be commended for doing their very best to try to bring a single payer system to Vermont, though they are finding many of the barriers to be insurmountable. While they are patching together what they can, they should join our growing movement demanding that Congress enact a national single payer program. That would solve the health care financing problems for all states.

Vermont adds bronze plan

Vt. would allow ‘bronze plan’ to encourage health

cbsnews.com
February 6, 2012
Vermont Gov. Peter Shumlin and legislative leaders said Monday they wanted to make it possible for more of the state’s small businesses to offer lower premium health insurance plans sometimes known as “bronze plans” until the state can implement its single payer health care system.
Speaking Monday in Montpelier, Shumlin and leaders from the House and Senate, all Democrats, said they would also allow businesses with more than 50 employees to remain outside the federally-mandated health care exchange until 2016.
“This was a hard decision, a very hard decision because there are people who will not have the opportunity to get into that market and they’ll have to wait two years and their employees will have to wait two years as well,” (House Speaker Shap Smith) said.
http://www.cbsnews.com/8301-505245_162-57372163/vt-would-allow-bronze-plan-to-encourage-health/

Vermont is providing us with very important lessons on just how difficult it is to set up a single payer program on a state level. The legislation that passed – hailed as the first single payer system in the United States – is primarily an enactment of a state health insurance exchange as called for in the Affordable Care Act, along with future proposals that are not much more than a wish list at this point.
When they enacted the insurance exchange, they deliberately eliminated the bronze plan since it has an actuarial value of only 60 percent, which would leave 40 percent of covered health care costs to be paid by the patient out-of-pocket, minus income-related subsidies which are inadequate to prevent financial hardship for many of those with health care needs. They wanted better coverage than that.
The problem they faced was that the premiums for the silver and gold plans (70 and 80 percent actuarial values) would be too expensive for many individuals and small businesses in Vermont, thus the trade off of lower premiums for spartan plans.
What doesn’t appear in this article is that these high-deductible bronze plans are very profitable for insurers, and they certainly would want to maintain and grow this sector of their market. It is likely that the insurers’ message to the governor and the legislature was that they couldn’t provide silver and gold plans at the level of premium that many businesses could afford, and the insurers likely didn’t need to resort to threats of withdrawing from markets. (BlueCross BlueShield of Vermont is the dominant insurer and can write its own ticket, and, though a nonprofit, it still depends on profits.)
The governor and the legislature are to be commended for doing their very best to try to bring a single payer system to Vermont, though they are finding many of the barriers to be insurmountable. While they are patching together what they can, they should join our growing movement demanding that Congress enact a national single payer program. That would solve the health care financing problems for all states.

On the freedom to choose birth control

By Michael Ozer, M.D.
Letters, The New York Times, Feb. 14, 2012

Re “The Freedom to Choose Birth Control” (editorial, Feb. 11):

I am struck by the quandary the United States has on issues like these by maintaining an employer-based health insurance system. If we Americans had a national single-payer system that covered all of our people, the arguments against infringement on religious liberty would be a moot point.

All women would have open access to birth control, and Catholic institutions would be free to advocate their position without private employer insurance being used as a wedge issue to divide our population.

MICHAEL OZER
London, Feb. 12, 2012

The writer is a pediatrician.

http://www.nytimes.com/2012/02/14/opinion/the-church-the-state-and-contraception.html

Re birth control flap: health care for all should be a right

By Johnathon Ross, M.D.
Letters, The Toledo Blade, Feb. 13, 2012

Catholic employers would hurt themselves if they don’t offer health insurance, because there is competition for the best employees. However, they can act on their conscience and have nothing to do with health insurance except to pay into the exchange created by the Patient Protection and Affordable Care Act.

The act will cover 15 million more Americans; 50,000 die yearly because of lack of insurance coverage. No one knows the added total suffering and disability.

My Catholic employer pays me to care for the poor and uninsured. Every day I see a near miss. Several times yearly, I see deaths because of lack of health insurance.

Here lies the real, difficult moral choice. A thousand points of light — employer-based coverage — do not make a searchlight. They make a blur. Our government should, like the mirrors in a searchlight, focus the moral fiber of the nation.

The nation’s failure to provide health care to everyone is a stain on our moral character that far exceeds covering contraceptive services. The flawed Affordable Care Act attempts to cleanse this stain. At least and at last, we are trying.

As a physician, I would prescribe an improved Medicare for all. It would cover everyone without employers in the middle and save $400 billion yearly in administrative costs, enough to cover all the uninsured and improve coverage for the rest of us.

The contraception debate misses a more important moral crisis. We need a health care system with everybody in and nobody out. Health care should be a right of citizenship in the richest country on Earth.

Dr. Johnathon Ross resides in Toledo, Ohio.

http://www.toledoblade.com/Letters-to-the-Editor/2012/02/13/Bishops-should-work-to-aid-poor.html

Debating Health Care As a Right

By Winthrop Quigley, Journal Staff Writer
Albuquerque Journal, Feb. 12, 2012

The question is asked with regularity at legislative and congressional hearings, medical and public health conferences, political rallies and policy think tanks: Is health care a right, or a privilege?

Sen. Jerry Ortiz y Pino, an Albuquerque Democrat, long ago decided that health care is a right and that insurance company profit-making prevents people from enjoying that right.

For the second year in a row, Ortiz y Pino has introduced legislation to put the question to a popular vote.

If he’s successful, New Mexico’s Constitution would be amended to say, “Health care is a fundamental right that is an essential safeguard of human life and dignity. The state shall ensure that every resident has the opportunity to realize this right by establishing a comprehensive system of quality health care that is accessible to each resident on an equitable basis regardless of ability to pay.”

Identical legislation was introduced in the House by Rep. Gail Chasey, D-Albuquerque.

The cost of a comprehensive state-wide health system would range from $11 billion to $16 billion a year, more than twice the entire state budget, which already includes substantial spending on health care, according to insurance company lobbyists who testified against the proposal at a Senate Rules Committee hearing last week.

They argued that comprehensive health care has to be provided at the national level and that the federal Affordable Care Act has addressed the issue.

The proposed constitutional amendment needs to secure a majority vote in both houses of the Legislature and must be ratified by a majority of the voters to become effective. Unlike other legislation, proposed constitutional amendments do not need the governor’s signature, though a spokesman for Gov. Susana Martinez said she opposes the amendment.

No legal effect

Robert L. Schwartz, a University of New Mexico law professor and health law expert, said the amendment, however, would have no meaningful legal effect. Former state Health Secretary Alfredo Vigil, a practicing physician, said it wouldn’t change how the state Health Department goes about its business in any noticeable way.

Even Ortiz y Pino doesn’t believe the amendment would force state government to do anything, which raises yet another question. Why bother?

“Because it is a constitutional amendment, there would have to be a discussion of the issue leading up to a vote,” Ortiz y Pino said. “That would be healthy, I think, to get people talking about it.

“It would change the way we budget,” he continued. “We think in terms of a patchwork quilt of health programs. This would create an opportunity for us to step back and look at health care as a system, something that takes care of the basic health needs of all New Mexicans. It shifts the debate from asking how we are going to pay for programs to asking if we should be doing something different.”

Ortiz y Pino said there is no need for a financial argument. “I was listening to the insurance company lobbyists, and I wanted to scream,” he said. “The whole point of this is to get away from how do we pay your plans’ premiums and make sure your approach will continue in perpetuity to how do we get away from having any reliance on you guys at all. That’s what it’s about.”

Trying to ‘raise the bar’

Bruce Trigg, a retired Health Department employee and a practicing physician, asked Ortiz y Pino to sponsor the resolution on behalf of the Network of Health Professionals for a National Health Program.

“We’re trying to raise the bar,” Trigg said. “We’re trying to set an ethical standard. We’re putting up with more uninsured people than we could have imagined 20 years ago. This is a truly pro-life bill. It recognizes that all human beings are valued and society has a responsibility to take care of them to the best of our ability.”

Trigg said the idea is not to create a mandate: “It’s something we will work toward.”

Martinez believes the amendment will have bigger teeth than that. Her spokesman, Scott Darnell, said, “According to analysis from our office, this resolution would require the establishment of a government-run health care system that the governor has made very clear she does not support. Not only would the cost of a government run health care system break the state financially, but it could decrease the quality of health care as well.”

Schwartz said the amendment is an example of what he called an aspiration statement, and legal documents are full of them. The New Mexico Constitution already says citizens have a right to seek and obtain happiness. The International Covenant on Economics, Social and Cultural rights, passed by the United Nations in 1966 and signed by the United States, recognizes “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.”

The health-as-a-right amendment “is not truly enforceable in any way, any more than the right to achieve happiness is enforceable,” Schwartz said.

That doesn’t mean it’s a pointless exercise.

‘An important goal’

“An aspirational statement serves an important goal,” Schwartz said. “It says that we as a society have an obligation to provide at least some minimal amount of health care. I don’t think that is unreasonable or impossible. We ought to aspire to do that.”

Health plans and physicians seem to share the aspiration. Lovelace Health Plan CEO Ben Slocum and Presbyterian Healthcare Services CEO Jim Hinton said they have no problem with the principle of affordable, universal access to health care.

Jeremy Gleeson, a physician with ABQ Health Partners and president of the Greater Albuquerque Medical Association, said GAMA has taken no position on the amendment, but that he supports “the concept that health is a fundamental right, as this constitutional amendment seems to be suggesting.

“I’m not sure how it can be implemented in any practical, useful way to get to that point,” he said. “The concept is nice. Most doctors would agree with the concept that health care is a right, though there are some libertarian doctors who would say it’s something you have to pay for.”

Former Health Secretary Alfredo Vigil applauds the concept as well, but also cautions not to count on state government to revolutionize health care.

What would happen?

Vigil provided two answers to the question of what would happen at the Health Department the day after a health care rights amendment was in force.

“The nice answer is the health secretary would rally the troops at the department and attempt to rally his or her supervisors at the Roundhouse and say it’s time to renew our efforts at creating priorities and strategies to improve the health of the people of the state of New Mexico. The honest answer is it wouldn’t do a damn thing.”

“The state of New Mexico has never had enough money to do even its most critical functions,” Vigil said. “It won’t be different for the indefinite future. Besides money, it has to do with time. The Legislature and the governor and the critical people running the show only have 24 hours a day, like everyone else. All the other issues are clamoring for time as much as health is.”

Vigil said that if the state wanted to create a comprehensive health care system, someone like a health secretary would have to be given the permission, time and money to create a system from scratch, since the existing system isn’t the answer.

“Ninety-nine percent of your energy is spent on convincing people who supposedly are on the sam
e side of the fence that you are, then putting on a suit of armor and going to the other side of the fence to deal with people who hate you because you’re from the other side of the fence. You can’t discuss anything without venom and hostility and anger. The result is the proposals that get thrown out tend not to be serious. They are either waving a flag from your side of the fence or sticking someone on the other side of the fence in the eye.”

This article appeared on page A1 of the Albuquerque Journal.

http://www.abqjournal.com/main/2012/02/12/news/debating-health-care-as-a-right.html

AHIP Hooray! Occupiers fete insurance exec at Harvard

By Jacob Bor, Heather Lanthorn, and John Quattroch
The Harvard Crimson, Feb. 10, 2012

If you were anywhere near Harvard Business School last Saturday you might have seen a 12-foot tall puppet dancing to accordion music while a merry band of “Congresspeople” and “health insurance executives” swilled champagne, showered each other in cash and sang round after round of “For She’s A Jolly Good Fellow.” If you weren’t near HBS, you missed a fantastic party. Here’s what happened:

Karen Ignagni, CEO of America’s Health Insurance Plans, was greeted by this band of Occupy Harvard and Occupy Boston at the 9th Annual Healthcare Conference at HBS, where she was the keynote speaker. The merry band feted the insurance industry’s lobbyist-in-chief with an impromptu gala, honoring Ms. Ignagni with an award for “Excellence in the Business of Denying People Medical Care.” The revelers welcomed conference goers with cheers of “A-HIP-Hooray” and explained why Ms. Ignagni had been chosen for this ignominious award.

The award read: “Be it hereby known that Karen Ignagni has successfully upheld the interests of private insurance in the face of efforts to reduce the costs of administrative waste and to insure all Americans, preserving company rights to profit before the public’s right to health.”

Nearby, a comatose patient lay under a sign declaring “45,000 deaths per year due to lack of insurance,” citing a well-publicized study by Harvard Medical School.

The 12-foot tall puppet was allowed to pay to register for the conference but barred from entering any of the conference buildings; poignantly illustrating that corporate medicine will gladly take the money of those not invited to the table. Unperturbed, the outdoor gala-goers still had plenty to say. “We want to thank AHIP and the insurance industry for making us all filthy rich,” said one protester dressed as Max Baucus, the senior U.S. senator from Montana.

More seriously, another protester noted that “the target here is not just the insurance industry, but the wholesale corruption of our government by corporate interests.” He told conference-goers, “When the health care industry spends half a billion dollars each year lobbying Congress, it’s difficult to achieve meaningful health reform that prioritizes the health of the public.”

It’s fitting that Ignagni was the keynote speaker at a conference titled “The Future of Healthcare: Innovative Business Models.” The current business model in health care legislation goes something like this: Large corporations spend hundreds of millions of dollars on lobbyists and contribute millions more directly to politicians on both sides of the aisle. Politicians then allow private health insurers to profit tremendously from a system that provides neither adequate coverage nor adequate care and has failed utterly to contain costs.

AHIP’s success in this model is exemplary. Health insurance and drug companies donated $26.2 million to the 111th Congress. Politicians receiving the largest campaign contributions from health insurers were Barack Obama, John McCain, John Kerry, Max Baucus, Eric Cantor and John Boehner. After a vigorous ($86 million) campaign against health reform, health insurers not only defeated the public option but also got a bill that will compel all Americans to purchase private insurance. Critics may call AHIP two-faced, but we believe that its goals are clear: promoting the profitability of the health insurance industry.

Since Obamacare (the Affordable Care Act) passed into law, health insurers have seen record profits, raising premiums well above inflation. Last year the profits from the five largest insurers, UnitedHealth, WellPoint, Aetna, Humana and Cigna totaled $12.6 billion. That’s enough money to increase the number of low-income children receiving health care by 6.45 million. As working families and employers struggle to pay rising premiums, insurance CEOs rake in salaries of $10-20 million a year, which is 300 to 600 times greater than the median personal income in the U.S.

Obamacare will expand coverage to many of the over 40 million Americans without health insurance. Still, health insurance often fails to provide adequate coverage. Twenty-five million Americans are underinsured. In 2007, medical bills contributed to 62% of all personal bankruptcies. And 69% of those experiencing medical bankruptcy actually had health insurance at the time they got sick or injured—just not enough.

For health care, the U.S. pays more and gets less on key outcomes, such as health status (life expectancy) and financial risk protection (not being bankrupted by out-of-pocket medical expenses). The U.S. spends $7,500 per person on healthcare each year, twice as much as other rich nations spend, including Japan ($2,700), Spain ($2,900), Sweden ($3,500) and France ($3,700). And yet U.S. life expectancy is 78.2 years, while Japan’s is 83.0, Spain’s is 81.8, Sweden’s is 81.4 and France’s is 81.0.

Happily, there are plans that could truly reform our health system. One promising fix for our health system is to consolidate to single-payer insurance, a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private. With one payer, the U.S. could save enough on administrative costs (more than $350 billion annually) to cover all of the uninsured.  Patients would regain free choice of doctor and hospital, and doctors would regain autonomy over patient care.

Of course, there’s nothing that private health insurers and their lobbyists will fight harder against. After all, although a single-payer healthcare system would save American lives, it would hurt the profitability of the health insurance industry.  The industry will continue to fight so that the champagne will keep flowing, the money will keep showering down, and the accordion will keep playing.

[A 3-minute YouTube video of the action is available here.]

Jacob Bor is an ScD candidate in Global Health & Population at the Harvard School of Public Health. Heather Lanthorn is an ScD candidate in Global Health & Population at the Harvard School of Public Health. John Quattroch is an ScD candidate in Global Health & Population at the Harvard School of Public Health.

http://www.thecrimson.com/article/2012/2/10/occupy-hbs-insurance/

Hospitals' charity obligations

Hospitals Flout Charity Aid Law

By Nina Bernstein
The New York Times, February 12, 2012

New York’s charity care system, partly financed by an 8.95 percent surcharge on hospital bills, is one of the most complicated in the nation, but many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including Illinois, California and Minnesota.

But a new study of New York hospitals’ practices and state records finds that most medical centers are violating the rules without consequences, even as the state government ignores glaring problems in the hospitals’ own reports.

Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and wait while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills — typically reflecting much higher rates than what insurers pay — are then treated as the equivalent of charity care.

Change is now urgent, health care experts agree, because the state pool stands to lose hundreds of millions of federal dollars in 2014, when provisions of the health care overhaul will no longer treat so-called bad debt, based on uncollected bills, as if it were charity care.

http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html?_r=1&emc=eta1&pagewanted=all

Comment: 

By Don McCanne, MD

How much charity care should hospitals be expected to provide? Contrary to the prevailing view, the answer should be, “None.” Let me explain.

With our fragmented, dysfunctional system of financing health care it is inevitable that some individuals will receive essential health care services in hospitals, often on an urgent or emergency basis, even though they lack both the funds and insurance coverage to pay for those services. Charity always has been expected of hospitals, so much so that some even have included “Charity” in their names.

The issue became more acute with a differentiation between nonprofit and for-profit hospitals. Nonprofit hospitals were relieved of tax obligations on retained revenues exceeding their costs in exchange for fulfilling their obligation to provide charity care. These retained excesses could then be used for capital improvements, or for charity care.

For-profit hospitals, as entrepreneurial entities, are taxed on these retained revenues as profits. As such, they usually are not expected to provide free care as part of their mission to profitably serve the health care needs of the community.

Members of Congress have expressed concerns over the fact that many nonprofit hospitals seem to be shirking their responsibilities to provide charitable services. They have been acting more like the for-profit hospitals in that much of their uncompensated care is not for prearranged charitable services but rather represents charges that patients were unable to pay. They then write this off as their charitable obligation, but usually only after vigorous attempts to collect the bills – efforts which often leave those patients in financial ruin forever.

It seems ironic that members of Congress pursue an investigation of the charity practices of nonprofit hospitals while paying their respects to market principles by exempting the for-profit hospitals from such an investigation, though it is understandable when you realize that Congress allows tax policy to trump health policy.

The fundamental flaw in all of this is our dysfunctional health care financing system. Everyone should have comprehensive health care coverage that pays all appropriate costs. There should never be a situation in which a person would require charity care. This is a fundamental principle common to most other wealthier nations in that their systems are designed to see that everyone receives appropriate care without the necessity of negotiating financial barriers. Services outside of the system, such as vanity cosmetic surgery, would be available based on the ability to pay, but would never require a need for charity.

Once again, it’s clear that we need to move forward with enacting an efficient, comprehensive, equitable single payer national health program. Why do we keep putting it off when the need is so clear?

Hospitals’ charity obligations

Hospitals Flout Charity Aid Law

By Nina Bernstein
The New York Times, February 12, 2012

New York’s charity care system, partly financed by an 8.95 percent surcharge on hospital bills, is one of the most complicated in the nation, but many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including Illinois, California and Minnesota.

But a new study of New York hospitals’ practices and state records finds that most medical centers are violating the rules without consequences, even as the state government ignores glaring problems in the hospitals’ own reports.

Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and wait while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills — typically reflecting much higher rates than what insurers pay — are then treated as the equivalent of charity care.

Change is now urgent, health care experts agree, because the state pool stands to lose hundreds of millions of federal dollars in 2014, when provisions of the health care overhaul will no longer treat so-called bad debt, based on uncollected bills, as if it were charity care.

http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html?_r=1&emc=eta1&pagewanted=all

Comment: 

By Don McCanne, MD

How much charity care should hospitals be expected to provide? Contrary to the prevailing view, the answer should be, “None.” Let me explain.

With our fragmented, dysfunctional system of financing health care it is inevitable that some individuals will receive essential health care services in hospitals, often on an urgent or emergency basis, even though they lack both the funds and insurance coverage to pay for those services. Charity always has been expected of hospitals, so much so that some even have included “Charity” in their names.

The issue became more acute with a differentiation between nonprofit and for-profit hospitals. Nonprofit hospitals were relieved of tax obligations on retained revenues exceeding their costs in exchange for fulfilling their obligation to provide charity care. These retained excesses could then be used for capital improvements, or for charity care.

For-profit hospitals, as entrepreneurial entities, are taxed on these retained revenues as profits. As such, they usually are not expected to provide free care as part of their mission to profitably serve the health care needs of the community.

Members of Congress have expressed concerns over the fact that many nonprofit hospitals seem to be shirking their responsibilities to provide charitable services. They have been acting more like the for-profit hospitals in that much of their uncompensated care is not for prearranged charitable services but rather represents charges that patients were unable to pay. They then write this off as their charitable obligation, but usually only after vigorous attempts to collect the bills – efforts which often leave those patients in financial ruin forever.

It seems ironic that members of Congress pursue an investigation of the charity practices of nonprofit hospitals while paying their respects to market principles by exempting the for-profit hospitals from such an investigation, though it is understandable when you realize that Congress allows tax policy to trump health policy.

The fundamental flaw in all of this is our dysfunctional health care financing system. Everyone should have comprehensive health care coverage that pays all appropriate costs. There should never be a situation in which a person would require charity care. This is a fundamental principle common to most other wealthier nations in that their systems are designed to see that everyone receives appropriate care without the necessity of negotiating financial barriers. Services outside of the system, such as vanity cosmetic surgery, would be available based on the ability to pay, but would never require a need for charity.

Once again, it’s clear that we need to move forward with enacting an efficient, comprehensive, equitable single payer national health program. Why do we keep putting it off when the need is so clear?

Hospitals' charity obligations

Hospitals Flout Charity Aid Law

By Nina Bernstein
The New York Times, February 12, 2012
New York’s charity care system, partly financed by an 8.95 percent surcharge on hospital bills, is one of the most complicated in the nation, but many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including Illinois, California and Minnesota.
But a new study of New York hospitals’ practices and state records finds that most medical centers are violating the rules without consequences, even as the state government ignores glaring problems in the hospitals’ own reports.
Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and wait while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills — typically reflecting much higher rates than what insurers pay — are then treated as the equivalent of charity care.
Change is now urgent, health care experts agree, because the state pool stands to lose hundreds of millions of federal dollars in 2014, when provisions of the health care overhaul will no longer treat so-called bad debt, based on uncollected bills, as if it were charity care.
http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html?_r=1&emc=eta1&pagewanted=all

How much charity care should hospitals be expected to provide? Contrary to the prevailing view, the answer should be, “None.” Let me explain.
With our fragmented, dysfunctional system of financing health care it is inevitable that some individuals will receive essential health care services in hospitals, often on an urgent or emergency basis, even though they lack both the funds and insurance coverage to pay for those services. Charity always has been expected of hospitals, so much so that some even have included “Charity” in their names.
The issue became more acute with a differentiation between nonprofit and for-profit hospitals. Nonprofit hospitals were relieved of tax obligations on retained revenues exceeding their costs in exchange for fulfilling their obligation to provide charity care. These retained excesses could then be used for capital improvements, or for charity care.
For-profit hospitals, as entrepreneurial entities, are taxed on these retained revenues as profits. As such, they usually are not expected to provide free care as part of their mission to profitably serve the health care needs of the community.
Members of Congress have expressed concerns over the fact that many nonprofit hospitals seem to be shirking their responsibilities to provide charitable services. They have been acting more like the for-profit hospitals in that much of their uncompensated care is not for prearranged charitable services but rather represents charges that patients were unable to pay. They then write this off as their charitable obligation, but usually only after vigorous attempts to collect the bills – efforts which often leave those patients in financial ruin forever.
It seems ironic that members of Congress pursue an investigation of the charity practices of nonprofit hospitals while paying their respects to market principles by exempting the for-profit hospitals from such an investigation, though it is understandable when you realize that Congress allows tax policy to trump health policy.
The fundamental flaw in all of this is our dysfunctional health care financing system. Everyone should have comprehensive health care coverage that pays all appropriate costs. There should never be a situation in which a person would require charity care. This is a fundamental principle common to most other wealthier nations in that their systems are designed to see that everyone receives appropriate care without the necessity of negotiating financial barriers. Services outside of the system, such as vanity cosmetic surgery, would be available based on the ability to pay, but would never require a need for charity.
Once again, it’s clear that we need to move forward with enacting an efficient, comprehensive, equitable single payer national health program. Why do we keep putting it off when the need is so clear?

Insurers shift more out-of-network costs to patients

Consumers Hit By Higher Out-of-Network Medical Costs

By Julie Appleby
Kaiser Health News, February 8, 2012

Consumers have long complained about the cost of going outside their health plan’s network, but …

Now, instead of paying a percentage of the “usual and customary” charges from physicians and other providers, insurers are basing reimbursements on a percentage of what Medicare pays, which can be much less.  “Every carrier is moving to this,” says Ken Sperling, global health care practice leader at the benefit consulting firm Aon Hewitt.

Many employers welcome the change as a way to slow rising premium increases, but some “employees are going to get stuck shouldering a significant portion of the bill because they don’t understand how it’s done,” Sperling says.

Consumers are responsible for the difference between what the out-of-network doctor charges and what their insurer pays. But few understand the basis on which plans reimburse, let alone the widely varying prices doctors and hospitals charge. As a result, they may be blindsided by big bills, says Lynn Quincy, senior health policy analyst at Consumers Union.

Insurer networks are designed to slow rising health care costs, in part by getting doctors and hospitals who join to agree to negotiated rates, which are generally lower than their usual fees.

Because out-of-network hospitals and doctors are not held to negotiated rates, they can set their own fees and “balance bill” patients for the portion insurers don’t cover.

“One of the most expensive decisions that a customer could make is going out of network,” says Alan Muney, chief medical officer at Cigna.

Medicare strictly limits how much patients can be balance billed by doctors who don’t participate in the program.

Benefit consultants, insurers, patient advocates and actuaries say the shift to Medicare rates began after a national database tracking usual and customary charges — run by UnitedHealthcare subsidiary Ingenix — was shuttered in 2009 following an investigation by the New York Attorney General, who questioned whether the data were skewed in favor of insurers.

While the closure was touted as a consumer win, “unfortunately, it’s worse now,” says Jennifer Jaff, executive director of Advocacy for Patients with Chronic Illness, a Connecticut-based group that helps file insurance appeals for consumers. “Once New York said you can’t use those (Ingenix figures) anymore, the insurers looked at it as an opportunity to pay even less.”

http://www.kaiserhealthnews.org/Stories/2012/February/09/consumers-hit-by-higher-out-of-network-medical-costs.aspx

Comment: 

By Don McCanne, MD

The most effective cost containment tool introduced during the managed care revolution was the ability of insurers to contract for set rates with networks of health care providers, eliminating arbitrarily high rates by those providers, rates that seemed to have no end in sight. Although health plan purchasers benefited by the slowing of the rate of premium increases, the trade-off was that care obtained outside of the networks either required larger out-of-pocket costs, or was not covered at all.

A universal single payer system would apply rate controls to all health care no matter where is was obtained. The obvious advantage would be that patients would then have their choice of any and all health care providers. With the current provider networks established by the private insurers, care outside of the networks may not be available because of prohibitive out-of-pocket costs.

Networks may not include centers of excellence, specialists with greater expertise of complex problems, an adequate network of primary care physicians, care that is provided by non-network physicians called in during a hospitalization, or care that is accessible within reasonable geographic boundaries. There are many reasons, not always under the control of the patient, as to why care is obtained out of the network.

Although the insurer may not provide any coverage for out-of-network care, it is more common to provide coverage that will cost the insurer no more or even less that would be paid to in-network providers. The patient could bear the brunt of the costs when the amount of the allowed charges not covered is higher, but the greater risk is that the patient is responsible for the full amount of charges over the allowed amount since the providers’ charges are not bound by a network contract.

Those supporting the private insurance industry tout the application of insurer innovations as being one of the great advantages of market solutions. But these are not social institutions that serve the public good. These are private businesses that serve their own interests. The innovations are designed to leverage markets in their favor.

This latest innovation is particularly repulsive because it is a new deception that was designed to replace the fraudulent rate-setting perpetrated by Ingenix, a UnitedHealthcare subsidiary. Ingenix and the insurers using them were caught cheating patients by manipulating downward the usual fees charged by out-of-network providers so that they would pay less out-of-network, while the patients had to take up the slack. The insurance industry paid hundreds of millions of dollars in legal settlements and shut down the Ingenix program.

Not to be outdone, without fanfare, they replaced the phony usual fee determination for out-of-network care with an allowable fee based on a percentage of Medicare fees. In most cases, this shifts even more of the costs away from the insurers and onto the patients receiving care. So these Ingenix-driven scam artists have shifted to a worse-than-Ingenix system of manipulating prices, but one that will pass legal muster since it’s in the fine print of the insurance contract (as an example, on page 108 of the 126 page booklet of the Oxford/UnitedHealthcare plan mentioned in the article).

Another newer innovation that compounds the injustice of this scheme is that insurers are increasing the number of limited network plans – smaller networks which increase the probability that patients will be stuck with the much higher costs of out-of-network providers.

Also compounding this problem is that the high-deductible plans that flooded the individual market are now being adopted wholesale by employers. Insurers benefit because they can keep their premiums more competitive, even if still outrageous. Employers have complicity with these strategies because they want the lower premiums made possible by protecting the insurers from the costs that are shifted to the patients.

Under the Affordable Care Act, we’ll continue to see more of these abuses. Employers will continue to shift more payment responsibilities to their employees. Insurers will continue to innovate to bring them the highest return possible using this sick financing system. And the patients will be exposed to ever greater financial hardship.

Most employers would prefer not to introduce these innovations that stiff their employees, but the very high cost of private plans almost force them to do so. We should relieve employers of the obligation to sponsor their employees’ health plans. Above all, we need to eliminate the industry that uses health care payment innovations to enrich themselves at a great cost to patients.

For those who have not yet watched Lawrence O’Donnell’s video on employer-sponsored plans and single payer, do it now, and then share it with others:
http://www.msnbc.msn.com/id/45755883/vp/46320398#46321122

Local physician will lead national group

Andrew Coates chosen by organization that supports universal care

By Cathleen F. Crowley
Albany Times-Union, Thursday, February 9, 2012

ALBANY – A local physician and activist was chosen as president-elect of Physicians for a National Health Program, a national organization of 18,000 doctors who support universal health care.

Dr. Andrew Coates, 49, was selected to lead the group by PNHP’s executive committee last month. His one-year term starts in 2013.

“We still need real health reform in this country,” Coates said. “We still need health care that will provide comprehensive and necessary care for absolutely everyone.”

Coates, who often shows up at peace rallies and health care protests in a bow tie and fleece jacket, is director of medical services at Capital District Psychiatric Center, medical director at Albany County Nursing home and a member of the executive board of the Public Employees Federation.

Coates, who is board certified in internal medicine and hospice and palliative medicine, is also a Times Union blogger.

“Andy is a fabulous person who is committed to social justice and that includes health care for all and it includes adequate income and housing and food,” said Dr. Richard Propp, a retired doctor who founded the Capital District Alliance for Universal Health Care. “Basically, he is someone who is fighting on all levels for everybody.”

Coates founded the region’s chapter of PNHP about 10 years ago with Dr. Paul Sorum, a family doctor in Latham.

Sorum said, “He has a very good vision of what a just society should provide in the way of real health care access.”

The United States should model its health care system on countries like Canada, Taiwan, New Zealand and England, Coates said.

“What doesn’t work is private health insurance,” he said.

Coates was raised in Greene County and attended Hamilton College. He has a master’s degree in history from SUNY Albany and a medical degree from Columbia University College of Physicians and Surgeons. He trained at Bassett Healthcare and teaches at Albany Medical College. He lives in Delmar with his wife, Lori Coates, and their three children.

Read more: http://www.timesunion.com/business/article/Local-physician-will-lead-national-group-3213628.php#ixzz1lzY871di