Resource – Page 638

The moral hazard of Medigap plans

FAQ: Seniors May See Changes in Medigap Policies

By Julie Appleby
Kaiser Health News, July 15, 2011

What is Medigap and why do people buy it?

Unlike most job-based health insurance, traditional Medicare does not include “catastrophic” coverage, an annual maximum upper limit on the amount beneficiaries could pay. So enrollees can be liable for thousands of dollars each year, including: $1,132 per-episode deductible for hospital admissions; hundreds of dollars in daily charges for hospital stays of longer than 60 days; a $162-a-year deductible for doctor care, plus 20 percent of charges for office visits or equipment like wheelchairs.

Ten standardized types of supplemental plans offered by private insurers – including AARP’s UnitedHealthcare policies – cover all or most of such deductibles and copayments. Some employers also pay all or part of such costs for their retirees.

What changes are under consideration?

It is not clear exactly what’s on the table in the negotiations between congressional leaders and the White House. But the charts released show that one such proposal under consideration would bar insurers from offering supplemental policies unless the policies came with an annual deductible. People who didn’t want a deductible could pay $530 a year in additional premium to ensure that they won’t be hit with costs before their coverage kicks in.

What about people who don’t have a Medigap plan?

Only about 10 percent of seniors don’t have some sort of supplemental coverage. Some people have military/VA benefits, others are in Medicaid, and some have coverage through Medicare Advantage plans, which are insurance policies offered by private insurers as an alternative to traditional Medicare.

Would changing supplemental coverage save money?

Some economists and policy experts say that supplemental coverage insulates beneficiaries from medical costs, driving up demand for unnecessary care. A study done for MedPAC in 2009 found that beneficiaries with supplemental insurance used more care and cost the program more money. The increased spending wasn’t for emergency hospitalizations, but for other services such as elective hospital admissions, preventive care, doctor office visits and some types of tests.

What else do people say about the idea?

Advocacy groups like the Medicare Rights Center oppose restricting Medigap plans, saying it would simply shift more costs from the government to elderly and low-income people who can least afford it. “Some in government feel people in Medicare don’t have enough ‘skin in the game,’” says Ilene Stein, federal policy director for the center. In fact, she says, people on Medicare already pay 15 percent of their incomes for health care, well above the level paid by non-Medicare households. While the proposals would cap maximum annual spending per enrollee to $5,500 or $7,500, “that’s a lot of money for someone making $22,000,” the median household income for those on Medicare, she says.

http://www.kaiserhealthnews.org/Stories/2011/July/15/medigap-medicare-supplemental-faq.aspx

And…

Exploring the Effects of Secondary Coverage on Medicare Spending for the Elderly

Study by Direct Research, LLC
For the Medicare Payment Advisory Commission (MedPAC)
June 2009

Our results show that secondary insurance has a substantial impact on Medicare spending, consistent with the prior literature in this area. After removing beneficiaries with any VA use and adjusting for differences in health status, income, education, and demographics, individuals with Medigap coverage had Medicare costs 33 percent higher than those with no secondary insurance. Other private secondary insurance was associated with smaller increases in spending. There was no statistically significant difference in Part A spending, but a large and statistically significant increase in Part B spending.

Out-of-pocket payment reduced spending largely by suppressing elective care (broadly defined) as opposed to emergency care. In particular:

* Emergency care (ambulance use, emergency room visits, emergency and urgent hospitalizations) appeared unaffected by the presence of secondary insurance.

* Elective admissions, preventive care, minor procedures and endoscopies were strongly affected by secondary insurance coverage, with substantially higher use among those with private secondary insurance.

It is not possible to use observational (non-experimental) data to prove beyond a doubt that a causal relationship exists between secondary insurance and spending. For several reasons, however, this analysis strongly suggests secondary insurance (reduced out-of-pocket costs) genuinely causes higher spending, and is not merely associated with secondary insurance due to some other factors affecting both insurance demand and health care use. The following factors suggest that this is a causal relationship. First, beneficiaries themselves report that out-of-pocket costs are a significant reason for delaying care. Nearly 20 percent of beneficiaries without secondary insurance reporting delaying care due to concerns over cost, versus 5 percent of beneficiaries with private secondary insurance. Thus, survey data provide direct evidence that out-of-pocket cost is a mechanism by which secondary insurance increases demand for care.

Second, there was a clear dose-response relationship between depth of insurance coverage and increased spending. Those with first-dollar or nearly first-dollar coverage had much higher spending than others, regardless of secondary insurance status.

Third, only the depth of coverage mattered, not the type of secondary insurance. When a flag for (nearly) first-dollar coverage was included in the regression, the individual types of secondary insurance were no longer statistically significant determinants of spending. Low out-of-pocket cost was a sufficient explanation for all of the observed increase in demand, regardless of the source of the secondary insurance.

This finding of a universal effect of first-dollar coverage regardless of insurance type weakens any alternative explanation based on the specifics of insurance ownership (described below). Ultimately, it did not matter whether beneficiaries chose to purchase coverage or not, or earned coverage as a retirement benefit or not. The only factor that mattered was whether or not their Part B care was free or nearly free. There are two generic counter-arguments that can be used to explain the results of a regression analysis as something other than a causal relationship. The first is omitted variables bias. This is the possibility that some unobserved factors are strongly correlated with insurance and are strong determinants of spending. This could be some unobserved difference in health status, or merely a systematic difference in beneficiaries taste for or preference for health care use. If such factors exist, then the apparent relationship between insurance and spending shown by the regression is merely proxying for these unobserved factors. The second counter-argument is self-selection, for the types of insurance that are individually purchased. If beneficiaries bought secondary coverage in anticipation of having higher spending, then the causality runs from spending causing insurance coverage, and not the other way around.

Unobserved health status differences cannot plausibly explain these results. Any hypothesized health status differences would have to be highly selective and secretive. They would only affect the need for Part B services but not Part A, only require elective care but not emergency care, and would only affect those who have near-first-dollar coverage and not others. Such factors would also have to be undetectable both by physicians (reporting diagnoses used in risk adjustment) and by beneficiaries (in their own self-reported health and functional status). to be strongly correlated with ownership of secondary insurance. That combination is implausible enough that we can reasonably dismiss it from consideration.

Unobserved differences in taste and preference for health care are impossible to rule out as an alternative explanation of the results. It is possible that, on average, beneficiaries who ended up with nearly-complete secondary coverage, regardless of the source of that coverage, had developed a taste for higher levels of health care use prior to becoming eligible for Medicare. Whereas beneficiaries with the same class of coverage, but paying at least 5 percent of costs, did not. We could think of no obvious mechanism that would generate such a strong correlation across all types of secondary coverage. But tastes and preferences are idiosyncratic and unobservable, so there is no obvious data-driven way either to rule that out or to test it as an alternative.

Self-selection as an alternative hypothesis could only apply to individual purchase insurance, not to employer-sponsored coverage. If self-selection is offered as an alternative explanation, it has to be paired with some alternative explanation of higher costs for those with employer-sponsored coverage. Moreover, any self-selection of insurance based on observable factors – observed health status, income, education, or demographics – should largely be accounted for by the regression analysis. For example, any connection between good health and unwillingness to purchase secondary insurance should be captured by the presence of health status measures in the regression analysis.

Finally, we appeal to Occam’s Razor (a principle that generally recommends selecting the competing hypothesis that makes the fewest new assumptions, when the hypotheses are equal in other respects) to argue that the lack of copayment causes the higher spending by those with secondary insurance. On the one hand, one simple explanation – those who receive nearly free care use much more of it – provides a simple, universal explanation for the higher spending by beneficiaries with all types of private secondary insurance. On the other hand, alternative explanations are a hodgepodge of factors that only apply to some types of insurance (self-selection) and unobservable taste and preference factors that (through some unexplained mechanism) apply only to a subset of persons with secondary insurance (those with near-first-dollar coverage). Clearly, lack of copayment is the simpler explanation of what we have observed.

In summary, the evidence is reasonably clear that secondary insurance raises Medicare costs. After eliminating persons with VA use and adjusting for covariates (health, income, education, demographics), beneficiaries with secondary insurance use much more health care than those who have no secondary insurance. The effect is due solely to those with near-first-dollar coverage (defined here as paying less than 5 percent of Part B costs). Beneficiaries without such coverage, by contrast, appear no different from those with no secondary insurance. The differential impact by service type – more on Part B than Part A, more on elective care than emergency care – also suggests that the out-of-pocket cost causes the lower use of care. When asked, beneficiaries themselves say exactly that – those without secondary insurance are far more likely to report having delayed care due to cost. Taken together, this provides a coherent picture that out-of-pocket costs matter significantly to Medicare beneficiaries, and that eliminating those costs raises health care spending.

This analysis does not address whether the increased spending is desirable or undesirable, or whether reduced spending leads to poorer outcomes. That question — whether the value of additional care exceeds its cost – cannot be answered from the analysis of spending data alone, if it can be answered at all. Instead, this analysis merely shows that beneficiaries in fee-for-service Medicare will tend to use much more health care when each additional service is free (to them) than they would if they had to pay a significant portion of the cost of each additional service.

http://www.medpac.gov/documents/Jun09_SecondaryInsurance_CONTRACTOR_RS_REVISED.pdf

Although this excerpt from the 44 page MedPAC report on secondary insurance for Medicare beneficiaries (Medigap, etc.) is more than most people want to read, it really is important because this report is being used to try to expand policies that would reduce the moral hazard of insurance. The theory is that people use too much health care if it is “for free” (no deductibles, copayments, or coinsurance), and that they would access only the care that they really needed if they had to pay for at least a portion of it. Is this theory valid?

Although many proposals to reduce the government component of Medicare spending would do so by transferring government costs to the beneficiaries, this proposal to require cost sharing in Medigap plans is quite different. Since Medigap plans are privately funded, the reduction in premiums due to increases in cost sharing would accrue to the beneficiaries and not to the government. The reduction in government spending occurs only indirectly by not having to pay the government’s share of that care which was not received because of the patients’ own concerns about out-of-pocket costs.

The authors of the MedPAC report do confirm that individuals without supplementary coverage (without Medigap) use less care and therefore cost less. Policymakers using this report seem to be extrapolating the conclusion that eliminating cost sharing creates an increased demand for care that patients can do without, even though the authors clearly state that “this analysis does not address whether the increased spending is desirable or undesirable.” Nevertheless, the authors do seem to demonstrate some bias as they dismiss alternative explanations.

A few observations are warranted:

* Above all, the greater amount of care obtained by those with first dollar coverage cannot be dismissed as being excessive or wasteful. Although predominantly elective, these included preventive services and services that may reduce symptoms and improve quality of life. Preventive services were used only half as often by those with no supplemental coverage compared to those with additional coverage. A health care system should provide affordable access to more than just emergency services.

* Only about 10 percent of Medicare beneficiaries have no supplemental coverage, and it was this group that used fewer services. The authors seem to dismiss the facts that these individuals may not be culturally attuned to freely using the health care system, and many would self-select to not purchase additional coverage. They may decide that premiums for the plans are not worth the cost, or they may simply not like doctors and want to avoid all of the health care that they can.

* The fact that those receiving supplemental plans from their employers used less care than those purchasing their own Medigap plans suggests that the former group was diluted with individuals who would not have purchased plans had their employers not provided them. Again, this suggests that individuals averse to health care and not wanting to pay for it should not be used as the standard for the proper level of care.

* An observation buried in this report is that mortality was higher in those who had no supplemental coverage. Although the authors were not able to explain precisely why, they did state, “In summary, the importance of this finding comes down to a judgment. On the one hand, the finding of excess mortality is based on a single year’s experience, and is inconsistent with the other measures of population health status. On the other hand, it is not explained by demographic or other factors, and it is not obviously an artifact of the methodology used. Finally, excess mortality would be a reasonable outcome from deficiencies of care, for example, from the lack of preventive care for this population.”

* Whether or not increased utilization by those with supplemental coverage provided a medical benefit, the plans clearly provided financial security for users of health care. How could anyone consider that to not be of benefit?

* This report remains silent on the issue of the profound administrative waste in providing plans that supplement the traditional Medicare program. The savings achieved by rolling the benefits of the supplemental plans into Medicare would likely offset much of the cost of services declined because of perceptions of affordability. Of course, once we fix Medicare, we should provide it to everyone.

Blaming our high health care costs on the moral hazard of having free access to health care at the time of need has got to end. Several nations that spend half of what we do nevertheless provide comprehensive health care services with free access. The real moral hazard is not that people might use more health care that they don’t have to pay for at the time of services, the moral hazard we should be concerned about is that people might not get the care that they should have because of financial barriers to that care.

That turns the moral hazard argument upside down, but that’s where it belongs.

For more on cracks in the foundation of moral hazard, citing the work of John Nyman:

https://pnhp.org/news/2007/september/cracks-in-the-moral-hazard-foundation

Dr. Bruce Vladeck on Medicare

Single-payer doctors available to speak on budget talks, Medicare and Medicaid

Media advisory

FOR IMMEDIATE RELEASE
July 15, 2011

Contact:
Mark Almberg, PNHP communications director, (312) 782-6006, mark@pnhp.org

As tense budget negotiations in Washington continue, leaders of Physicians for a National Health Program, an organization of 18,000 doctors who support single-payer national health insurance, are calling upon the White House and Congress to safeguard vital social insurance programs (Medicare, Medicaid and Social Security) while simultaneously calling for a durable fix to the nation’s health care woes: the enactment of an “improved Medicare for all,” a single-payer health system.

The physicians say a national, nonprofit single-payer system, by replacing the private health insurance industry and our current patchwork of public insurance programs with a streamlined, publicly financed social insurance fund, would save $400 billion annually in unnecessary administrative costs – enough to provide quality, comprehensive, first-dollar coverage to the entire population, including the 51 million people who are currently uninsured.

Under an improved Medicare for all, the delivery of care would remain largely private, co-pays and deductibles would be eliminated, and patients would enjoy unrestricted choice of doctor and hospital. The new system would also leverage its bargaining power to control costs over the long haul.

PNHP spokespeople from across the country are available for interview about the proposals for changing Medicare and Medicaid coming from lawmakers on both sides of the aisle, and on the pressing need for a durable, comprehensive and cost-saving single-payer program. Their biographies and photos appear below in alphabetical order. To place a request, please contact Mark Almberg, PNHP communications director, (312) 782-6006 or e-mail mark@pnhp.org.

Garrett Adams, M.D., M.P.H., Louisville, Ky.
Dr. Garrett Adams is president of PNHP. He is a pediatrician specializing in infectious disease and infectious disease epidemiology in Louisville, Ky. He received his undergraduate and master’s degrees from Vanderbilt University and medical degree from Wake Forest University. He completed his residency at Vanderbilt University Hospital and the Children’s Hospital of Los Angeles. He is retired from being a full-time faculty member at the University of Louisville School of Medicine, where he was chief of pediatric infectious diseases. He has also served as medical director of communicable diseases at the Louisville Metro Health Department. Since retiring, he has founded the Beersheba Springs Medical Clinic, a comprehensive ambulatory clinic in the underserved community of Beersheba Springs, Tenn. For 40 years Dr. Adams attended the health care needs of sick children and their young families.

Olveen Carrasquillo, M.D., M.P.H., Miami, Fla.
Dr. Olveen Carrasquillo is a nationally recognized expert on health disparities. He is an associate professor of medicine and chief of the Division of General Internal Medicine at the University of Miami’s Miller School of Medicine. His research interests include minority health, health insurance, managed care and access to care, particularly among Latinos. Prior to his position in Miami, he was on the faculty of Columbia University’s College of Physicians and Surgeons for 12 years and directed their NIH-designated Center of Excellence in Health Disparities Research. Dr. Carrasquillo serves on the Advisory Committee of the HHS Office of Minority Health. He is available for interviews in English and Spanish.

Claudia Fegan, M.D., F.A.C.P., CHCQM, Chicago
Dr. Claudia Fegan is interim chief medical officer at the Cook County Health and Hospitals System and past president of PNHP. An internist who has practice in both private settings and in large public systems, she has lectured extensively to both medical and lay audiences on health care reform across the United States. She is co-author of the book “Universal Health Care: What the United States Can Learn from Canada” and a contributor to another book, “10 Excellent Reasons for National Health Care.” The daughter of labor union organizer and a social worker, Dr. Fegan received her undergraduate degree from Fisk University and her M.D. from the University of Illinois College of Medicine.

Oliver Fein, M.D., New York City
Dr. Oliver Fein is immediate past president of PNHP. A general internist who is active in clinical practice, he is also professor of clinical medicine and clinical public health at Weill Medical College of Cornell University, where he serves as associate dean responsible for the Office of Affiliations and the Office of Global Health Education. Dr. Fein has advocated for an expanded role for primary care, for academic health centers in urban health care delivery systems, and for national health system reform. He was Robert Wood Johnson Health Policy Fellow during 1993-1994, when he worked in the office of Senate Democratic Majority Leader George Mitchell. He spent 17 years at the Columbia Presbyterian Medical Center developing community-based ambulatory care practices and the Division of General Medicine. He is chair of the N.Y. Metro chapter of PNHP and past vice president of the American Public Health Association. Dr. Fein participated in the 2009 White House Summit on Health Reform as a result of public pressure.

Margaret Flowers, M.D., Baltimore
Dr. Margaret Flowers is a Maryland pediatrician with experience as a hospitalist at a rural hospital and in private practice. She is currently serving as a national board advisor for PNHP. In addition to her activity with PNHP, she is a national board member of another national single-payer advocacy group, Healthcare-Now! Dr. Flowers obtained her medical degree from the University of Maryland School of Medicine and did her residency at Johns Hopkins Hospital in Baltimore. She testified before President Obama’s Deficit Commission in 2010, and in June 2009 she testified before the Senate Health, Education, Labor and Pensions Committee. A little more than a month prior to that, she was among those who stood up and spoke in support of putting single payer “on the table” at the May 5 meeting chaired by Sen. Max Baucus of the Senate Finance Committee, leading to her arrest along with seven others.

David Himmelstein, M.D., F.A.C.P., New York City/Boston
Dr. David Himmelstein, a co-founder of PNHP, is professor at the CUNY School of Public Health at Hunter College and visiting professor of medicine at Harvard Medical School. As a practicing internist, he has also served as chief of the division of social and community medicine at Cambridge Hospital in Cambridge, Mass. He co-founded the Center for a National Health Program Studies at Harvard. Dr. Himmelst
ein co-edits PNHP’s newsletter and is a principal author of PNHP articles published in the JAMA and the New England Journal of Medicine. His research focuses on problems in access to care, administrative waste, and the advantages of a national health program. He recently co-authored, with Dr. Steffie Woolhandler and others, a study published in the American Journal of Medicine showing that medical bills and illness are now linked to 62 percent of all personal bankruptcies, with 78 percent of those bankrupted having had insurance when they got sick. In 2009 he testified before the House Subcommittee on Health, Education, Labor and Pensions, one of many occasions where he has spoken before Congress.

Paul Y. Song, M.D., Los Angeles
Dr. Paul Song is a radiation oncologist practicing at St. John’s Health Center in Santa Monica, and he is an adjunct faculty member at the John Wayne Cancer Institute. He has served as an attending physician at Inova Fairfax Hospital, co-chief of the brachytherapy service at the Center for Prostate Disease Research at the Walter Reed Army Medical Center, and as medical director of the Little Company of Mary/University of Chicago radiation oncology department. He was named one of the top doctors in Washington, D.C., by Washingtonian Magazine and Consumer Checkbook in 2002 and 2005. Dr. Song has established successful HDR (breast, prostate, and GYN) and prostate seed brachytherapy, stereotactic radiosurgery, and IMRT programs de novo and has published several articles on the treatment of prostate cancer and brain tumors. Dr. Song graduated with honors from the University of Chicago and received his medical degree from George Washington University. He completed his residency in radiation oncology at the University of Chicago where he also served as chief resident and was honored as an ASTRO research fellow by the American Society for Therapeutic Radiology and Oncology for his research in genetic radiotherapy. Dr. Song was also a visiting brachytherapy fellow at the Institut Gustave Roussy in Villejuif, France.

Steffie Woolhandler, M.D., M.P.H., F.A.C.P., New York City/Boston
Dr. Steffie Woolhandler, a co-founder of PHNP, is professor at the CUNY School of Public Health at Hunter College and visiting professor of medicine at Harvard Medical School. She has served as co-director of Harvard’s General Internal Medicine Fellowship program, and worked for many years as a primary care physician at Cambridge Hospital in Cambridge, Mass. She served in 1990-91 as a Robert Wood Johnson Foundation health policy fellow at the Institute of Medicine and the U.S. Congress. Dr. Woolhandler is a frequent speaker and has written extensively on health policy. She is a principal author of many PNHP articles published in the JAMA, the New England Journal of Medicine and other professional journals. In 2009, she testified before the Health Subcommittee of the House Energy and Commerce Committee and to the House Judiciary Subcommittee on Commercial and Administrative Law about medical causes of bankruptcy. She also co-authored, with Dr. David Himmelstein and others, a recent study in the American Journal of Public Health showing that nearly 45,000 annual deaths are associated with lack of health insurance.

Quentin D. Young, M.D., M.A.C.P., Chicago
Dr. Quentin Young, an internist who recently retired from a decades-long practice in the Hyde Park community on Chicago’s South Side, is national coordinator of PNHP. He is clinical professor of preventive medicine and community health at the University of Illinois Medical Center. Dr. Young graduated from Northwestern Medical School and did his residency at Cook County Hospital in Chicago. During the 1970s and early 1980s, he served as chairman of the Department of Internal Medicine at Cook County, where he established the Department of Occupational Medicine. He has been a member of the American Medical Association since 1952. In addition distinguished career as a physician, Dr. Young has been a leader in public health policy and medical and social justice issues. He was Dr. Martin Luther King Jr.’s personal physician during Dr. King’s stays in Chicago. In 1998, he had the distinction of serving as president of the American Public Health Association and in 1997 was inducted as a master of the American College of Physicians.

Making Medicare beneficiaries pay more

Once politically taboo, proposals to shift more Medicare costs to elderly are gaining traction

By Noam N. Levey
Los Angeles Times, July 15, 2011

The heated debate over the federal deficit has pumped new life into controversial proposals for requiring Americans on Medicare to pay more for their healthcare, raising the possibility that seniors’ medical bills could jump hundreds, or even thousands of dollars.

“Over the long haul, beneficiaries will have to pay more and taxpayers will have to pay more,” warned Henry Aaron, a longtime healthcare expert at the Brookings Institution. “It’s just too darn expensive.”

That could mean higher co-pays, higher deductibles or higher premiums for many seniors.

Though the elderly are much better off financially than they were when Medicare was enacted, half of seniors subsist on incomes below $22,000 a year.

“What many people may not realize is that the Medicare benefit package is not actually very generous,” said Jonathan Oberlander, a University of North Carolina health policy professor who has written extensively about the program’s history.

On top of standard premiums of more than $141 a month, enrollees must pay a $1,132 deductible for every hospital stay, and hundreds of dollars a day more for long hospital stays.

Medicare beneficiaries are also responsible for 20% of the bills for medical equipment such as wheelchairs and non-hospital procedures, such as kidney dialysis, physical therapy or outpatient surgery.

Medicare also doesn’t cover long-term care in nursing homes. And unlike many private health plans, Medicare doesn’t offer catastrophic protection by capping how much beneficiaries have to pay out of pocket every year.

That can mean substantial healthcare tabs for some seniors.

Medicare households on average spent $4,620 on healthcare in 2009, more than twice what non-Medicare households spent, according to the nonprofit Kaiser Family Foundation.

“We will do better if people are more involved in making healthcare choices,” said Gail Wilensky, a health economist who oversaw the Medicare program under President George H.W. Bush. “There are few people who are more price sensitive than seniors.”

How much more seniors can afford to pay continues to stoke intense debate, however, especially as Medicare beneficiaries are already projected to spend as much as quarter of their income on healthcare in 2020, up from around a sixth now.

“Some have the impression that seniors are quite wealthy and could afford more premiums,” said Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation. “The numbers tell a different story.”

A recent Kaiser analysis showed that half of all Medicare beneficiaries have less than $33,100 in retirements account and other savings.

Neuman and others also warn that increasing co-pays and deductibles may discourage seniors from seeking medical care they need.

Brown University researchers, for example, found that seniors went to the doctor less frequently after their Medicare managed care plans raised co-pays for outpatient visits. At the same time, they ended up spending more time in the hospital.

Because hospital care is so much more expensive, that probably ended up costing Medicare more than the program saved by paying for fewer doctor visits, while also leaving seniors sicker, said Dr. Amal Trivedi, the lead author of the study.

“Policymakers should be very sensitive to adverse and unexpected consequence of increased cost-sharing,” Trivedi warned. “It can be a lose-lose proposition.”

http://www.latimes.com/health/sc-dc-0715-medicare-costs-20110715,0,2124812,full.story

And…

Press Conference by the President

The White House
July 15, 2011

President Barack Obama: So with that, let me see who’s on the list. We’re going to start with Jake Tapper.

Q: Thank you, Mr. President. You’ve said that reducing the deficit will require shared sacrifice. We know — we have an idea of the taxes that you would like to see raised on corporations and on Americans in the top two tax brackets, but we don’t yet know what you specifically are willing to do when it comes to entitlement spending. In the interest of transparency, leadership, and also showing the American people that you have been negotiating in good faith, can you tell us one structural reform that you are willing to make to one of these entitlement programs that would have a major impact on the deficit? Would you be willing to raise the retirement age? Would you be willing to means test Social Security or Medicare?

THE PRESIDENT: We’ve said that we are willing to look at all those approaches. I’ve laid out some criteria in terms of what would be acceptable. So, for example, I’ve said very clearly that we should make sure that current beneficiaries as much as possible are not affected. But we should look at what can we do in the out-years, so that over time some of these programs are more sustainable.

I’ve said that means testing on Medicare, meaning people like myself, if — I’m going to be turning 50 in a week. So I’m starting to think a little bit more about Medicare eligibility. (Laughter.) Yes, I’m going to get my AARP card soon — and the discounts.

But you can envision a situation where for somebody in my position, me having to pay a little bit more on premiums or co-pays or things like that would be appropriate. And, again, that could make a difference. So we’ve been very clear about where we’re willing to go.

What we’re not willing to do is to restructure the program in the ways that we’ve seen coming out of the House over the last several months where we would voucherize the program and you potentially have senior citizens paying $6,000 more. I view Social Security and Medicare as the most important social safety nets that we have. I think it is important for them to remain as social insurance programs that give people some certainty and reliability in their golden years.

But it turns out that making some modest modifications in those entitlements can save you trillions of dollars. And it’s not necessary to completely revamp the program. What is necessary is to say how do we make some modifications, including, by the way, on the providers’ side. I think that it’s important for us to keep in mind that drug companies, for example, are still doing very well through the Medicare program. And although we have made drugs more available at a cheaper price to seniors who are in Medicare through the Affordable Care Act, there’s more work to potentially be done there.

So if you look at a balanced package even within the entitlement programs, it turns out that you can save trillions of dollars while maintaining the core integrity of the program.

Q: And the retirement age?

THE PRESIDENT: I’m not going to get into specifics. As I said, Jake, everything that you mentioned are things that we have discussed. But what I’m not going to do is to ask for even — well, let me put it this way: If you’re a senior citizen, and a modification potentially costs you a hundred or two hundred bucks a year more, or even if it’s not affecting current beneficiaries, somebody who’s 40 today 20 years from no
w is going to end up having to pay a little bit more.

The least I can do is to say that people who are making a million dollars or more have to do something as well. And that’s the kind of tradeoff, that’s the kind of balanced approach and shared sacrifice that I think most Americans agree needs to happen.

Q: Thank you.

http://www.whitehouse.gov/the-press-office/2011/07/15/press-conference-president

Comment:

By Don McCanne, MD

The facts are clear. Medicare is an inadequate program, driving most beneficiaries to purchase supplemental coverage, or to rely on supplemental retirement benefits provided by their prior employment, or to switch to Medicare Advantage plans. Also, instead of advocating for patching the deficiencies in Medicare, our Washington politicians are supporting policies that would move more of the costs to Medicare beneficiaries themselves. With median incomes of only $22,000 and median savings and retirement accounts of only $33,100, the average Medicare population would be further burdened financially.

Let’s look at two of the policies that President Obama supported in his press conference today: 1) “we should make sure that current beneficiaries as much as possible are not affected, but we should look at what can we do in the out-years, so that over time some of these programs are more sustainable,” and 2) we should require higher income Medicare beneficiaries to pay “more on premiums or co-pays or things like that.”

Making Medicare “more sustainable” for future beneficiaries means reducing government spending on this already inadequate program. That reduction comes at the cost of forcing increased spending by the beneficiaries. We should be going in the opposite direction. We should be rolling the benefits of the supplemental plans into the traditional Medicare program. Since that would eliminate the administrative waste of these programs, it would actually reduce total spending on health care, even if more of the costs are shifted to the government program. The decrease in out-of-pocket costs would be greater than the increase in government spending.

Since health care costs are now so high, it is very reasonable to expect higher income individuals to pay more for Medicare, but how should we do that? If we start means-testing the deductibles and coinsurance, we create an administratively complex system that would test the fortitude of patients, providers, and the IRS. Instead, we should be eliminating deductibles and coinsurance. Other nations have demonstrated that reducing “moral hazard” through cost sharing is unnecessary since their costs are much lower than ours even though they have first dollar coverage.

Should premiums be means tested? Requiring wealthier individuals to pay significantly higher premiums would motivate them to look for other private options for health care. Without the political support of the wealthy, Medicare would become another underfunded welfare program. It would be like Medicaid except with skimpier benefits, greater out-of-pocket costs, and a greater lack of willing providers.

Instead of means tested Medicare premiums, we should totally eliminate the premiums and fully fund Medicare through progressive taxes. Separating the financing totally from the payment system allows us to “means test” the contribution to the program without having any negative impact on access for anyone, regardless of personal financial resources.

What is sad is that this diversion into defending Medicare as it is, with all of its deficiencies, has kept the national dialogue from moving into the conversation that we need to have – fixing Medicare and providing it for all of us. In the meantime, Washington burnishes its reputation of being the nation’s prime source of bad ideas, and we live with the consequences.

Making Medicare beneficiaries pay more

Once politically taboo, proposals to shift more Medicare costs to elderly are gaining traction

By Noam N. Levey
Los Angeles Times, July 15, 2011

The heated debate over the federal deficit has pumped new life into controversial proposals for requiring Americans on Medicare to pay more for their healthcare, raising the possibility that seniors’ medical bills could jump hundreds, or even thousands of dollars.

“Over the long haul, beneficiaries will have to pay more and taxpayers will have to pay more,” warned Henry Aaron, a longtime healthcare expert at the Brookings Institution. “It’s just too darn expensive.”

That could mean higher co-pays, higher deductibles or higher premiums for many seniors.

Though the elderly are much better off financially than they were when Medicare was enacted, half of seniors subsist on incomes below $22,000 a year.

“What many people may not realize is that the Medicare benefit package is not actually very generous,” said Jonathan Oberlander, a University of North Carolina health policy professor who has written extensively about the program’s history.

On top of standard premiums of more than $141 a month, enrollees must pay a $1,132 deductible for every hospital stay, and hundreds of dollars a day more for long hospital stays.

Medicare beneficiaries are also responsible for 20% of the bills for medical equipment such as wheelchairs and non-hospital procedures, such as kidney dialysis, physical therapy or outpatient surgery.

Medicare also doesn’t cover long-term care in nursing homes. And unlike many private health plans, Medicare doesn’t offer catastrophic protection by capping how much beneficiaries have to pay out of pocket every year.

That can mean substantial healthcare tabs for some seniors.

Medicare households on average spent $4,620 on healthcare in 2009, more than twice what non-Medicare households spent, according to the nonprofit Kaiser Family Foundation.

“We will do better if people are more involved in making healthcare choices,” said Gail Wilensky, a health economist who oversaw the Medicare program under President George H.W. Bush. “There are few people who are more price sensitive than seniors.”

How much more seniors can afford to pay continues to stoke intense debate, however, especially as Medicare beneficiaries are already projected to spend as much as quarter of their income on healthcare in 2020, up from around a sixth now.

“Some have the impression that seniors are quite wealthy and could afford more premiums,” said Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation. “The numbers tell a different story.”

A recent Kaiser analysis showed that half of all Medicare beneficiaries have less than $33,100 in retirements account and other savings.

Neuman and others also warn that increasing co-pays and deductibles may discourage seniors from seeking medical care they need.

Brown University researchers, for example, found that seniors went to the doctor less frequently after their Medicare managed care plans raised co-pays for outpatient visits. At the same time, they ended up spending more time in the hospital.

Because hospital care is so much more expensive, that probably ended up costing Medicare more than the program saved by paying for fewer doctor visits, while also leaving seniors sicker, said Dr. Amal Trivedi, the lead author of the study.

“Policymakers should be very sensitive to adverse and unexpected consequence of increased cost-sharing,” Trivedi warned. “It can be a lose-lose proposition.”

http://www.latimes.com/health/sc-dc-0715-medicare-costs-20110715,0,2124812,full.story

And…

Press Conference by the President

The White House
July 15, 2011

President Barack Obama: So with that, let me see who’s on the list. We’re going to start with Jake Tapper.

Q: Thank you, Mr. President. You’ve said that reducing the deficit will require shared sacrifice. We know — we have an idea of the taxes that you would like to see raised on corporations and on Americans in the top two tax brackets, but we don’t yet know what you specifically are willing to do when it comes to entitlement spending. In the interest of transparency, leadership, and also showing the American people that you have been negotiating in good faith, can you tell us one structural reform that you are willing to make to one of these entitlement programs that would have a major impact on the deficit? Would you be willing to raise the retirement age? Would you be willing to means test Social Security or Medicare?

THE PRESIDENT: We’ve said that we are willing to look at all those approaches. I’ve laid out some criteria in terms of what would be acceptable. So, for example, I’ve said very clearly that we should make sure that current beneficiaries as much as possible are not affected. But we should look at what can we do in the out-years, so that over time some of these programs are more sustainable.

I’ve said that means testing on Medicare, meaning people like myself, if — I’m going to be turning 50 in a week. So I’m starting to think a little bit more about Medicare eligibility. (Laughter.) Yes, I’m going to get my AARP card soon — and the discounts.

But you can envision a situation where for somebody in my position, me having to pay a little bit more on premiums or co-pays or things like that would be appropriate. And, again, that could make a difference. So we’ve been very clear about where we’re willing to go.

What we’re not willing to do is to restructure the program in the ways that we’ve seen coming out of the House over the last several months where we would voucherize the program and you potentially have senior citizens paying $6,000 more. I view Social Security and Medicare as the most important social safety nets that we have. I think it is important for them to remain as social insurance programs that give people some certainty and reliability in their golden years.

But it turns out that making some modest modifications in those entitlements can save you trillions of dollars. And it’s not necessary to completely revamp the program. What is necessary is to say how do we make some modifications, including, by the way, on the providers’ side. I think that it’s important for us to keep in mind that drug companies, for example, are still doing very well through the Medicare program. And although we have made drugs more available at a cheaper price to seniors who are in Medicare through the Affordable Care Act, there’s more work to potentially be done there.

So if you look at a balanced package even within the entitlement programs, it turns out that you can save trillions of dollars while maintaining the core integrity of the program.

Q: And the retirement age?

THE PRESIDENT: I’m not going to get into specifics. As I said, Jake, everything that you mentioned are things that we have discussed. But what I’m not going to do is to ask for even — well, let me put it this way: If you’re a senior citizen, and a modification potentially costs you a hundred or two hundred bucks a year more, or even if it’s not affecting current beneficiaries, somebody who’s 40 today 20 years from now is going to end up having to pay a little bit more.

The least I can do is to say that people who are making a million dollars or more have to do something as well. And that’s the kind of tradeoff, that’s the kind of balanced approach and shared sacrifice that I think most Americans agree needs to happen.

Q: Thank you.

http://www.whitehouse.gov/the-press-office/2011/07/15/press-conference-president

Insurance exchanges tilted toward health insurers, not consumers

A Rocky Mountain outrage: Colorado governor, legislators give regular folks short shrift in choice of board members

By Wendell Potter
iWatch News, Center for Public Integrity, July 13, 2011

The insurance industry made it abundantly clear this week that it is in the driver’s seat — in both Washington and state capitals — of one of the most important vehicles created by Congress to reform the U.S. health care system.

The Affordable Care Act requires the states to create new marketplaces — “exchanges”— where individuals and small businesses can shop for health insurance. In the 15 months since the law took effect, insurers have lobbied the Obama administration relentlessly to give states the broadest possible latitude in setting up their exchanges. And those insurance companies have been equally relentless at the state level in making sure governors and legislators follow their orders in determining how the exchanges will be operated.

When Health and Human Services Secretary Kathleen Sebelius announced the proposed federal rules governing the exchanges on Monday, insurance executives must have been doing high fives all over the country.

Insurers had several main objectives. First, they did not want the feds to require states to negotiate with health plans on price and benefit design. And they did not want plans that failed to meet certain criteria to be excluded from the exchanges. Insurers did want the states to feel free to appoint people with ties to the industry to run the exchanges.

Consumer advocates didn’t think they had much of a chance of denying insurers their first two wishes. But they hoped HHS would at least agree that allowing health insurance executives to serve on exchange boards would create a ‘foxes-guarding-the hen-house’ disaster that lawmakers never intended.

Nowhere are consumer groups more dismayed by the Obama administration’s proposed rules than in Colorado, where lawmakers passed a bill that explicitly prohibits the state exchange from negotiating with health plans and where the governor and legislators have just packed the exchange board with industry executives and allies.

I can’t say I’m surprised with most of these developments. During a visit to Denver in March, I heard a member of one of the legislative committees that helped draft the bill say at a public forum that Colorado’s exchange should offer the state’s residents “bad choices as well as good ones.” The state had no obligation, in her view, to inspect all the apples in the health insurance barrel and throw out the bad ones.

A majority of her colleagues agreed with her. As the bill worked its way through the legislature, free market ideology trumped the real world need to protect the state’s residents from unscrupulous and profit-motivated insurers.

I was surprised, though, when Gov. John Hickenlooper, a Democrat, joined Republican legislators in appointing industry executives to the exchange board. Hickenlooper got to appoint five of the nine board members, and several of his appointees, actually, tilted the board solidly in favor of insurers.

Five of the nine board members appointed by the governor and legislative leaders have either direct or indirect ties to the industry. Of the other four, one is an accountant and another is a doctor who has been a vocal critic of health care reform and the very idea of state exchanges. (As you might guess, he was appointed by a Republican, Senate Minority Leader Mike Kopp, who also was opposed to creating a state exchange.) Only two of the nine have been active proponents of reform and champions of consumer interests.

What is especially dismaying to Colorado consumer advocates is that Hickenlooper seems to have bought — hook, line and sinker — industry claims that the exchanges couldn’t possibly meet the needs of consumers if insurance company executives don’t hold seats on exchange boards, that only by having insurers on the board can consumers be assured of “choice and competition.”

In every state that has taken up legislation to create exchanges so far, insurance executives have said that no one could possibly know the marketplace and the needs of consumers better than they do.

That’s nonsense, and I suspect Hickenlooper knows it. It’s hard to believe that in all of Colorado, he couldn’t find qualified candidates who understand commercial health insurance to balance industry executives with obvious conflicts of interest. I know from my years in the industry that insurers will protect their market share at all costs, that what they consider competition is competition among existing players and that the choices they want consumers to have are the choices they decide to offer. What are the chances that the industry-dominated Colorado exchange board will allow a new insurer to get a toehold in the market? Not much, I’d bet.

Colorado has many fine colleges and universities with faculty members who have deep knowledge of health insurance and health policy. Surely at least one or two of them would have been willing to serve on the exchange board.

And what about former state insurance regulators? Few people know the industry and individual companies as well as they do. I got to know and respect Colorado’s former insurance commissioner, Marcy Morrison, when I served as a consumer representative to the National Association of Insurance Commissioners last year. If I were Hickenlooper, I would have begged and pleaded Morrison to serve on the board.

Hickenlooper could have ensured that the board tilted more toward consumers than insurers. Instead, three of his appointees have industry ties. One is the CEO of Anthem Blue Cross, another is CEO of United Healthcare of Colorado and one is vice president of TriZetto, an information technology company that serves some of those insurers and has two insurance company executives on its own board of directors. (Other members appointed by legislative leaders include the president of Rocky Mountain Health Plans and the executive director of Colorado Health Partnerships.)

At least two consumer groups in the state have called on the TriZetto executive to resign, in part because of what he wrote in a trade publication about how the exchanges would affect insurance business practices and profit margins. He wrote that exchanges would be “bad” because they would be “competitive marketplaces where payers will have to differentiate themselves based on brand, price, customer service and more — all while cutting costs and increasing efficiencies.”

One can’t help but wonder what the governor was thinking — if he was thinking at all about the best interests of his constituents — when he appointed someone to the board who had written just a few months ago that all of that would be bad. Hello, Governor, that’s exactly what the exchanges are supposed to do.

Lorenz Meinhold, Hickenlooper’s deputy policy director who helped review and recommend candidates for the board, was quoted recently as saying that all of the board members “had made a commitment to creating an exchange that will increase affordability of, access to and quality of health care while increasing competition in the market.”

Of course they made that commitment. Foxes don’t get jobs as henhouse guards by revealing their true intentions.

Wendell Potter is senior analyst at the Center for Public Integrity.

http://www.iwatchnews.org/2011/07/14/5220/analysis-insurance-exchanges-tilted-toward-health-insurers-not-consumers

Birthday wishes for a better Medicare

By Susanne L. King, M.D.
The Berkshire Eagle (Lenox, Mass.), July 13, 2011

Celebrating 46 years this month, Medicare continues to pay for the health care of 47 million Americans. Medicare has improved the health of our seniors, reduced their risk of poverty, and improved the financial security of their families.

Unfortunately, there are those who would like to “cut Medicare” by raising the age of eligibility, or by increasing the co-pays and deductibles of beneficiaries. Rep. Paul Ryan (R-Wisconsin) even proposed ending the Medicare program, replacing it with a system of vouchers to buy private insurance. The vouchers would decline in value over time, leaving seniors with increased financial hardship when they became ill.

The current Medicare program does have its funding problems that need to be addressed, but Medicare is the victim of skyrocketing health care costs, not the cause. As the past director of Medicare and Medicaid programs, Bruce Vladeck, said recently, “the current so-called crisis is in fact an artifact of broader problems with the federal budget and budgetary politics and should not be used as an excuse to dismantle one of the most important programs the federal government has ever operated, or to renege on the commitment this government has made to generations of working people as it has collected taxes from them.” He goes on to say that we are not having a “Medicare crisis” but rather, a “revenue crisis,” with federal revenues at a much lower percentage of the gross domestic product (GDP) than in 1999, when we had a balanced budget rather than a deficit.

How can Medicare be improved and strengthened? The financial integrity of the program could be stabilized by an upturn in the general economy, by additional federal appropriations from general tax revenues, or by increasing the payroll tax by a small fraction of a percent (the last system-wide adjustment was in 1985). In addition, money could be saved by allowing Medicare to negotiate drug prices with pharmaceutical companies, and by stopping the current practice of paying private Medicare plans more than traditional Medicare.

However, to reap maximum health benefits and cost savings, Medicare should be improved and expanded to include everyone. Rather than providing coverage only for the elderly and disabled who have the highest medical costs, the program would be strengthened if Medicare coverage included the young and healthy.

In our current system, private insurance companies cover younger, healthier workers and their families, screen out the sick, and deny care for people who become sick. At the same time, private insurers reap obscene profits and afflict our health care system with mountains of paperwork and unnecessary administrative costs, which devour 31 percent of our health care dollars. Private insurance companies also pay multimillion-dollar salaries to their CEOs, who continue to dream up new ways to game the health care system and increase profits.

First quarter earnings for all major health insurance companies were up this year. United Health Group’s profit during the first three months of 2011 rose 13 percent to $1.35 billion, from $1.19 billion last year, and the company’s CEO, Stephen Helmsley, was at the top of Forbes 2011 Executive Pay List. His total compensation of $101.96 million last year made him the highest paid corporate executive in the United States. To make this kind of money, insurance companies have to spend far less paying their policyholders’ medical claims than anyone thought possible. In contrast, the administrative overhead for Medicare is less than 3 percent, because there are no CEO salaries, no shareholder profits, and no marketing campaigns.

The bottom line for private insurance companies is their profit. The bottom line for patients, health care providers, and our society is medical coverage to care for everyone, in a cost-effective manner. The way to do this is not to cut Medicare, but to eliminate private insurance companies. The solution to our health care crisis is to establish a national “improved Medicare for all,” publicly financed but privately delivered, a single-payer health care program for everyone in our country. Unfortunately President Obama’s new health care law builds on the faulty foundation of private insurance companies.

The numerous benefits of a national “improved Medicare for all” would include:

* Universal, comprehensive coverage, with no co-pays or deductibles. Everyone would be covered, and coverage would no longer be tied to a job.

* Freedom to choose doctors and hospitals.

* $400 billion in savings by eliminating the administrative waste of the private insurance industry.

* Medicare’s negotiation for decreased prices for drugs and other medical supplies.

* Savings from the use of global budgets for health facilities.

* Elimination of personal bankruptcy due to medical expenses.

* Improved health and productivity of workers, because they have access to health care they can afford.

* Stimulation of the economy, because families would have more money to spend.

* Elimination of the onerous administrative burdens of doctors, thereby freeing them to see more patients.

* Relief for small businesses and towns, who would no longer have to pay for health insurance for their employees.

Legislation exists in Congress to establish this single payer program, the Extended and Improved Medicare for All Act, H.R.676. Pass this bill and everyone can celebrate, while saving enough money to provide every American with health insurance coverage.

Susanne L. King, M.D., is a Lenox-based practitioner.

http://www.berkshireeagle.com/otheropinions/ci_18465922

Health insurers' errors wasting billions

By Dave Zweifel, Cap Times editor emeritus
The Capital Times (Madison, Wis.), July 13, 2011

The American Medical Association, the organization that represents most of the nation’s doctors, claimed at its recent convention in Chicago that health insurance companies are inaccurately processing nearly one in five medical claims.

In its annual report on the health insurance industry, the AMA reported that commercial insurance companies had an error rate of 19.3 percent in 2010, 2 percent higher than the year before.

Dr. Barbara McAneny, a member of the AMA board of directors, said the error rate “represents an intolerable level of inefficiency that wastes $17 billion annually.”

“Health insurers must put more effort into paying claims correctly the first time to save precious health care dollars and reduce unnecessary administrative tasks that take time and resources away from patient care,” she added.

These commercial health insurers, it should be noted, are the very people who Rep. Paul Ryan and some of his Republican colleagues in Congress insist ought to be handling Medicare a few years from now.

Somehow, Ryan and his allies deduce that letting private insurers into the Medicare business would save money. That’s a strange notion since private insurers spend as much as 20 percent on administrative costs while the government-run Medicare program has overhead costs of from 2 to 3 percent. Perhaps Ryan’s voucher plan would somehow save the government money, but it would shift those costs onto the country’s senior citizens, those in most need of medical care.

Indeed, it’s the United States’ multilayered and convoluted health care system that has American citizens and the companies they work for spending roughly double the amount it costs most countries in the free world. Yet Congress refuses to come to grips with the problem, yielding to the lobbying and campaign contributions by the health industry, whose only interest is protecting the status quo.

Congress won’t even discuss a single-payer system that, in effect, would expand Medicare to everyone, from birth to death, a system that Canada, England, Germany and countless others have been using for years. Instead, we wind up about once a decade tweaking a system that already is unwieldy and confusing and making little gains in covering uninsured Americans and harnessing the skyrocketing costs of American health care.

Yes, the Medicare payroll tax would need to be increased, but the savings for both individuals and companies, who would no longer need to pay the premiums and administer their own health care plans, would far exceed those costs. Although President Obama’s new health care reform is a step forward, it still is confusing and the savings won’t be anywhere close to what a true single-payer system would generate.

The state of Vermont recently became the first state to pass a universal single-payer plan, which will be phased in over the next few years. The state will pool its Medicaid funds with other state resources to provide health coverage to every Vermonter. Harvard economist William Hsiao predicts that the Vermont plan will produce savings of 24.3 percent of total health care expenditures between 2015 and 2024.

Perhaps the rest of the country will learn from Vermont just as the country of Canada learned from Saskatchewan, which started its own single-payer plan years ago and the rest of the provinces followed suit when they found it worked.

If our politicians truly want to reduce health care costs for both working people and the companies that employ them, they’d begin a debate on how the United States could offer all its citizens a single-payer plan that is fair to all.

Instead, we’re debating how to reduce Medicare coverage for our seniors and, at the same time, directing more taxpayer money to the sector most responsible for already out-of-control health care costs.

Dave Zweifel is editor emeritus of The Capital Times.

How would Walmart cover part time, seasonal and other short term employees?

Employers Lobby to Weaken Insurance Mandate

By Janet Adamy
The Wall Street Journal, July 13, 2011

It is three years before most of the new health-care law kicks in, but already some of America’s largest employers are peppering the Internal Revenue Service with concerns that making the changes will be far more complex than they anticipated.

At issue is one of the law’s central requirements: employers with 50 or more full-time workers must offer affordable insurance or pay a penalty. It sounds simple enough. But in crafting the rules, the IRS and two other federal agencies are now tackling basic yet messy questions, such as who counts as a full-time worker and how do companies measure whether insurance is “affordable.”

Retailers, restaurants and other companies that rely on seasonal, temporary and other workers with flexible schedules, say it’s hard to figure out who is a full-time worker. That could cause the employer to enroll and drop them from coverage, potentially churning them through new state-run insurance exchanges or the Medicaid federal-state program for the poor, as their hours fluctuated.

Census Bureau data shows that six million, or 5.6% of private-sector employees, work variable hours.

The debate centers on how federal agencies define a full-time worker. The law itself, signed by President Barack Obama in March 2010, defines a full-time employee as one who works at least 30 hours per week on average in a given month.

Once classified as a full-time worker, the employer is obligated to provide affordable health care or pay a penalty of $2,000 per worker, excluding the first 30 workers.

In response, the IRS in May floated the idea of giving employers a “look-back” period of between three and 12 months to determine whether certain workers met the full-time definition. Only then, if the employee hit the target, would the employer have to start providing insurance or pay the penalty.

Meanwhile, employers cheered the idea and are pressing the IRS to go further. An umbrella group called Employers for Flexibility in Health Care, which represents at least four dozen big employers and trade groups, last month asked the IRS to ensure that all part-time, temporary and seasonal hires wait up to 12 months, plus an additional 90-day waiting period, before they qualify for insurance.

In one of more than 200 submissions made recently to the IRS, Wal-Mart Stores Inc., Gap Inc., United Parcel Service Inc., Hilton Worldwide Inc. and others have pushed for a lengthy grace period that could stave off penalties for a year or more after certain workers are hired. The result could undermine some of the law’s intent to insure those who can’t afford coverage.

http://online.wsj.com/article/SB10001424052702304584404576440093426726656.html

And…

Letter

June 17, 2011
From: Employers for Flexibility in Health Care
To: Internal Revenue Service

RE: Request for Comments on Shared Responsibility for Employers Regarding Health Coverage (IRC §4980H, as created by PPACA §1513)

(excerpt)

A. Definition of Full-time Employee Under the “Look-back” Methodology

1. Employers should be granted flexibility to utilize the lookback period for new parttime, temporary, and seasonal hires. Of primary importance to employers with variable workforces is the treatment of new and newly eligible employees, as our workforce fluctuates on an ongoing basis throughout a given year with new employees entering our systems sometimes on a daily basis. Notice 2011-36 indicates that the Department is considering applying the proposed safe harbor “only in a limited form” for such employees. A limited application for newly hired employees would be extremely problematic for employers with variable workforces. Employers with variable workforces must be able to utilize the look-back period primarily in the first year of an employee’s service to determine whether the employee has worked sufficient hours to reach full-time status and become eligible for the employer’s health plan. In many cases in our industries, employees may choose to leave before completing one year of service. In addition, under the individual mandate in 2014, these employees may be receiving coverage through other sources (e.g., Exchange, Medicaid, dependent or parent coverage). Because these employees may be in the middle of a plan year for other coverage and do not want to lose their annual benefits (i.e., restart their annual deductible or out of pocket maximum), they may choose to retain that coverage rather than enroll in the employer plan in the first year of service.

Employers should have the flexibility to choose the length of the look-back period ranging from 3 to 12 months depending on the nature of their business and their workforce.

For employers offering health plans, the 90-day wait period would begin once an employee’s eligibility for the employer plan is established.

Utilizing this form of a lookback not only allows for a longer measuring period, but also a longer stability period to reduce churn between employer and Exchange coverage. Not applying the look-back period to new parttime, temporary and seasonal employees would be a strong deterrent to employers’ giving employees the opportunity to work more than 30 hours per week on average and employing seasonal workers beyond 90 days.

C. Maintaining the Employment Connection During the Stability Period

The Notice states that if an employee is determined to be full time during the lookback period, then the employee would be treated as a full-time employee during a subsequent stability period, regardless of the number of the employee’s hours of service during the stability period, so long as he or she “remained an employee.”

The Coalition recommends that employees maintain a connection with an employer and meet a minimum work threshold during the stability period. This is particularly important for employers with large numbers of parttime, temporary, or seasonal workers whose hours and patterns of work fluctuate considerably.

D. Penalties

1) Penalties should not apply during any lookback or wait periods.

2) Seasonal employees should not be included in the total number of fulltime employee for purposes of calculating employer tax liability.

For full 10 page letter, including signers, click on this link:

http://www.restaurant.org/pdfs/advocacy/20110617_EFHC-Re_Notice2011-36-FINAL.pdf

Comment:

By Don McCanne, MD

When supposedly the intent of the health reform legislation was to try to provide health insurance for everyone (well, not quite), it is particularly disconcerting to see large employers such as Walmart, Gap, United Parcel Service, Hilton, and even health insurer Aetna propose rules that would relieve them of the requirement to cover as many as half or even more of their employees. But these employers do have a point. Is it reasonable for them to provide health benefits for a highly unstable workforce that works seasonally, part time, or temporarily, especially when that turnover creates instability and fragmentation in the employees’ health care coverage?

Although Walmart has been a favorite whipping boy for the health justice community, should Walmart alone really bear that much of the blame? As long as we have a system that is dependent on a patchwork of private health plans, public programs, and no programs at all, no matter how much Walmart tries, their employees cannot possibly be assured of having stable, comprehensive coverage throughout their pre-Medicare years.
We should dismiss Walmart (and all other employers) as the keeper of health insurance (while encouraging them to apply the savings toward living wages). But to do that, we need to end our fragmentation of coverage and care by establishing a single, comprehensive health program that will include everyone – from birth, throughout life – through an improved Medicare for all.

I mean… look back over a year of employment? … and then start another three month waiting period before eligibility is established? … and then find that this “associate” is no longer employed? (Check… more bucks for the Walton family.) Come on!

How would Walmart cover part time, seasonal and other short term employees?

Employers Lobby to Weaken Insurance Mandate

By Janet Adamy
The Wall Street Journal, July 13, 2011

It is three years before most of the new health-care law kicks in, but already some of America’s largest employers are peppering the Internal Revenue Service with concerns that making the changes will be far more complex than they anticipated.

At issue is one of the law’s central requirements: employers with 50 or more full-time workers must offer affordable insurance or pay a penalty. It sounds simple enough. But in crafting the rules, the IRS and two other federal agencies are now tackling basic yet messy questions, such as who counts as a full-time worker and how do companies measure whether insurance is “affordable.”

Retailers, restaurants and other companies that rely on seasonal, temporary and other workers with flexible schedules, say it’s hard to figure out who is a full-time worker. That could cause the employer to enroll and drop them from coverage, potentially churning them through new state-run insurance exchanges or the Medicaid federal-state program for the poor, as their hours fluctuated.

Census Bureau data shows that six million, or 5.6% of private-sector employees, work variable hours.

The debate centers on how federal agencies define a full-time worker. The law itself, signed by President Barack Obama in March 2010, defines a full-time employee as one who works at least 30 hours per week on average in a given month.

Once classified as a full-time worker, the employer is obligated to provide affordable health care or pay a penalty of $2,000 per worker, excluding the first 30 workers.

In response, the IRS in May floated the idea of giving employers a “look-back” period of between three and 12 months to determine whether certain workers met the full-time definition. Only then, if the employee hit the target, would the employer have to start providing insurance or pay the penalty.

Meanwhile, employers cheered the idea and are pressing the IRS to go further. An umbrella group called Employers for Flexibility in Health Care, which represents at least four dozen big employers and trade groups, last month asked the IRS to ensure that all part-time, temporary and seasonal hires wait up to 12 months, plus an additional 90-day waiting period, before they qualify for insurance.

In one of more than 200 submissions made recently to the IRS, Wal-Mart Stores Inc., Gap Inc., United Parcel Service Inc., Hilton Worldwide Inc. and others have pushed for a lengthy grace period that could stave off penalties for a year or more after certain workers are hired. The result could undermine some of the law’s intent to insure those who can’t afford coverage.

http://online.wsj.com/article/SB10001424052702304584404576440093426726656.html

And…

Letter

June 17, 2011
From: Employers for Flexibility in Health Care
To: Internal Revenue Service

RE: Request for Comments on Shared Responsibility for Employers Regarding Health Coverage (IRC §4980H, as created by PPACA §1513)

(excerpt)

A. Definition of Full-time Employee Under the “Look-back” Methodology

1. Employers should be granted flexibility to utilize the lookback period for new parttime, temporary, and seasonal hires. Of primary importance to employers with variable workforces is the treatment of new and newly eligible employees, as our workforce fluctuates on an ongoing basis throughout a given year with new employees entering our systems sometimes on a daily basis. Notice 2011-36 indicates that the Department is considering applying the proposed safe harbor “only in a limited form” for such employees. A limited application for newly hired employees would be extremely problematic for employers with variable workforces. Employers with variable workforces must be able to utilize the look-back period primarily in the first year of an employee’s service to determine whether the employee has worked sufficient hours to reach full-time status and become eligible for the employer’s health plan. In many cases in our industries, employees may choose to leave before completing one year of service. In addition, under the individual mandate in 2014, these employees may be receiving coverage through other sources (e.g., Exchange, Medicaid, dependent or parent coverage). Because these employees may be in the middle of a plan year for other coverage and do not want to lose their annual benefits (i.e., restart their annual deductible or out of pocket maximum), they may choose to retain that coverage rather than enroll in the employer plan in the first year of service.

Employers should have the flexibility to choose the length of the look-back period ranging from 3 to 12 months depending on the nature of their business and their workforce.

For employers offering health plans, the 90-day wait period would begin once an employee’s eligibility for the employer plan is established.

Utilizing this form of a lookback not only allows for a longer measuring period, but also a longer stability period to reduce churn between employer and Exchange coverage. Not applying the look-back period to new parttime, temporary and seasonal employees would be a strong deterrent to employers’ giving employees the opportunity to work more than 30 hours per week on average and employing seasonal workers beyond 90 days.

C. Maintaining the Employment Connection During the Stability Period

The Notice states that if an employee is determined to be full time during the lookback period, then the employee would be treated as a full-time employee during a subsequent stability period, regardless of the number of the employee’s hours of service during the stability period, so long as he or she “remained an employee.”

The Coalition recommends that employees maintain a connection with an employer and meet a minimum work threshold during the stability period. This is particularly important for employers with large numbers of parttime, temporary, or seasonal workers whose hours and patterns of work fluctuate considerably.

D. Penalties

1) Penalties should not apply during any lookback or wait periods.

2) Seasonal employees should not be included in the total number of fulltime employee for purposes of calculating employer tax liability.

For full 10 page letter, including signers, click on this link:

http://www.restaurant.org/pdfs/advocacy/20110617_EFHC-Re_Notice2011-36-FINAL.pdf

When supposedly the intent of the health reform legislation was to try to provide health insurance for everyone (well, not quite), it is particularly disconcerting to see large employers such as Walmart, Gap, United Parcel Service, Hilton, and even health insurer Aetna propose rules that would relieve them of the requirement to cover as many as half or even more of their employees. But these employers do have a point. Is it reasonable for them to provide health benefits for a highly unstable workforce that works seasonally, part time, or temporarily, especially when that turnover creates instability and fragmentation in the employees’ health care coverage?

Although Walmart has been a favorite whipping boy for the health justice community, should Walmart alone really bear that much of the blame? As long as we have a system that is dependent on a patchwork of private health plans, public programs, and no programs at all, no matter how much Walmart tries, their employees cannot possibly be assured of having stable, comprehensive coverage throughout their pre-Medicare years.

We should dismiss Walmart (and all other employers) as the keeper of health insurance (while encouraging them to apply the savings toward living wages). But to do that, we need to end our fragmentation of coverage and care by establishing a single, comprehensive health program that will include everyone – from birth, throughout life – through an improved Medicare for all.

I mean… look back over a year of employment? … and then start another three month waiting period before eligibility is established? … and then find that this “associate” is no longer employed? (Check… more bucks for the Walton family.) Come on!

ALEC Exposed: Sabotaging Healthcare

By Wendell Potter
The Nation, July 12, 2011

Days after President Obama signed the Affordable Care Act into law, I arrived at the spring 2010 meeting of the National Association of Insurance Commissioners (NAIC) in Denver, where a fellow consumer representative introduced me to one of the hundreds of industry lobbyists swarming the convention center. “She’s somebody we can work with,” he said, clearly convinced that she would deal with us in good faith, even if we might disagree on certain policy issues. Over the next several months, other consumer reps agreed that she really did seem to want to do what was right for patients, even if the organization that paid her salary often seemed to care more about profits than people.

I was skeptical. I knew from my two decades as an insurance company executive that the industry often conducts duplicitous charm offensives, assuring the public that insurers support consumer-focused reform while executives work surreptitiously to block any reform that might curtail profits. So I was not shocked when I found out that Joan Gardner, executive director of state services for the Blue Cross and Blue Shield Association’s Office of Policy and Representation, had been keeping something important from us. As a leading member of ALEC’s Health and Human Services Task Force, she’d been helping write legislation designed to ensure that any healthcare reform implemented at the state level would benefit insurance companies far more than their policyholders. She was also leading an effort to recruit more dues-paying members to ALEC.

I learned of Gardner’s clandestine work when a reform advocate alerted me to a story about a resolution her ALEC committee had drafted in 2008 to forbid “government-mandated health care.” Apparently fearful that a bill would reach Obama’s desk that would allow states to establish single-payer systems, ALEC crafted the Freedom of Choice in Health Care Act, which, despite its Orwellian name, was written to deny the citizens of any state that passed it the freedom to set up such a system. By declaring that Congressional attempts to regulate health insurance at the federal level would be unconstitutional, it would effectively ban not only a federal single-payer proposal but also a federally created health insurance exchange and a federally operated public insurance option. ALEC has boasted that some forty-four states have introduced its Freedom of Choice in Health Care Act (which itself would not withstand a constitutional challenge). What it hasn’t acknowledged is that attempts to pass healthcare-nullification bills have failed in at least twenty-five states. Only eight states have passed the act so far.

Reviewing ALEC’s healthcare-related bills and resolutions from the past few years makes it clear that insurers realized early on that the best way to block the profit-threatening provisions of any federal reform would be to attack them at the state level through ALEC. With Democrats in control of both houses of Congress and the White House in 2009, insurers assumed some kind of healthcare reform was inevitable, so they adopted a strategy to shape rather than stop reform. Its top five goals became:

– Keeping single-payer proposals off the table;

– Ensuring that the final bill contain a clause requiring all Americans not eligible for an existing federal program to buy coverage from a private insurance company;

– Preventing the new law from establishing a government-run plan (the “public option”) that would compete with private insurers;

– Making sure that the reform law is implemented primarily at the state level, to keep the federal government from assuming any significant new oversight of private insurers’ business practices; and

– Keeping any new regulations and consumer protections to a minimum.

Insurers achieved their first four goals, with ALEC playing a key role in a well-coordinated effort to keep the most progressive proposals from being enacted at the state or federal level. Where it fell short was in blocking provisions of the law that will impose more rigorous oversight of insurance companies’ business practices. After Obama signed the bill into law, the industry turned its attention to influencing how the new regulations would be written (by the NAIC and federal bureaucrats) and how the law would be implemented in the states.

As its archive reveals, ALEC has been at work for more than a decade on what amounts to a comprehensive wish list for insurers: from turning over the Medicare and Medicaid programs to them—assuring them a vast new stream of revenue—to letting insurers continue marketing substandard yet highly profitable policies while giving them protection from litigation. Republican lawmakers continue to promote model bills from the 1990s. Some of the most far-reaching and industry-favorable measures adopted by ALEC over the years:

– The Resolution Urging Congress to Create Private Financing of the Medicare Program, initially adopted in 1998, calls on Congress to privatize Medicare by permitting the creation of Individual Medical Accounts, similar to Health Savings Accounts that accompany high-deductible health plans and that have become attractive tax shelters for well-to-do Americans. Individual Medical Accounts, along with vouchers, are a feature of Representative Paul Ryan’s federal proposal to privatize Medicare.

– The Resolution on Medicaid Funding Through a Federal Block Grant, adopted in 2008, urges Congress to replace the current financing mechanism for Medicaid with block grants, as Ryan proposes. In another proposal to privatize the program, the Access to Medicaid Act, beneficiaries would receive vouchers to buy insurance policies in the private market.

– The Health Care Choice Act for States, adopted in 2007, would permit the sale of individual health insurance policies across state lines, which would not be subject to the mandated benefits required by in-state policies. The effect would be to make comprehensive policies significantly more expensive than they already are. (Wyoming was the first state to enact this model bill, in 2010, followed by Georgia and Maine this year.)

– The Non-Economic Damage Awards Act, adopted in 2002, would limit medical malpractice awards for damages like pain and suffering to $250,000, making such lawsuits infeasible. (Few lawyers would be willing to represent patients if the total award were limited to that amount because they probably would not be able to cover their costs.) Insurers and the American Medical Association have joined forces in lobbying for such tort reform.

In sum, ALEC’s model legislation would not only undermine the consumer protections in the Affordable Care Act; it would shred the social safety net for the most vulnerable among us: older, disabled and poorer Americans, and those who become victims of a system that is supposed to heal, not harm.

This article is part of a Nation series exposing the American Legislative Exchange Council, in collaboration with the Center For Media and Democracy. Wendell Potter is senior fellow on health care for the Center for Media and Democracy. He previously served as head of communications for Cigna, the giant health insurance company.

http://www.thenation.com/article/161975/sabotaging-healthcare

Malpractice reform lessons from abroad

Administrative Compensation for Medical Injuries: Lessons from Three Foreign Systems

By Michelle M. Mello, Allen Kachalia, and David M. Studdert
The Commonwealth Fund, July 2011

Medical malpractice reform is a perennial issue for state legislatures and, more recently, for the U.S. Congress. The American medical liability system is widely acknowledged to perform poorly in several important respects. Few patients with injuries due to negligence file claims, in part because of the difficulty of obtaining attorney representation and the arduousness of the litigation process. Many meritorious cases do not result in compensation to the patient, while many non-meritorious cases do lead to settlements or jury awards. The amounts awarded are highly variable across similar injuries, inadequate in some cases and excessive in others. The highly adversarial litigation process destroys physician–patient relationships and involves considerable emotional strain for both plaintiffs and defendants. Fear of litigation chills open discussion about medical errors, resulting in missed opportunities for learning and patient safety improvement, and leads physicians to order extra tests, referrals, and other services primarily for the purpose of reducing their liability exposure. Such defensive medicine, together with the high cost of malpractice insurance premiums that increases providers’ overhead costs and the prices they charge, contributes to the upward growth of health care expenditures.

Abstract:

The United States requires patients injured by medical negligence to seek compensation through lawsuits, an approach that has drawbacks related to fairness, cost, and impact on medical care. Several countries, including New Zealand, Sweden, and Denmark, have replaced litigation with administrative compensation systems for patients who experience an avoidable medical injury. Sometimes called “no-fault” systems, such schemes enable patients to file claims for compensation without using an attorney. A governmental or private adjudicating organization uses neutral medical experts to evaluate claims of injury and does not require patients to prove that health care providers were negligent in order to receive compensation. Information from claims is used to analyze opportunities for patient safety improvement. The systems have successfully limited liability costs while improving injured patients’ access to compensation. American policymakers may find many of the elements of these countries’ systems to be transferable to demonstration projects in the U.S.

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Jul/1517_Mello_admin_compensation_med_injuries.pdf

Comment:

By Don McCanne, MD

Our medical liability system is very expensive, highly inefficient, extremely adversarial thereby inflicting much emotional pain on all involved, and leaves most individuals with medical injury uncompensated. It is a very lousy system. This report describes far better systems in three other nations, providing very valuable lessons for the United States.

There are two important stumbling blocks if we were to decide to adopt a more rational liability system based on these models. First, these nations demonstrate greater social solidarity than the United States, such as having other social insurance programs (health care, disability, unemployment) obviating the need for for filing as many medical injury claims.

Second, just as we seem to be incapable of displacing our wasteful, inefficient, highly expensive private insurance industry, we would likely find similar resistance in displacing our wasteful, inefficient, highly expensive legal system. Health insurers and tort attorneys have the ear of Congress.

What can we do? Citizen activism. It’s empowering.

FAQ: Seniors May See Changes in Medigap Policies

Exploring the Effects of Secondary Coverage on Medicare Spending for the Elderly

Press Conference by the President

Comment:

Once politically taboo, proposals to shift more Medicare costs to elderly are gaining traction

Press Conference by the President

Letter

Comment:

Employers Lobby to Weaken Insurance Mandate

Letter

Comment:

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