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Important RWJF report on cost-sharing

Important RWJF report on cost-sharing

The Synthesis Project, Policy Brief No.20

Robert Wood Johnson Foundation
December 2010

Cost-sharing: Effects on spending and outcomes
By Sarah Goodell, M.A. and Katherine Swartz, Ph.D., based on a research synthesis by Swartz

This brief examines how cost-sharing affects the use of services, whether some patients are more sensitive to cost-sharing than others, and whether reduced use of services as a result of cost-sharing has an effect on health outcomes. All of these issues factor into whether and how cost-sharing could be used to reduce the rate of growth of health care spending.

Policy Implications

Recent studies of patient cost-sharing confirm the primary conclusion of the HIE — demand for most health care services is price sensitive. When people have to pay more, they reduce their use of health care. The HIE’s exclusion of the elderly, the increase in the prevalence of chronic conditions, and changes to medical care and insurance design since the 1970s, however, make it important to re-examine the role of cost-sharing. Findings from more recent research highlight important implications for policy-makers, including:

*  Patient cost-sharing is not necessarily an effective mechanism for significantly slowing health care spending. Most people are healthy and cost-sharing would only modestly affect their health care spending. People who are very sick or who have serious chronic health conditions are typically deferring to their physicians rather than making choices about medical care based on cost-sharing. Moreover, by itself, cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.

*  Cost-sharing is not well-targeted on low-value services. Patient cost-sharing generally has been organized in broad categories (e.g., outpatient care, inpatient care, emergency department care). These broad categorizations do not help people distinguish between essential and nonessential services. Comparative effectiveness research could help insurers and government programs better target cost-sharing to improve value.

*  Caution should be used when increasing cost-sharing for low-income populations or the chronically ill. Not only are low-income populations disproportionately affected by increased cost-sharing, but they also are more price sensitive than other income groups. Unless the cost-sharing increases are concentrated on services that are ineffective or unnecessary, low-income groups may avoid necessary medical care as a result. Increased cost-sharing for people with chronic conditions may result in higher expenditures for hospitalizations and other adverse outcomes if necessary care is reduced.

Policy Brief:
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.brief.pdf

Full Research Synthesis Report by Katherine Swartz, Ph.D. (40 pages):
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.rpt.pdf

This is a very important report. Let me tell you why.

Conservatives have framed the problem of our very high health care costs as being due to a lack of sensitivity of health care prices by patient-consumers who are simply demanding too much care. This is been repeated so many times that moderates and liberals are now parroting the same message. They profess that patients must face large deductibles, co-payments and coinsurance if we are ever going to get our health care costs under control.

It is true that these forms of cost-sharing do reduce health care spending, but is the savings significant? And is there any downside, any unintended consequences, to applying these price sensitizers to health care shopping?

Too much care?

When is the last time that you went to your health care professional and demanded too much care? If it isn’t you who is guilty of this transgression, then who is? I didn’t see these people in my very busy practice. Sure, you can find a few anecdotes, but most people simply are not motivated to use their time and money to seek out care that they don’t need.

Reduction in spending

The healthier one-half of our population uses only three percent of health care. They may be price sensitive shoppers when they have significant cost-sharing, but even if they reduced spending by ten percent, the savings of three-tenths of one-percent would represent only a negligible decline in our national health expenditures.

Twenty percent of us use eighty percent of the nation’s health care. These are people with very significant problems who are preoccupied with accessing the health care that they need, and are no longer concerned about the deductibles that they’ve already gone through. Cost-sharing is not intended to apply to individuals with significant illnesses or injuries anyway. So cost-sharing has very little impact on eighty percent of our national health expenditures.

The remaining thirty percent of us use about sixteen percent of health care. Some of this is urgent care, over which we have little choice, so price shopping isn’t an issue. But suppose that we could actually reduce spending in this group by about ten percent; that would still be only about 1.6 percent of our national spending. Combined with the 0.3 percent above, that’s still under two percent.

If you read the report, you will find that it is common for people to make unwise decisions as to which care they decline because of the out-of-pocket costs involved. These studies show that the net costs are sometimes higher because forgoing treatment can result in a greater incidence of emergency department visits and hospitalizations, and can sometimes intensify their chronic problems, making them more expensive to manage. Much of the relatively paltry savings from creating price sensitivity is lost due to the offset of the higher costs of deferred medical management.

As this report states, “cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.” We need to consider more effective options than cost-sharing if we want to tame health care costs.

Unintended consequences

Cost-sharing has been demonstrated to result in adverse outcomes in two particularly vulnerable groups: low-income individuals and families, and individuals with chronic disease.

Although Medicaid selectively covers the low-income sector with more generous benefits and usually without significant cost-sharing, as a chronically underfunded welfare program, access is often impaired because of a lack of willing providers. Also, as states struggle with their budgets, some are introducing more cost-sharing into their Medicaid programs in order to reduce spending.

For those with incomes just above the level at which they would qualify for Medicaid, the standard plan in the exchanges will have an actuarial value of only 70 percent, which can be achieved only by including cost-sharing in the plan design.

Creating financial barriers to care for this vulnerable sector clearly reduces their access to beneficial health care services – the opposite of what a well functioning health care system should be doing.

The same applies to the chronically ill. The health care financing system should be designed to help them get the care that they need. Cost-sharing does the opposite. Also it is in this sector that cost sharing has often been shown to result in the opposite of its intent. Instead of reducing health care spending, the financial barriers of cost sharing have often resulted in higher costs because of more expensive emergency department and in-hospital care that must be rendered due to the financial barriers that result in inadequate chronic disease management.

Prevention of financial hardship

A prevalent concept is that the purpose of insurance is to protect against catastrophic loss, but individuals should be personally responsible for routine medical expenses. That has been repeated so often that it is widely accepted. Yet many studies have confirmed that so-called routine expenses can be very burdensome financially. When medical debt contributes to personal bankruptcy, the routine expenses of cost-sharing have defeated this purpose of preventing catastrophic loss since the necessity of filing bankruptcy is, in itself, catastrophic.

We need to abandon the glib definition of insurance as being only for the purpose of covering catastrophic loss, and replace it with the definition that a health care financing system is for the purpose of removing financial barriers to the care that a patient should have. Cost-sharing does the opposite by creating financial barriers that should be removed.

Solidarity

Another prevalent attitude is that the government should stay out of our lives, and we should each tend to our own needs. As an abstraction, that concept has a certain appeal, and, consequently, a wide following. But there are very few of us who are not offended when we hear real-life stories of people who suffer when they fail to receive the medical care that they should have. We are particularly offended when we hear that the individuals’ insurance failed them in their times of need.

Insurance should be designed to help people get the care they need. Yet, as we all know, it is frequently designed to reduce spending on health care for the business purposes of keeping insurance premiums competitive and enhancing profits. One of the most important tools used by the insurers is cost-sharing. At times it seems as if they are a business set up more for the purpose reducing health care spending than helping us get health care.

Traditional private insurance has represented a form of social solidarity in which we join together to pool our risks so that none of us would have to suffer financial hardship in the face of medical need. But the interests of private insurers are very different from the interests of patients. The tool of cost-sharing serves the interests of the private insurers very well, but it fractures the solidarity that was intended to bring those with needs the health care that they need.

Other nations have expressed solidarity in a more effective manner. The people join together, through their governments, to finance their universal pools to serve as a resource for funds to pay for health care that people need. Many of those nations have rejected the concept of cost-sharing because of its perversities. They provide first dollar coverage for health care.

Those nations that do eliminate the barriers of cost-sharing still provide comprehensive benefits for everyone at a cost much lower than what we spend here in the United States. That’s the kind of solidarity that we need and that we would have if people weren’t confused by prevailing misperceptions that our goal should be to stop people from demanding too much care, and that we can do that by assessing the penalties of cost-sharing on people who attempt to access the care that they need.

You should consider downloading the RWJF brief for future use. We need to change the national discourse from that of using the consumer-directed tools of cost-sharing – tools that save very little money and impair outcomes – that are being used to address the alleged but fictional excess patient demand for care. Instead we need to have a national dialogue on how we can improve access to the care that patients need, and do it in an affordable manner (i.e., single payer).

Vt. student rally a huge success, activism up nationwide

March 30, 2011

Dear PNHP colleagues and friends,

We have some important news from Vermont and elsewhere in the nation. In this message:

  1. Health-professional student rally in Vermont is a huge success
  2. Over 200 doctors say they’d relocate to Vermont if it implemented a single-payer system
  3. Vermonters face challenges as health reform bill is weakened in legislative process
  4. Wisconsin members active in battle to protect health care safety net
  5. Doctors around country have their letters, op-eds published in newspapers
  6. Opportunity: Invite PNHP President Dr. Garrett Adams to speak in your area

1. More than 200 medical students, other health-professional students, physicians, nurses and health reform advocates rallied at the Vermont Statehouse in Montpelier last Saturday in a stunning show of support for a single-payer health care system. 

 Vermont Student Rally

Watch an exciting 5-minute video about it here.

Attired in white coats and scrubs, and accompanied by a boisterous brass band and drums, the participants – who hailed from Vermont, the Northeast and in some cases from states as far away as Oregon and New Mexico – marched from a nearby high school to the steps of the Statehouse chanting slogans like “Single Payer Now!” and “Health care is a right!” and “Everybody in! Nobody out!”

Minutes later, Sen. Bernie Sanders, I-Vt., addressed the crowd in a packed meeting room inside. “What is unique and important about your presence here today,” he said, “is that you are saying, ‘I want to be the best doctor or the best healer that I can be, but I can’t be that unless we change the system.’”

In addition to Sanders, Vermont Gov. Peter Shumlin also spoke, as did about eight health-professional students. Each of the students described a key feature of a single-payer system – truly universal, comprehensive coverage; a single, publicly financed insurance plan, administered by a public or quasi-public authority; free choice of provider; and so on – to the applause of the crowd. The program was emceed by Danielle Alexander, a second-year medical student from Albany Medical College in New York.

Vermont Student Rally

The March 26 rally, which was organized and led by PNHP student activists and co-sponsored by the American Medical Student Association, was the top story on the region’s evening television news. Some of the media coverage can be found here, and some of the lead-up coverage here.

Ali Thebert, PNHP’s national organizer, provided substantial support for the effort from beginning to end, with aid, of course, from PNHP members in Vermont and the Northeast. For example, PNHP med student activists such as Sim Kimmel, Kirsten Austad and Brandon Green in the Boston area filled two busloads with students; their efforts were supported by members of the Boston chapter.

Several PNHP leaders on the scene said they thought the event marked a new high-water mark in student activism for single payer. To support additional initiatives like this one, please make a tax-deductible donation to PNHP.

2. The student rally followed on the heels of an announcement by Vermont PNHP’s interim chair, Dr. Peggy Carey, a few days before that more than 200 physicians and over 50 medical students would seriously consider relocating to Vermont if it were to implement a single-payer system. About half of the physicians who said they’d consider switching to Vermont are in primary care, a category of doctors the state badly needs.

This story helped counter the arguments of single payer’s opponents in the state, who claimed that the creation of a single-payer system would cause physicians to flee Vermont. The news about the willingness of doctors to relocate was brought to the attention of the state’s lawmakers by PNHP’s Dr. Deb Richter and others, and it also received significant media coverage.

3. The situation in Vermont has grown more complex. The Shumlin administration’s bill, H.202, which was never a full-fledged single-payer bill, was severely weakened in the House before it was approved by that body on March 24. It currently stresses the implementation of the national health law, PPACA, and specifically the creation of a health insurance exchange in Vermont. The bill would keep private insurers in the system, and the very phrase “single payer” was stripped almost completely from the legislation, including from its title. It’s now called “A Road Map to a Universal and Unified Health System.” Here’s a useful analysis by Vtdigger.org, a Vermont publication.

It’s a very challenging situation, but single-payer supporters in Vermont haven’t given up and are working to strengthen the bill on the Senate side. Characteristically, the insurance industry, directly or through proxies, is stepping up its campaign to discredit the single-payer idea, using scare tactics and misinformation.

PNHP is pointing out the superiority of the single-payer solution to policy makers with projects like the student rally, the announcement about the 200 physicians willing to relocate, our members’ opinion pieces and other efforts. You can help support these measures by making a donation here.

Meanwhile, Harvard economist William Hsiao, Ph.D., had an article in the New England Journal of Medicine this month about state-based single-payer plans that you may find of interest. You can read it by clicking here.

4. Our Wisconsin members have been deeply involved in the battle to preserve their state’s health care safety net and to fend off their governor’s assault on the collective bargaining rights of public workers, including health care workers. See Dr. Chuck Benedict’s speech here, which includes links to the Wisconsin and national PNHP statements on these developments. Dr. Andy Coates has written a blog posting about similar developments in New York.

5. PNHP members have continued to advocate for single-payer national health insurance, an improved Medicare for all, in their letters to the editor and opinion pieces in newspapers from coast to coast. Since our last major round-up in late January, at least 23 op-eds or letters to the editors by our members have been published. These include one by PNHP President Garrett Adams in the Lexington Herald-Leader on medical bankruptcy and another by Dr. Margaret Flowers in Truthout on state-based single-payer efforts. (Both are appended.)

Drs. Deb Richter, Marvin Malek and Susan Deppe of Vermont have each had pieces printed in their state’s newspapers as part of the reform debate there. Drs. James Mitchiner of Michigan and Pippa Abston of Alabama have written about the dangers posed to Medicare and Medicaid by privatization and government cuts. Dr. Claudia Fegan of Illinois had articles published about the impact of PPACA on employees of large and small businesses. And Drs. Richard Weiskopf (N.Y.), Philip Caper and Julie Pease (Maine), Ralph Bovard (Minn.), James Fiesher (N.H.), Susanne King (Mass.), Jerry Frankel (Texas), Julian Gonzalez (Alaska), Bruce Trigg (N.M.), Arthur Sutherland (Tenn.), Samuel Metz (Ore.), Margaret Flowers (Md.), and med student Carl Berdahl (Conn.) all had recent op-eds or letters published in regional or national papers. (All of these and more are accessible at “Articles of Interest” on PNHP’s website.)

Please keep writing; it’s a crucial way of getting our message out. If you need help editing something you’ve written, don’t hesitate to contact Mark Almberg at mark@pnhp.org or call him (312) 782-6006.

6. Finally, we encourage you to invite PNHP President Dr. Garrett Adams of Louisville, Ky., to speak at a grand rounds or other event in your area, especially if you are located in the South. A short biography of Dr. Adams appears here. Contact Ali Thebert at ali@pnhp.org or call her at the same number given above; she’ll be happy to assist with the arrangements.

Cordially,

Quentin Young signature Mark Almberg signature
Quentin D. Young, M.D.
National Coordinator		 Mark Almberg
Communications Director

P.S. If you haven’t renewed your membership, or if you’d like to give PNHP an extra boost by making a tax-deductible donation, please do so today.

P.P.S. Save the date of Saturday, Oct. 29, for our Annual Meeting in Washington, D.C.

We need single-payer, nonprofit health insurance
 
By Garrett Adams
Lexington Herald-Leader, March 27, 2011
 
Since the passage of its landmark health reform law of 2006, the people of Massachusetts have been living like a canary in a coal mine. National health policy experts have been watching them, closely studying how they’re faring under the reform.
 
That watch intensified after enactment of the new federal health law, which is patterned after the Massachusetts plan. Both laws contain an individual mandate requiring people to buy private insurance, for example. The theory is that as the Bay State goes, so goes the nation.
 
The first reports were glowing. The number of uninsured went down. Massachusetts now boasts the lowest percentage of uninsured residents in the nation, 4.4 percent.
 
But with the passage of time, and despite generous dollops of supplementary federal aid to help keep the Massachusetts plan afloat, the canary isn’t looking too chipper these days.
 
Insurance premiums and out-of-pocket health costs keep rising. These skyrocketing costs prompted Gov. Deval Patrick to call for the program’s “overhaul” just last week.
 
Now comes a Harvard research study showing that despite the increase in the number of people covered, the Massachusetts reform hasn’t made a significant dent in the medical bankruptcy rate. Families still are being ruined by unpayable medical bills.
 
The researchers discovered that between early 2007 and mid-2009 — before and after the reform took effect — the share of medical bankruptcies in Massachusetts changed very little, from 59.3 percent to 52.9 percent. The absolute number of medical bankruptcies actually climbed from 7,504 to 10,093.
 
Lest you think only low-income families are being financially clobbered by medical debt, think again. Two-thirds of the bankruptcy filers were college-educated and 89 percent had health insurance when they filed their court papers.
 
In explanation, the authors of the study, which appears in the American Journal of Medicine, write: “Health costs in the state have risen sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts — as in other states — afflicted middle-class families with health insurance. High premium costs and gaps in coverage — co-payments, deductibles and uncovered services — often left insured families liable for substantial out-of-pocket costs. None of that changed.”
 
Lead author Dr. David Himmelstein elaborates: “Massachusetts’ health reform, like the national law modeled after it, takes many of the uninsured and makes them under-insured, typically giving them a skimpy, defective private policy that’s like an umbrella that melts in the rain: The protection’s not there when you need it.”
 
Needless to say, these findings don’t bode well for the look-alike federal law’s ability to end the scandalous blight of medical bankruptcies in the U.S. And behind these statistics are tragic, heart-rending stories.
 
The crux of the
problem is this: Both the Massachusetts law and the new federal law are based on the crumbling foundation of for-profit, employer-based health insurance, a financing model that has outlived its usefulness.
 
Our present setup is a crazy-quilt patchwork of plans that results in huge inefficiencies and mountains of wasteful paperwork — just ask your doctor! And our current arrangements contain a deeply embedded incentive for private insurers to enlarge their profits by enrolling the healthy, screening out the sick and denying claims.
 
In Canada, which has a truly universal, non-profit single-payer system of financing care called medicare (bearing resemblance to our own much more limited Medicare program), medical bankruptcies are virtually unknown.
 
Sure, you’ll hear the occasional exaggerated story about wait times in Canada. But if you want to hear real horror stories, you need look no further than our own community. And if you ask Canadians if they’d prefer a U.S.-style health system, 9 out of 10 will say no.
 
It’s never too late to do the right thing. Congress should move beyond patchwork solutions and implement a streamlined single-payer system, an improved Medicare for all.
 
The savings in bureaucracy alone would be enough to cover everyone, and the threat of medical bankruptcy would vanish overnight. Significantly a single-payer system’s bargaining power would control costs.
 
We can’t wait for the canary to keel over.
 
Dr. Garrett Adams is a pediatric infectious diseases specialist in Louisville. He is a co-founder of Physicians for a National Health Program-Kentucky and president of Physicians for a National Health Program.

State Health Law Waivers: Where Will They Take Us?

By Margaret Flowers
t r u t h o u t | News Analysis, March 8, 2011
 
The president supports state innovation in health care, but vigilance is required to ensure state reforms improve health as we continue to call for national reform.
 
President Obama announced at the National Governors Association on Monday that he supports an amendment to the health law that would allow states some flexibility to innovate with their own models of health reform beginning in 2014, rather than waiting until 2017, as is currently required by law. The president’s concession comes as the current federal health law is deteriorating and states are complaining that the financial burden of complying with the law are too onerous in the face of serious budget deficits.
 
The president’s endorsement of the Wyden-Brown amendment, known as the “Empowering States to Innovate Act” or S.248, allows states to apply for waivers from the health insurance exchange beginning in 2014 and would give them some federal dollars to experiment with alternative ways of providing health coverage. The federal health bill requires that any state seeking a waiver from the health insurance exchange must, at a minimum, provide coverage comparable to that specified by the federal bill (Section 1332). It is left to the discretion of the secretary of health and human services to determine if a state meets this requirement.
 
States that put in place a single-payer health system will surpass the coverage of federal law. A single-payer health system, improved Medicare for all, would be universal and would provide the necessary cost controls and savings that would fund comprehensive coverage, including much-needed mental health, dental and vision care.

States such as Vermont and California, which appear to be closer than any others to enacting a state single-payer health system, welcomed the president’s support for the Wyden-Brown amendment because it would remove one of the many barriers they face. The amendment will still need to be passed by Congress before it arrives at the president’s desk, which may, in itself, be a formidable feat in the current political climate.
 
In addition, for states that want to take the path of single payer, even with the amendment, there will still be many hurdles before they can implement such a plan. The amendment only moves up the date when waivers can be applied for. It does not guarantee federal approval of the many waivers a state single-payer system would need, such as being allowed to roll their Medicaid and Medicare populations into their single-payer system.
 
Of concern is that the president is signaling a greater willingness to allow states to opt out of the health reform bill, not because states want to provide better coverage, but because governors in some states are opposed to the federal health law altogether. Beginning shortly after passage of the law last year, there has been an effort to undermine it through court challenges to its constitutionality and, more recently, through efforts to repeal it entirely or in part by the House. Additionally, hundreds of waivers have been issued excusing businesses, union health plans and health insurers from having to comply with parts of the law. The Department of Health and Human Services now has a 24-hour turnaround time on such waivers.
 
Vigilance will be required to ensure that some states do not use the amendment, if it is passed, to gut important public health programs such as Medicaid and the State Children’s Health Insurance Program and further privatize health care, which would be harmful to patients. According to a White House fact sheet released around the time of the president’s statement, “The law also allows states to submit a single application that includes Medicaid waiver requests which could, for example, seek to give people eligible for Medicaid the choice of enrolling in [health insurance] exchange plans.” A change such as this would undermine Medicaid and shift more people into more expensive and less protective private insurance plans.
 
Efforts are already underway in Wisconsin to take control of the state’s Medicaid programs away from the state Legislature and end the public’s ability to have a voice in the process and, instead, give full authority over the program to the governor’s office. Gov. Scott Walker appointed Dennis Smith, a former Heritage Foundation fellow who has written about moving people out of Medicaid and raising co-pa
ys for those still in Medicaid, as his secretary of health.
 
Wisconsin is not alone in challenging Medicaid. According to The Wall Street Journal, more than half the states want permission to remove hundreds of thousands of people from Medicaid. Other states like New York and Arizona are cutting benefits of health programs that already provide insufficient coverage.
 
Decades of experience in the United States shows that the market model fails when it comes to financing health care. Health is a necessity, not a commodity. A system based on the purchase of private insurance results in higher costs and poorer outcomes. Patients who cannot afford necessary care get sick, defer treatment and develop preventable complications, sometimes fatal ones. Families experience personal bankruptcy when a serious illness or accident occurs. With increased political pressure and Secretary Sebelius already issuing hundreds of waivers, can further privatization of health care be prevented?
 
While some welcome the president’s support for the amendment and hope that, if it passes, a state will be able to demonstrate the benefits of a single-payer system, as happened in Saskatchewan (and which led to Canada’s national Medicare system), it is possible that the actual outcome of such an amendment will be a further attack on our necessary public health programs. For this reason, it is imperative that we continue to push for a national health program, improved Medicare for all in the US.
 
“It would require fewer waivers and be simpler to enact improved Medicare for all at the national level,” says Dr. Garrett Adams, president of Physicians for a National Health Program. “Not only is it simpler, but it would save lives and end personal bankruptcy caused by medical illness. We would like to see a national Medicare-for-all system enacted sooner rather than later. Every day that we wait, hundreds of Americans die of preventable causes.”
 
Physicians for a National Health Program advocates for a national, publicly financed and privately delivered health system: an improved Medicare for All as embodied in H.R. 676, the “Expanded and Improved Medicare for All Act.” Among the benefits of such a program are that it is a simpler system for patients and health professionals, recaptures about $400 billion annually in unnecessary paperwork and bureaucracy and directs that money into care, allows freedom to choose one’s health provider and more control over one’s treatment, is universal and provides comprehensive health benefits while at the same time effectively controlling our soaring health care costs. In this time of fiscal and health crises, national Medicare for all is more important than ever.
 
Margaret Flowers, M.D., is congressional fellow for Physicians for a National Health Program.

A single-payer health care system would work for Oregon

By Samuel Metz
The Oregonian, March 29, 2011

Am I crazy, a physician embracing legislative efforts to create a single-payer health care system in Oregon? You be the judge.

It would create thousands of jobs. It would provide health care to people whether they work full time, part time or are retired, disabled, sick or unemployed. It would stimulate Oregon business. It would reduce our state deficit. And it would provide comprehensive care to every Oregonian without spending more than we do now.

Where would the money come from? Oregon businesses and families already spend this money. But Oregon wastes $4 billion annually in private insurance administration. That’s premium money that never goes toward health care. Half is the insurance company overhead. The rest is what hospitals and providers like me waste collecting payments from insurance companies. Princeton economics professor Uwe Reinhardt, speaking recently before the Senate Finance Committee, said of Duke University’s 900-bed hospital: “We have 900 billing clerks at Duke. I’m not sure we have a nurse per bed, but we have a billing clerk per bed. It’s obscene.”

For physicians, it’s no easier. A Chicago doctor faces as many as 17,000 different sets of benefits for her patients. Your physician in Oregon might deal with only 300. But that’s still a lot of paperwork that doesn’t provide health care.

Single payer would eliminate these administrative losses. Diverting $4 billion to real health care is more than enough to enable comprehensive, no-deductible, no-co-pay, all-medications-included health care to every Oregonian, young and old.

So why doesn’t everybody embrace single-payer financing? It’s a stark answer: The money is re-labeled as “taxes.” And unfortunately many voters who unknowingly pay thousands of dollars in premiums and out-of-pocket payments refuse to pay a penny of it as a tax, even when this tax would buy them more health care at less cost and protect their families from medical bankruptcy.

Other objections are mere distractions. Single payer will destroy jobs? No evidence. Single-payer studies in 14 other states suggest 35,000 new jobs in Oregon. That’s 12,000 more than the entire Oregon insurance industry. And because these new jobs are highly paid medical personnel, they generate $500 million in new tax revenues.

Will businesses flee Oregon? Single payer would eliminate labor disputes over health care benefits. It would halve the cost of human resource departments (no health benefit management). Entrepreneurs would be free to create new businesses without fear of losing health care. Business would flourish.

Worried about our state deficit? Single payer would reduce government costs to provide comprehensive benefits to state employees. Couple this with increased tax revenue and the budget deficit would go down.

A new single-payer health care bill — House Bill 3510 and Senate Billl 888 — would be a win for all Oregon. Families finally would get the health care they need. Workers would enjoy thousands of new jobs. Employer costs would go down. And so would our state government’s deficit.

Single-payer health care: It’s not crazy. It’s good for Oregon, good for you and good for your legislators. Tell them now.

Samuel Metz is a Portland physician.

http://www.oregonlive.com/opinion/index.ssf/2011/03/a_single-payer_health_care_sys.html

Market or government for hospital pricing?

Blue Cross investigation is expanded

The Baltimore Sun
March 29, 2011

A probe of alleged anti-competitive agreements between Blue Cross Blue Shield companies and hospitals has been expanded by the U.S. Justice Department beyond Michigan, where an antitrust lawsuit that alleged the agreements raised hospital prices was filed last year.

CareFirst BlueCross BlueShield, Maryland’s largest insurer, confirmed to the Wall Street Journal that it received a civil investigative demand from the Justice Department but declined to comment further.

Federal and state investigators also have sent civil subpoenas to Blue Cross Blue Shield units in Kansas, Missouri, Ohio, West Virginia, North Carolina, South Carolina and the District of Columbia, a person familiar with the matter said.

The expansion of the Blue Cross Blue Shield investigation is important because “they’re using exclusionary practices to hold competitors at bay,” said David Balto, an antitrust attorney and senior fellow at the Center for American Progress, a Washington-based policy group that generally favors Democratic initiatives.

The department’s Michigan complaint said Blue Cross negotiated contracts with 70 of the state’s 131 general acute- care hospitals that led to higher prices for the insurer’s competitors. In some cases, the hospitals charged rivals 30 percent to 40 percent more than Blue Cross, the department said at the time.

http://www.baltimoresun.com/business/bs-bz-carefirst-justice-20110329,0,7272326.story

And…

One state’s hospital cost solution: regulated prices

By Christine Vestal
The Pew Center on the States
March 29, 2011

The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power.

In one state, however, monopoly pricing won’t be a problem. The state sets the prices.

For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals.  And everyone — private insurers, the uninsured, and those on Medicaid and Medicare—is charged the same amount.

Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500.  The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.

Whether other states will emulate Maryland’s system is an open question.  Any attempt to invoke cost regulation relies heavily on the people involved and the voluntary cooperation of the state’s hospitals. That is not always easy to achieve. In the end, however, (Maryland’s chief regulator Robert) Murray insists that the regulatory approach relies on a simple concept: “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

http://www.stateline.org/live/details/story?contentId=562689

Comment: 

By Don McCanne, MD

Because of market dominance, Blue Cross Blue Shield plans have been able to negotiate lower hospital prices in many regions throughout the nation. Hospitals, in turn, have been able to negotiate higher prices for insurers that do not dominate the markets, resulting in higher premiums and consequently less ability for the smaller insurers to penetrate these markets. The U.S. Justice Department quite appropriately is investigating these agreements.

The Blue Cross Blue Shield plans competing unfairly in the private market have proven once again that private insurers are not capable of providing equitable financing of our health care.

If instead of using market dynamics to price hospital services, what would happen if the government regulated the rates? We have an example of that in Maryland which uses an “all-payer” system. The state sets the prices. All insurers, including Medicare and Medicaid, pay the same.

How well has that worked? Maryland’s hospital prices are the lowest in the nation – only 40 percent of the national average. That has resulted in insurance premiums that also are amongst the lowest in the nation.

Although the all-payer system has had a very favorable impact on pricing, there are still many other inefficiencies and inequities in a financing system that depends on private insurers. A single payer system would eliminate the private insurers and establish global budgets for hospitals – funding them just as you would police, fire, libraries, and other public or quasi-public institutions.

As Maryland’s chief regulator stated, “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

Given that we have a finite though generous amount of funds available to pay for health care, we can get the best value if we do that within a government budget, administered efficiently through a single payer system.

Market or government for hospital pricing?

Blue Cross investigation is expanded

The Baltimore Sun
March 29, 2011

A probe of alleged anti-competitive agreements between Blue Cross Blue Shield companies and hospitals has been expanded by the U.S. Justice Department beyond Michigan, where an antitrust lawsuit that alleged the agreements raised hospital prices was filed last year.

CareFirst BlueCross BlueShield, Maryland’s largest insurer, confirmed to the Wall Street Journal that it received a civil investigative demand from the Justice Department but declined to comment further.

Federal and state investigators also have sent civil subpoenas to Blue Cross Blue Shield units in Kansas, Missouri, Ohio, West Virginia, North Carolina, South Carolina and the District of Columbia, a person familiar with the matter said.

The expansion of the Blue Cross Blue Shield investigation is important because “they’re using exclusionary practices to hold competitors at bay,” said David Balto, an antitrust attorney and senior fellow at the Center for American Progress, a Washington-based policy group that generally favors Democratic initiatives.

The department’s Michigan complaint said Blue Cross negotiated contracts with 70 of the state’s 131 general acute- care hospitals that led to higher prices for the insurer’s competitors. In some cases, the hospitals charged rivals 30 percent to 40 percent more than Blue Cross, the department said at the time.

http://www.baltimoresun.com/business/bs-bz-carefirst-justice-20110329,0,7272326.story

And…

One state’s hospital cost solution: regulated prices

By Christine Vestal
The Pew Center on the States
March 29, 2011

The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power.

In one state, however, monopoly pricing won’t be a problem. The state sets the prices.

For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals.  And everyone — private insurers, the uninsured, and those on Medicaid and Medicare—is charged the same amount.

Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500.  The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.

Whether other states will emulate Maryland’s system is an open question.  Any attempt to invoke cost regulation relies heavily on the people involved and the voluntary cooperation of the state’s hospitals. That is not always easy to achieve. In the end, however, (Maryland’s chief regulator Robert) Murray insists that the regulatory approach relies on a simple concept: “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

http://www.stateline.org/live/details/story?contentId=562689

Because of market dominance, Blue Cross Blue Shield plans have been able to negotiate lower hospital prices in many regions throughout the nation. Hospitals, in turn, have been able to negotiate higher prices for insurers that do not dominate the markets, resulting in higher premiums and consequently less ability for the smaller insurers to penetrate these markets. The U.S. Justice Department quite appropriately is investigating these agreements.

The Blue Cross Blue Shield plans competing unfairly in the private market have proven once again that private insurers are not capable of providing equitable financing of our health care.

If instead of using market dynamics to price hospital services, what would happen if the government regulated the rates? We have an example of that in Maryland which uses an “all-payer” system. The state sets the prices. All insurers, including Medicare and Medicaid, pay the same.

How well has that worked? Maryland’s hospital prices are the lowest in the nation – only 40 percent of the national average. That has resulted in insurance premiums that also are amongst the lowest in the nation.

Although the all-payer system has had a very favorable impact on pricing, there are still many other inefficiencies and inequities in a financing system that depends on private insurers. A single payer system would eliminate the private insurers and establish global budgets for hospitals – funding them just as you would police, fire, libraries, and other public or quasi-public institutions.

As Maryland’s chief regulator stated, “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

Given that we have a finite though generous amount of funds available to pay for health care, we can get the best value if we do that within a government budget, administered efficiently through a single payer system.

New RAND study on high-deductible plans

Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans

By Melinda Beeuwkes Buntin, PhD; Amelia M. Haviland, PhD; Roland McDevitt, PhD; and Neeraj Sood, PhD
The American Journal of Managed Care
March 2011

The effect of enrollment in high-deductible health plans (HDHPs) or consumer-directed health plans (CDHPs) on healthcare spending and on the use of preventive care was assessed across multiple employers, insurance carriers, and plans in a 2-year retrospective study.

* Families enrolling in HDHPs or CDHPs and firms offering HDHPs or CDHPs spent less on healthcare.

* Significant savings were realized only for enrollees in plans with deductibles of at least $1000, and savings decreased with generous employer contributions to healthcare accounts.

* Enrollment in HDHPs or CDHPs was associated with moderate reductions in the use of preventive care, despite the fact that these plans waived the deductible for preventive care.

http://www.ajmc.com/publications/issue/2011/2011-3-vol17-n3/AJMC_11mar_Buntin_222to230

Comment: 

By Don McCanne, MD

The Affordable Care Act has established silver or bronze plans, with low actuarial values of 70 or 60 percent respectively, as the new standard for plans to be offered in the insurance exchanges. Since the plans will have to provide a mandated basic level of benefits, it is inevitable that they will have to include high deductibles since an average of 30 to 40 percent of the costs of health care will to be shifted to the patients to pay out of pocket. Is the wholesale adoption of high-deductible health plans a wise policy decision?

This new RAND study of over 800,000 families with employer-sponsored health plans showed that deductibles of $1000 or more do result in lower total spending, but also result in lower use of important preventive services, specifically immunizations and cancer screening. (As an aside, this study also shows how commonplace high-deductible plans have become in the employer-sponsored market as well.)

This study does have limitations. It was a two year study of the healthy workforce and their young healthy families during a healthy period in their lives. It was too short to measure differences in outcomes, and no attempt was made to do so. For our purposes, we can assume that the reduction in the use of preventive services serves as a proxy for what might be predicted when patients are not taking full advantage of the health care opportunities available to them.

The landmark RAND Health Insurance Experiment (RAND HIE) had previously shown that cost sharing resulted in a decline of both beneficial services and services of questionable value. In a press release announcing this new RAND study, co-author Amelia Haviland stated, “We discovered that costs go down dramatically during the first year people are enrolled in high-deductible health plans, as long as the deductible is at least $1,000 per person. But we also found concerning reductions in use of preventive care. This suggests people are cutting both necessary and unnecessary care.”

We do need to be concerned about costs, but there are many different policies that can control costs. Any policy that reduces spending by reducing beneficial services that patients should be receiving is bad policy. High-deductible health plans represent bad policy. They should be eliminated.

It is particularly annoying to hear policy experts say that we can’t control costs unless we put patients in charge of spending their own health care dollars, as if that were the only cost reduction tool available. Here’s what the authors of this study have to say:

“Employers often make contributions to personal medical accounts to provide incentives to employees to switch to high-deductible plans, as high enrollments are necessary to capture substantial cost savings. Some have posited that such contributions would reduce the cost savings of HDHPs (high-deductible health plans) or CDHPs (consumer-directed health plans which are HDHPs with health savings accounts) by undermining consumer cost sensitivity. However, this was not the case for HDHPs or CDHPs with moderate employer contributions. These HDHPs or CDHPs seem to reduce spending as much as plans with similar deductibles but no employer account contribution.” (High employer contributions also reduced spending, but not as much.)

Instead of erecting financial barriers to beneficial health care services, we need to erect a financing infrastructure that blocks spending on wasteful administrative excesses and non-beneficial services, while promoting access to appropriate health care. The single payer model is designed specifically to get patients the care that they need while eliminating wasteful spending.

New RAND study on high-deductible plans

Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans

By Melinda Beeuwkes Buntin, PhD; Amelia M. Haviland, PhD; Roland McDevitt, PhD; and Neeraj Sood, PhD
The American Journal of Managed Care
March 2011

The effect of enrollment in high-deductible health plans (HDHPs) or consumer-directed health plans (CDHPs) on healthcare spending and on the use of preventive care was assessed across multiple employers, insurance carriers, and plans in a 2-year retrospective study.

* Families enrolling in HDHPs or CDHPs and firms offering HDHPs or CDHPs spent less on healthcare.

* Significant savings were realized only for enrollees in plans with deductibles of at least $1000, and savings decreased with generous employer contributions to healthcare accounts.

* Enrollment in HDHPs or CDHPs was associated with moderate reductions in the use of preventive care, despite the fact that these plans waived the deductible for preventive care.

http://www.ajmc.com/publications/issue/2011/2011-3-vol17-n3/AJMC_11mar_Buntin_222to230

The Affordable Care Act has established silver or bronze plans, with low actuarial values of 70 or 60 percent respectively, as the new standard for plans to be offered in the insurance exchanges. Since the plans will have to provide a mandated basic level of benefits, it is inevitable that they will have to include high deductibles since an average of 30 to 40 percent of the costs of health care will to be shifted to the patients to pay out of pocket. Is the wholesale adoption of high-deductible health plans a wise policy decision?

This new RAND study of over 800,000 families with employer-sponsored health plans showed that deductibles of $1000 or more do result in lower total spending, but also result in lower use of important preventive services, specifically immunizations and cancer screening. (As an aside, this study also shows how commonplace high-deductible plans have become in the employer-sponsored market as well.)

This study does have limitations. It was a two year study of the healthy workforce and their young healthy families during a healthy period in their lives. It was too short to measure differences in outcomes, and no attempt was made to do so. For our purposes, we can assume that the reduction in the use of preventive services serves as a proxy for what might be predicted when patients are not taking full advantage of the health care opportunities available to them.

The landmark RAND Health Insurance Experiment (RAND HIE) had previously shown that cost sharing resulted in a decline of both beneficial services and services of questionable value. In a press release announcing this new RAND study, co-author Amelia Haviland stated, “We discovered that costs go down dramatically during the first year people are enrolled in high-deductible health plans, as long as the deductible is at least $1,000 per person. But we also found concerning reductions in use of preventive care. This suggests people are cutting both necessary and unnecessary care.”

We do need to be concerned about costs, but there are many different policies that can control costs. Any policy that reduces spending by reducing beneficial services that patients should be receiving is bad policy. High-deductible health plans represent bad policy. They should be eliminated.

It is particularly annoying to hear policy experts say that we can’t control costs unless we put patients in charge of spending their own health care dollars, as if that were the only cost reduction tool available. Here’s what the authors of this study have to say:

“Employers often make contributions to personal medical accounts to provide incentives to employees to switch to high-deductible plans, as high enrollments are necessary to capture substantial cost savings. Some have posited that such contributions would reduce the cost savings of HDHPs (high-deductible health plans) or CDHPs (consumer-directed health plans which are HDHPs with health savings accounts) by undermining consumer cost sensitivity. However, this was not the case for HDHPs or CDHPs with moderate employer contributions. These HDHPs or CDHPs seem to reduce spending as much as plans with similar deductibles but no employer account contribution.” (High employer contributions also reduced spending, but not as much.)

Instead of erecting financial barriers to beneficial health care services, we need to erect a financing infrastructure that blocks spending on wasteful administrative excesses and non-beneficial services, while promoting access to appropriate health care. The single payer model is designed specifically to get patients the care that they need while eliminating wasteful spending.

Elliott Fisher questions whether ACOs will work

The Model of the Future?

By Avery Johnson
The Wall Street Journal
March 28, 2011

The 2010 health-care law encourages the development of accountable-care organizations as a way to improve care and reduce costs.

So what exactly are accountable-care organizations, anyway?

In broad outline, these entities propose to unite doctors and clinics or hospitals in groups that pool their resources with the goal of trimming spending while boosting the quality of care. When the group can show that it is improving care and delivers it for less than the cost projected—arrived at by crunching historical patient data for that market—a share of the savings goes to the ACO’s bottom line.

ACOs exist more on paper than in reality, for now.

“An ACO is like a unicorn; everyone thinks they know what one is, but no one has ever seen one,” says Gene Lindsey, president and chief executive of Atrius Health.

Elliott Fisher, the Dartmouth Medical School professor who helped coin the term ACO, and who worked with members of Congress to draft the ACO concept into the health-care law, concedes that “there are some really important questions about whether this will work.”

But, Dr. Fisher adds: “I think it’s the best hope we have.”

http://online.wsj.com/article/SB10001424052748703300904576178213570447994.html

And…

Cost control the next step for Massachusetts health reform

By Tanya Albert Henry
American Medical News
March 28, 2011

In February, Massachusetts Gov. Deval Patrick unveiled his cost-containment plan to follow up on the landmark 2006 coverage expansions. If approved by legislators, it would define and encourage accountable care organizations within the state; give the state insurance commissioner the ability to scrutinize insurers’ rates, including underlying physician pay, and disapprove rates that are excessive; and revamp the medical liability system to try to resolve disputes more quickly and curb defensive medicine.

Accountable care organizations

* Mandates that ACOs provide patient-centered primary care coordination and referral services.

* Requires ACOs to share financial risk, distribute savings and meet quality measures.

* Expects ACOs to be competent in population health management, financial and contract management, quality measurements, and communication.

* Charges ACOs with providing behavioral health services, either internally or by contract.

* Makes physician participation voluntary.

* Allows primary care physicians to belong to only one ACO but places no limits on specialists.

* Requires MassHealth, the Group Insurance Commission, the Commonwealth Connector and all other state-funded insurance programs to implement ACOs and alternative payments by January 2014.

http://www.ama-assn.org/amednews/2011/03/28/gvsb0328.htm

Comment: 

By Don McCanne, MD

Accountable care organizations (ACOs) began as an abstract concept of integrating health care providers into a not-yet-defined entity that would be rewarded for improving quality and reducing costs. Without knowing what they were, Congress included them in the Affordable Care Act (ACA). Dartmouth’s Elliott Fisher, who was one of the first to promote the concept, now says that “there are some really important questions about whether this will work.”

Nevertheless, Massachusetts, which is serving as a prototype for the now-enacted ACA, is intending to move forward with its version of ACOs. Their model not only measures quality and distributes savings, but it also shares financial risk. Also it includes exclusive primary care networks, limiting patient choices. The intent of Dr. Fisher and his colleagues is very noble, but it appears that we may be opening up the process to enable a return to the worst of the managed care era.

Quoting from a personal communication from Steffie Woolhandler and David Himmelstein, “Universal, geographically-based, non-profit ACOs are called a national health service, a reform we would heartily endorse. Unfortunately, the ACOs actually being pursued are profit-driven recreations of full-risk capitated HMOs.”

Very soon HHS will be releasing their guidelines for ACOs. The question we need to ask then is will these organizations be designed specifically to provide patients higher quality care at more reasonable costs, as Dr. Fisher envisions, or will they be designed by businessmen to… well, you know.

Medical students rally for single-payer system in Vermont

By Daniel Staples, Staff Writer
Times-Argus (Barre-Montpelier, Vt.), March 27, 2011

MONTPELIER, Vt. — U.S. Sen. Bernie Sanders and Gov. Peter Shumlin spoke before health profession students who gathered Saturday at the Statehouse in support of single-payer health care.

The Vermont House passed a version of the universal health care bill, which is being championed by Shumlin, with a party-line vote of 92-49 Thursday.

The bill, which will be debated in the Senate, is a critical step toward the creation of a publicly financed medical system that would deliver benefits to every resident of the state.

The students, who came from New England, New York and Pennsylvania, and as far away as Oregon, expressed concerns over the mire of paperwork and bureaucracy that they say would hamper them from practicing medicine in the way they are being trained to.

“I want my future patients to have a comprehensive health care insurance,” said Larry Bodden, a medical student at the University of Vermont.

“Whether or not the single-payer health care reforms are passed could have an effect on where I decide to practice,” Bodden said.

Bodden said he believes having a single-payer system could draw top medical professionals to the state to practice.

Bodden and 38 other medical students at the school have written and signed a letter that lays out what they would like to see in a single-payer health care system that included attracting high-quality health care professionals to the state. The letter, Bodden said, is the students’ way to influence the passing of single-payer health care reforms.

“Our goal is to have a single-payer system that is balanced and sustainable,” Bodden said.

UVM Medical School student Calvin Kegan said he came out for the event because he thinks that, “as Vermont is courageously undertaking the path to universal health care that is more sustainable as a whole, it is important for future health care professionals to express their support for legislation that could affect them throughout their entire practices.”

Kegan said that he believes the current system is frustrating for physicians as the paperwork and bureaucracy can be cumbersome.

A copy of the letter was presented to Sanders, who said that he would submit it to be included in the congressional record.

“It’s inspiring,” said Sanders. “It’s one thing for Vermonters to get behind this cause, but when you see physicians and young people from all over leading the way for health care reform, you begin to see that they are saying that they can’t provide the care they want to with the system we have in place now.”

Sanders said that politicians and lobbyists, including those for drug and insurance companies in Washington, are watching the progress of the Vermont health-care bill very closely.

“If we win here, they know it will spread,” Sanders said.

In his address to the crowd, Sanders said that under the current system patients often wait too long to seek care, and when they finally do, they are much sicker, which leads to more hospitalizations and emergency room visits.

Sanders said that with a new system, patients will be able to seek care before their conditions reach such desperate stages.

Shumlin touted his belief that Vermont can lead the way for health care reform for the nation.

Hundreds Of Health Advocates Rally For Single Payer System

Doctors Say It Would Save Money, Provide Better Treatment

WPTZ TV News (Burlington, Vt.), March 26, 2011

MONTPELIER, Vt. — Hundreds of health advocates and lawmakers rallied for a single payer health system inside Vermont’s Statehouse Saturday afternoon. The sweep of support comes two days after Vermont’s House of Representatives approved a bill for a single payer system.

There was little room to move as medical students and Vermont lawmakers packed the conference room. Many stood up one by one to make their appeals for single payer, which they say will better serve patients.

“A single payer system is the kind of system that really gives you the freedom to not only choose who you’re health care provider is, but freedom for a healthcare provider to provide the treatment that best fits,” Dr. Elizabeth Samuels, who is studying at Tufts University said.

“The are saying in order to do our profession right we have to provide health care to every man, woman, and child and they must do it in a cost effective way,” U.S. Sen. Bernie Sanders said.

Physicians say single payer healthcare will cut spending because patients can be seen more frequently and faster, which will prevent a more time-consuming and costly treatment.

Ultimately, those rallying hope to see the same sweep of approval for single payer healthcare by Vermont state senators.

http://www.wptz.com/news/27332474/detail.html

Supporting single payer

By Andy Potter
WCAX TV News (Montpelier, Vt.), March 26, 2011

MONTPELIER, Vt. — Advocates of a single payer health care system in Vermont rallied at the state house Saturday.  It came following the passage of a single payer bill in the House this week.

It had the feel of a labor rally, and in fact many of the advocates of single payer work in health care or attend medical school.

“What is unique and important about your presence here today is that you are saying I want to be the best doctor that I can be, but I can’t be that unless we change the system,” said Senator Bernie Sanders.

When it comes to single payer, the devil is in the details. For instance, Governor Shumlin has put off any discussion of how to pay for single payer — which taxes to raise — and what to do about unions, which have negotiated generally pretty good benefits for themselves.

Many advocates say they’re not concerned about losing income in the medical profession under single payer.

“Having a single payer being able to control payments in a way. They’re able to negotiate prices down and overall create a cheaper health care system for all,” said Stanton Shek of the Dartmouth Medical School.  When asked if he is to work for less money, Shek Replied, “Yes, although it’s not about less money. A doctor’s main concern is for patients.”

“I want to be able to care for everyone. Right now people are not coming in. Their deductibles are too high or they don’t have insurance. And they’re not getting the care they need,” said Primary Care Doctor Peggy Carey.   When asked if she was willing to work for less money, Carey replied, “absolutely.”

Supporters of single payer say that’s the way it’s supposed to be — the patient comes first. That’s the ideal at work here.

Full story, with video footage:
http://www.wcax.com/global/story.asp?s=14328153

Elliott Fisher questions whether ACOs will work

The Model of the Future?

By Avery Johnson
The Wall Street Journal
March 28, 2011

The 2010 health-care law encourages the development of accountable-care organizations as a way to improve care and reduce costs.

So what exactly are accountable-care organizations, anyway?

In broad outline, these entities propose to unite doctors and clinics or hospitals in groups that pool their resources with the goal of trimming spending while boosting the quality of care. When the group can show that it is improving care and delivers it for less than the cost projected—arrived at by crunching historical patient data for that market—a share of the savings goes to the ACO’s bottom line.

ACOs exist more on paper than in reality, for now.

“An ACO is like a unicorn; everyone thinks they know what one is, but no one has ever seen one,” says Gene Lindsey, president and chief executive of Atrius Health.

Elliott Fisher, the Dartmouth Medical School professor who helped coin the term ACO, and who worked with members of Congress to draft the ACO concept into the health-care law, concedes that “there are some really important questions about whether this will work.”

But, Dr. Fisher adds: “I think it’s the best hope we have.”

http://online.wsj.com/article/SB10001424052748703300904576178213570447994.html

And…

Cost control the next step for Massachusetts health reform

By Tanya Albert Henry
American Medical News
March 28, 2011

In February, Massachusetts Gov. Deval Patrick unveiled his cost-containment plan to follow up on the landmark 2006 coverage expansions. If approved by legislators, it would define and encourage accountable care organizations within the state; give the state insurance commissioner the ability to scrutinize insurers’ rates, including underlying physician pay, and disapprove rates that are excessive; and revamp the medical liability system to try to resolve disputes more quickly and curb defensive medicine.

Accountable care organizations

* Mandates that ACOs provide patient-centered primary care coordination and referral services.

* Requires ACOs to share financial risk, distribute savings and meet quality measures.

* Expects ACOs to be competent in population health management, financial and contract management, quality measurements, and communication.

* Charges ACOs with providing behavioral health services, either internally or by contract.

* Makes physician participation voluntary.

* Allows primary care physicians to belong to only one ACO but places no limits on specialists.

* Requires MassHealth, the Group Insurance Commission, the Commonwealth Connector and all other state-funded insurance programs to implement ACOs and alternative payments by January 2014.

http://www.ama-assn.org/amednews/2011/03/28/gvsb0328.htm

Accountable care organizations (ACOs) began as an abstract concept of integrating health care providers into a not-yet-defined entity that would be rewarded for improving quality and reducing costs. Without knowing what they were, Congress included them in the Affordable Care Act (ACA). Dartmouth’s Elliott Fisher, who was one of the first to promote the concept, now says that “there are some really important questions about whether this will work.”

Nevertheless, Massachusetts, which is serving as a prototype for the now-enacted ACA, is intending to move forward with its version of ACOs. Their model not only measures quality and distributes savings, but it also shares financial risk. Also it includes exclusive primary care networks, limiting patient choices. The intent of Dr. Fisher and his colleagues is very noble, but it appears that we may be opening up the process to enable a return to the worst of the managed care era.

Quoting from a personal communication from Steffie Woolhandler and David Himmelstein, “Universal, geographically-based, non-profit ACOs are called a national health service, a reform we would heartily endorse. Unfortunately, the ACOs actually being pursued are profit-driven recreations of full-risk capitated HMOs.”

Very soon HHS will be releasing their guidelines for ACOs. The question we need to ask then is will these organizations be designed specifically to provide patients higher quality care at more reasonable costs, as Dr. Fisher envisions, or will they be designed by businessmen to… well, you know.

We need single-payer, nonprofit health insurance

By Garrett Adams
Lexington Herald-Leader, March 27, 2011

Since the passage of its landmark health reform law of 2006, the people of Massachusetts have been living like a canary in a coal mine. National health policy experts have been watching them, closely studying how they’re faring under the reform.

That watch intensified after enactment of the new federal health law, which is patterned after the Massachusetts plan. Both laws contain an individual mandate requiring people to buy private insurance, for example. The theory is that, as the Bay State goes, so goes the nation.

The first reports were glowing. The number of uninsured went down. Massachusetts now boasts the lowest percentage of uninsured residents in the nation, 4.4 percent.

But with the passage of time, and despite generous dollops of supplementary federal aid to help keep the Massachusetts plan afloat, the canary isn’t looking too chipper these days.

Insurance premiums and out-of-pocket health costs keep rising. These skyrocketing costs prompted Gov. Deval Patrick to call for the program’s “overhaul” just last week.

Now comes a Harvard research study showing that despite the increase in the number of people covered, the Massachusetts reform hasn’t made a significant dent in the medical bankruptcy rate. Families still are being ruined by unpayable medical bills.

The researchers discovered that between early 2007 and mid-2009 — before and after the reform took effect — the share of medical bankruptcies in Massachusetts changed very little, from 59.3 percent to 52.9 percent. The absolute number of medical bankruptcies actually climbed from 7,504 to 10,093.

Lest you think only low-income families are being financially clobbered by medical debt, think again. Two-thirds of the bankruptcy filers were college-educated and 89 percent had health insurance when they filed their court papers.

In explanation, the authors of the study, which appears in the American Journal of Medicine, write: “Health costs in the state have risen sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts — as in other states — afflicted middle-class families with health insurance. High premium costs and gaps in coverage — co-payments, deductibles and uncovered services — often left insured families liable for substantial out-of-pocket costs. None of that changed.”

Lead author Dr. David Himmelstein elaborates: “Massachusetts’ health reform, like the national law modeled after it, takes many of the uninsured and makes them under-insured, typically giving them a skimpy, defective private policy that’s like an umbrella that melts in the rain: The protection’s not there when you need it.”

Needless to say, these findings don’t bode well for the look-alike federal law’s ability to end the scandalous blight of medical bankruptcies in the U.S. And behind these statistics are tragic, heart-rending stories.

The crux of the problem is this: Both the Massachusetts law and the new federal law are based on the crumbling foundation of for-profit, employer-based health insurance, a financing model that has outlived its usefulness.

Our present setup is a crazy-quilt patchwork of plans that results in huge inefficiencies and mountains of wasteful paperwork — just ask your doctor! And our current arrangements contain a deeply embedded incentive for private insurers to enlarge their profits by enrolling the healthy, screening out the sick and denying claims.

In Canada, which has a truly universal, non-profit single-payer system of financing care called medicare (bearing resemblance to our own much more limited Medicare program), medical bankruptcies are virtually unknown.

Sure, you’ll hear the occasional exaggerated story about wait times in Canada. But if you want to hear real horror stories, you need look no further than our own community. And if you ask Canadians if they’d prefer a U.S.-style health system, 9 out of 10 will say no.

It’s never too late to do the right thing. Congress should move beyond patchwork solutions and implement a streamlined single-payer system, an improved Medicare for all.

The savings in bureaucracy alone would be enough to cover everyone, and the threat of medical bankruptcy would vanish overnight. Significantly a single-payer system’s bargaining power would control costs.

We can’t wait for the canary to keel over.

Dr. Garrett Adams is a pediatric infectious diseases specialist in Louisville He is a co-founder of Physicians for a National Health Program-Kentucky and president of Physicians for a National Health Program

Read more:
http://www.kentucky.com/2011/03/27/1686304/we-need-single-payer-nonprofit.html

IBM should support single-payer

By MARVIN MALEK
Barre-Montpelier (Vt.) Times Argus, March 26, 2011

I was astonished when I read the rationale given by IBM’s John O’Kane in opposing the inclusion of IBM and other self-insured companies into the single-payer system the Legislature is attempting to craft.

His reason for opposition: Doing so would “introduce inequity among employers and introduce new administrative costs.”

I do not know what country Mr. O’Kane lives in. In case he lives in the United States, it’s really hard to see how he could fail to notice that many employers are scrambling to find affordable insurance policies for their employees, paying higher prices for ever poorer coverage, and that the inequity among employers is gaping. Many small businesses can’t find affordable coverage at any price. In the majority of states which don’t have community rating laws, employers can be severely punished for hiring ill employees.

They may be priced out of the market entirely. Meanwhile, in every other developed country (most every one has some version of a single-payer system), all employers are treated in an equitable, consistent manner, not punished for hiring individuals with chronic illness, and they pay far less for their employees’ health coverage than they pay here in the United States.

Consequently, support of single-payer systems among businesses in every one of those countries is virtually universal. In fact, I am not aware of IBM or any of the other companies mentioned in the article lobbying these other governments to change to a U.S.-like free-for-all insurance system.

And the argument that such a proposal would raise administrative costs would seem to locate O’Kane in some alternate reality. Currently, IBM’s employees may or may not accept coverage (e.g. if they can’t afford their portion of the premium, or receive coverage through their spouse or through Medicare), and if they refuse coverage and the employee fits into a specific category, then IBM may have to contribute to the Catamount fund. Newer employees may be in a category of “not yet eligible.” Some employees may opt for individual coverage, others for family coverage. By the way, over the last three years, a new cost-control strategy of large national companies has been to provide incentives — sometimes direct financial payoffs — to elect individual rather than family coverage, and raising premiums for family coverage much more than the employee contribution for individual coverage. Not exactly a step forward for the kids of the country.

On the other hand, if Vermont adopts a single-payer system, then all Vermont employees will be treated in the identical fashion. All employees — and their family members — are covered, and payments into the system are predictable. In fact, the system would be so simple, that it’s hard to understand why IBM would not be able to save money by reducing the staffing in their personnel department.

In contrast, the massive administrative burden the existing multi-insurer system imposes on every medical provider is orders of magnitude more complex than anything IBM could possibly be describing. Every one of these self-insured companies that doctors and hospitals contend with have different procedures for approving tests and X-rays, different billing procedures, different drug formularies, and different panels of specialists on the companies’ lists of preferred providers. And added to the complexity are the policies of Medicaid, Medicare, the other insurers in the state, the workers compensation insurers, retiree supplemental policies, etc. The necessity to hire so many employees in our billing and administrative departments forces us to boost the price of every medical bill we send to patients, and to insurers. IBM and Walmart also are paying for all our administrative employees.

In addition, if every Vermonter is brought into the single-payer system, the comprehensive single payer database will allow us to detect aberrant practice patterns and fraud much more easily than the current chaotic system allows. And we will be in a much stronger position to negotiate better prices for hospital beds, wheelchairs and perhaps finally stop paying 50 percent more than all the single payer countries do for prescription drugs.

So I ask IBM, Home Depot and other national companies to act in a way that will create a better future for Vermont by creating an affordable single-payer health care system. You haven’t been complaining in any of the other single-payer countries, why not support it here in the United States?

Dr. Marvin Malek is an internist working at Central Vermont Hospital on the hospital care team. He is a member of Vermont Physicians for a National Health Program.