PNHP

Two year Medicare waiting period for those with disabilities

Two year Medicare waiting period for those with disabilities

Groups Press Congress To End Patients' Wait For Medicare

By Jessica Marcy
Kaiser Health News
August 27, 2010

Under federal rules, most people with disabilities who are younger than 65 aren’t eligible for Medicare until more than two years after they qualify for Social Security disability income. A coalition of more than 65 organizations led by the Medicare Rights Center has been pushing Congress to do away with the waiting period. But the effort has stalled because of the high cost to the federal government – an estimated $113 billion over 10 years, according to the Congressional Budget Office. That takes into account a $32 billion reduction in federal spending on Medicaid, the state-federal program for the poor and the disabled. Many people with disabilities go on Medicaid while they wait to become eligible for Medicare.

When Medicare expanded in 1972 to cover the disabled, Congress created the waiting period to help control costs and ensure that only people with severe, ongoing disabilities received coverage. About 17 percent of Medicare’s total 47 million beneficiaries – just over 8 million people in 2010 – receive disability benefits, according to the Kaiser Family Foundation.

Still, the patient groups are pushing to end the Medicare waiting period because many people may still need government help. Currently, nearly 39 percent of patients are uninsured for at least some of the time during the Medicare two-year waiting period while 26 percent have no insurance for the entire time.

Discarding the Medicare waiting period “is always going to be an issue in Congress,” said Edmund Haislmaier, senior health policy research fellow at the Heritage Foundation. “Some of it is money, some of it is politics, too. For members of Congress, irrespective of party or where they stand on the issue, it’s kind of all-or-nothing because if they did it for some diseases, then they’re immediately going to be inundated with ‘Why didn’t you do it for us?'”

Joseph Antos, health care policy scholar at the American Enterprise Institute, said that a total elimination of the waiting period was not going to happen. “Across the board eliminating the two years just doesn’t seem practical,” he said. “This really is a money issue.”

http://www.kaiserhealthnews.org/Stories/2010/August/27/huntington-waiting-period.aspx

Comment: 

By Don McCanne, MD

When Congress expanded Medicare to cover individuals under 65 with long-term disabilities, they specified a two year waiting period to be certain that only those with truly permanent disabilities would be admitted to the program. Obviously this creates a hardship for precisely those for whom the eligibility was established. Will the Patient Protection and Affordable Care Act (PPACA) adequately address this injustice?

PPACA did not include any adjustments in the two year waiting period. Consequently different groups representing specific chronic disorders are lobbying for exceptions to the two year wait. Even if some of these groups achieve legislative success, it will not help the others who must wait the two years.

Since many lose their insurance and their income during that two year wait, some may become eligible for the expanded Medicaid program. Yesterday’s message explained how Medicaid may leave those with chronic disorders underinsured with impaired outcomes, so this is certainly not a satisfactory solution. Besides, many with inadequate incomes may still fall above the threshold for Medicaid eligibility.

For those who lose their insurance during the two year wait, the individual mandate would require that they purchase private plans. Even with premium subsidies, these plans may still not be affordable. Besides, their low actuarial values will not provide adequate protection for these individuals with high health care costs, even with out-of-pocket spending subsidies.

PPACA included the CLASS Act (Community Living Assistance Services and Supports Act) designed to provide long-term care insurance. Though you might think that this provides an out, there are significant problems with CLASS. The program is voluntary and the individual must pay premiums for five years before benefits are available. That alone will exclude those with modest incomes who might consider the premiums to be unaffordable, especially for a program they can’t use for five years and may never need. Furthermore, the benefits are anticipated to be quite meager and likely will provide only a modest daily cash benefit. The CLASS Act will not fulfill the insurance need for the two year gap.

The comments from the representatives of the Heritage Foundation and the American Enterprise Institute describe the real hurdles: politics and money. It’s not that we can’t find the money, but the anti-government politics of today is driven by the philosophy that the government has been drained dry so that no funds are available. That is ridiculous. Our national health expenditures are already adequate, but the funds are inequitably and inefficiently distributed. We need more government involvement, not less, in providing stewardship over our health care funds.

The two year waiting period is yet one more example of the profound injustices inherent in our fragmented, dysfunctional health care financing system – a unsound and iniquitous system perpetuated by Congress through the enactment of PPACA. All of this evil nonsense would go away if they instead would enact a single payer, improved Medicare for all.

Two year Medicare waiting period for those with disabilities

Groups Press Congress To End Patients’ Wait For Medicare

By Jessica Marcy
Kaiser Health News
August 27, 2010
Under federal rules, most people with disabilities who are younger than 65 aren’t eligible for Medicare until more than two years after they qualify for Social Security disability income. A coalition of more than 65 organizations led by the Medicare Rights Center has been pushing Congress to do away with the waiting period. But the effort has stalled because of the high cost to the federal government – an estimated $113 billion over 10 years, according to the Congressional Budget Office. That takes into account a $32 billion reduction in federal spending on Medicaid, the state-federal program for the poor and the disabled. Many people with disabilities go on Medicaid while they wait to become eligible for Medicare.
When Medicare expanded in 1972 to cover the disabled, Congress created the waiting period to help control costs and ensure that only people with severe, ongoing disabilities received coverage. About 17 percent of Medicare’s total 47 million beneficiaries – just over 8 million people in 2010 – receive disability benefits, according to the Kaiser Family Foundation.
Still, the patient groups are pushing to end the Medicare waiting period because many people may still need government help. Currently, nearly 39 percent of patients are uninsured for at least some of the time during the Medicare two-year waiting period while 26 percent have no insurance for the entire time.
Discarding the Medicare waiting period “is always going to be an issue in Congress,” said Edmund Haislmaier, senior health policy research fellow at the Heritage Foundation. “Some of it is money, some of it is politics, too. For members of Congress, irrespective of party or where they stand on the issue, it’s kind of all-or-nothing because if they did it for some diseases, then they’re immediately going to be inundated with ‘Why didn’t you do it for us?'”
Joseph Antos, health care policy scholar at the American Enterprise Institute, said that a total elimination of the waiting period was not going to happen. “Across the board eliminating the two years just doesn’t seem practical,” he said. “This really is a money issue.”
http://www.kaiserhealthnews.org/Stories/2010/August/27/huntington-waiting-period.aspx

When Congress expanded Medicare to cover individuals under 65 with long-term disabilities, they specified a two year waiting period to be certain that only those with truly permanent disabilities would be admitted to the program. Obviously this creates a hardship for precisely those for whom the eligibility was established. Will the Patient Protection and Affordable Care Act (PPACA) adequately address this injustice?
PPACA did not include any adjustments in the two year waiting period. Consequently different groups representing specific chronic disorders are lobbying for exceptions to the two year wait. Even if some of these groups achieve legislative success, it will not help the others who must wait the two years.
Since many lose their insurance and their income during that two year wait, some may become eligible for the expanded Medicaid program. Yesterday’s message explained how Medicaid may leave those with chronic disorders underinsured with impaired outcomes, so this is certainly not a satisfactory solution. Besides, many with inadequate incomes may still fall above the threshold for Medicaid eligibility.
For those who lose their insurance during the two year wait, the individual mandate would require that they purchase private plans. Even with premium subsidies, these plans may still not be affordable. Besides, their low actuarial values will not provide adequate protection for these individuals with high health care costs, even with out-of-pocket spending subsidies.
PPACA included the CLASS Act (Community Living Assistance Services and Supports Act) designed to provide long-term care insurance. Though you might think that this provides an out, there are significant problems with CLASS. The program is voluntary and the individual must pay premiums for five years before benefits are available. That alone will exclude those with modest incomes who might consider the premiums to be unaffordable, especially for a program they can’t use for five years and may never need. Furthermore, the benefits are anticipated to be quite meager and likely will provide only a modest daily cash benefit. The CLASS Act will not fulfill the insurance need for the two year gap.
The comments from the representatives of the Heritage Foundation and the American Enterprise Institute describe the real hurdles: politics and money. It’s not that we can’t find the money, but the anti-government politics of today is driven by the philosophy that the government has been drained dry so that no funds are available. That is ridiculous. Our national health expenditures are already adequate, but the funds are inequitably and inefficiently distributed. We need more government involvement, not less, in providing stewardship over our health care funds.
The two year waiting period is yet one more example of the profound injustices inherent in our fragmented, dysfunctional health care financing system – a unsound and iniquitous system perpetuated by Congress through the enactment of PPACA. All of this evil nonsense would go away if they instead would enact a single payer, improved Medicare for all.

Count yourselves blessed for the medicare you have

By Clark Newhall
The Charlottetown Guardian, Prince Edward Island, Canada
August 26th, 2010
 
I live in the U.S. 10 months of the year and in P.E.I. two months. From the election of Obama to the present, I have strongly advocated for medical care financed like Canada’s medicare. We have your system in the U.S. and we, too, call it Medicare — but we Americans only have the right to decent health care if we are over 65. Our last best chance to achieve what you have achieved — person-based health care instead of money-maker medicine — disappeared when Obama could not or would not stand up to bottom-feeders like Limbaugh, Beck and the Drudge Report.

Now the U.S. is on the way to a completely ‘market’ driven form of health care — if you are worth little in the ‘market’, then your health and your life is also worth little.

During our 10 years here, we have been in the Queen Elizabeth Hospital ER and in Souris hospital several times with our epileptic child. The experiences we have had are typical of ER’s everywhere — sometimes we wait, sometimes not — sometimes we get frustrated, sometimes not. Obviously, as non-citizens here in Canada, we don’t have the right to health care that you take for granted. But never in Canada — repeat, never — have we had the demeaning denigrating humiliating experience, so common in the U.S., of being treated as a second (or lower) class citizen because we don’t have health insurance.

I am a lawyer and an ER doctor. Nearly every person who comes to me with an injury caused by medical care is also a person who did not have insurance. In other words, your way of providing health care to everyone is also the reason that your health care is healthy and safe. When doctors know that everyone is equal, then everyone is treated with equal skill and attention. It works that way here, as it should. Despite what you may hear from wingnuts who read Drudge and other smudges, it does not work that way in the U.S., and it will never work that way as long as the ‘market’ rules medicine.

Count yourselves blessed for the medicare that you have. When we return to the U.S. in a few days, I will wish we had what you take for granted.

Clark Newhall MD JD is a physician and attorney in Salt Lake City, UT and a summer resident of Monticello, P.E.I. He founded HealthJustice.org which, along with Mike Farrell of TV’s M*A*S*H, produced a national TV campaign in 2009 explaining Medicare For All to Americans.

http://www.theguardian.pe.ca/Opinion/Letters-to-editor/2010-08-26/article-1699842/Count-yourselves-blessed-for-the-medicare-you-have/1

Rampant underinsurance in children

Underinsurance among Children in the United States

By Michael D. Kogan, Ph.D., Paul W. Newacheck, Dr.P.H., Stephen J. Blumberg, Ph.D., Reem M. Ghandour, Dr.P.H., Gopal K. Singh, Ph.D., Bonnie B. Strickland, Ph.D., and Peter C. van Dyck, M.D., M.P.H.
The New England Journal of Medicine
August 25, 2010

ABSTRACT

Background

Recent interest in policy regarding children’s health insurance has focused on expanding coverage. Less attention has been devoted to the question of whether insurance sufficiently meets children’s needs.

Methods

We estimated underinsurance among U.S. children on the basis of data from the 2007 National Survey of Children’s Health (sample size, 91,642 children) regarding parents’ or guardians’ judgments of whether their children’s insurance covered needed services and providers and reasonably covered costs. Data on adequacy were combined with data on continuity of insurance coverage to classify children as never insured during the past year, sometimes insured during the past year, continuously insured but inadequately covered (i.e., underinsured), and continuously insured and adequately covered. We examined the association between this classification and five overall indicators of health care access and quality: delayed or forgone care, difficulty obtaining needed care from a specialist, no preventive care, no developmental screening at a preventive visit, and care not meeting the criteria of a medical home.

Results

We estimated that in 2007, 11 million children were without health insurance for all or part of the year, and 22.7% of children with continuous insurance coverage — 14.1 million children — were underinsured. Older children, Hispanic children, children in fair or poor health, and children with special health care needs were more likely to be underinsured. As compared with children who were continuously and adequately insured, uninsured and underinsured children were more likely to have problems with health care access and quality.

Conclusions

The number of underinsured children exceeded the number of children without insurance for all or part of the year studied. Access to health care and the quality of health care are suboptimal for uninsured and underinsured children. (Funded by the Health Resources and Services Administration.)

From the Discussion

We found that inadequate coverage of charges was far and away the most common source of underinsurance. We also found that children enrolled in private plans were more than three times as likely as their counterparts in public plans to have inadequate coverage of charges. This dramatic difference is probably the result of federal rules that permit only very limited cost sharing under Medicaid and modest cost sharing under the Children’s Health Insurance Program.

http://healthpolicyandreform.nejm.org/?p=12176&query=TOC

And…

Treating Underinsurance

By James M. Perrin, M.D.
Editorial, The New England Journal of Medicine
August 25, 2010

Health care reform, through the Patient Protection and Affordable Care Act of 2010, may improve access to needed health care services for people with chronic health conditions, including children. Key private insurance reforms, including the removal of provisions imposing lifetime limits or unreasonable limits on annual benefit, the removal of discriminatory premium rates, guaranteed availability of coverage, and dependent coverage for young people up the age of 26 years, may go a long way toward improving coverage for Americans and lowering out-of-pocket costs.

However, the growth in child and adolescent disability, combined with the problem of underinsurance and its effects on the quality of care and access to care, also highlights gaps that will remain in public insurance coverage even after the institution of safeguards affecting private coverage. The basic Medicaid program, unlike Medicare, includes long-term care benefits, such as care at home or in nursing homes and specialized therapies, and it serves as a vital source of financing for nursing home care (about 41% of current total nursing home support). The assumption that most children are healthy, however, has led policymakers to limit long-term care and coverage of a number of other benefits for chronic conditions in other programs for children. SCHIP provided a less generous benefit package — and excluded coverage of services for many chronic conditions (e.g., respiratory therapy, speech and language services, and home-based services) on the basis of the belief that the SCHIP population would not need such benefits. Research conducted since the enactment of SCHIP has indicated that substantial numbers of enrolled children have chronic conditions and could benefit from these services.

The Affordable Care Act calls for a major expansion in Medicaid, especially to provide insurance for a large number of currently uninsured and ineligible adults — that is, those under 65 years of age who have incomes below 133% of the federal poverty line (an estimated 12 million to 17 million people). Here, too, the benefit package will resemble the SCHIP (now CHIP) benefit, with an emphasis on coverage of care for acute conditions and less generous coverage of long-term care. Yet the members of the low-income adult population who will become eligible under this Medicaid expansion include substantial numbers of people with chronic conditions, especially mental health conditions. Here, too, for cases in which long-term care is needed, the Medicaid expansion may leave many newly insured people underinsured. For those instances in which the major epidemics of chronic conditions among adolescents have already begun to affect the young adult population, it is unlikely that many of these young people, even with their new Medicaid coverage, will receive the coverage they need for long-term care.

http://healthpolicyandreform.nejm.org/?p=12178&query=TOC

Comment: 

By Don McCanne, MD

Being underinsured often results in the same or similar adverse outcomes as not being insured at all. This study demonstrates that the problem of underinsurance amongst children is even more widespread than being uninsured. Does the Patient Protection and Affordable Care Act (PPACA) adequately address this shameful injustice?

PPACA does expand coverage for children through the individual mandate to purchase private insurance, though this study demonstrates that private insurance plans were three times as likely as public insurance plans to have inadequate coverage of charges. Thus PPACA, while reducing the numbers who are uninsured, actually increases the incidence of underinsurance. Most will still be insured through private employer-sponsored plans. For those purchasing their plans through the exchanges, the subsidies will provide some relief but still will not be not adequate to eliminate underinsurance.

PPACA also expands Medicaid, though primarily for adults. Although Medicaid and CHIP cover out-of-pocket expenses better than do the private plans, the editorial by James Perrin explains how lower-income individuals in these programs may still be underinsured. This is particularly true of those with chronic conditions who may need long-term care.

An appropriately designed single payer system eliminates the problem of underinsurance by eliminating significant cost sharing for all appropriate health care services. The efficiencies and policies of the single payer model create enough savings to pay these costs equitably without increasing our national health expenditures.

As long as we remain content with merely tweaking PPACA, we will continue to live in a society that tolerates exposing individuals and families to the hardships created by underinsurance or by having no insurance at all. Certainly we must be a better nation than that.

Oregon to Look at Single-Payer Bill Next Session

Advocates for a dedicated tax to pay for basic health coverage want to introduce a single-payer bill next session

By David Rosenfeld
The Lund Report (Ore.), Aug. 25, 2010

A loose coalition of single-payer advocates in Oregon has taken the first steps toward developing legislation for the 2011 session

The bill would ultimately work in conjunction with the state’s ongoing efforts to form a health insurance exchange and possibly a public option, supporters say.

State Rep. Michael Dembrow, a first-term Democrat from northeast Portland, is interested in sponsoring a state-based single-payer bill, but first wants to give advocates a chance to reach consensus.

Groups involved in the effort include Portland Jobs with Justice, Physicians for a National Health Program with chapters in Corvallis and Portland, Health Care For All Oregon and the League of Women Voters.

“It’s all very preliminary,” Dembrow said. “There are many of us who feel that ultimately the best way to pay for healthcare is through a single-payer program – not deliver it, but pay for it. It’s something that needs to remain in the conversation.”

States including Vermont, Minnesota, Pennsylvania and California – where a Democratic-controlled legislature twice passed single-payer bills that were vetoed by Gov. Arnold Schwarzenegger – are also working on single-payer legislation this year.

A recent letter from U.S. Sen. Ron Wyden (D-Oregon) to Democratic and Republican leaders in the Oregon Legislature gave encouragement to the idea of seeking federal waivers so states can pursue innovative ideas that go further than the federal law. The letter did not, however, offer any specific concepts.

“I write to lend my support to your efforts to develop an Oregon-specific plan for our state to do health reform its own way,” the letter states. “I believe in the concept of ‘state choice,’ and that every state has the right to provide healthcare to its own residents in its own way, as long as the goal is to provide all citizens with quality, comprehensive coverage.”

Wyden said he authored section 1331 of the Patient Protection and Affordable Care Act to give states the ability to continue working toward cost-effective healthcare while retaining access to federal funding.

“We don’t see ourselves as acting in contradiction to anything people are doing in Salem,” said Peter Shapiro, an organizer with Portland Jobs with Justice. “We just see it as part of the mix.”

While the details of the proposed bill haven’t been ironed out, the tenets are strong. There would be a dedicated tax based on ability to pay, universal access, and a shared risk pool to increase purchasing power and reduce administrative costs.

“The basic principle is equity,” Shapiro said. “Everybody should have the same access to treatment regardless of how much risk they are or how much money they have in the bank.”

The group will soon begin working with a consultant on the costs of such a plan and the barriers, including ERISA that governs employee benefits, that could be overcome with federal waivers.

The Oregon State Public Interest Research Group is also pushing state healthcare leaders to do more with what’s already allowed in the federal law passed earlier this year. OSPIRG’s efforts, however, have focused on strengthening the health insurance exchange and creating a strong state-based public health insurance option, not a single-payer plan.

Laura Etherton, OSPIRG’s healthcare lobbyist, is pleased Oregon is among the first states to get out of the blocks to establish an exchange where individuals and small groups can purchase insurance that’s highly regulated and possibly subsidized. But, thus far, the draft plan which was released on Aug 14 falls short, Etherton said.

“Just an exchange by itself is not going to solve all the problems in healthcare,” she said. “But it’s a great tool to help us drive solutions.”

Etherton said the draft plan doesn’t allow the exchange to negotiate premiums on behalf of its members. It could include small businesses with more than 50 employees earlier. It needs stronger public accountability. And it lacks adequate protections to prevent the insurance industry from undermining the exchange’s stability, she said.

According to OSPIRG, the exchange as currently drafted would “let insurers cherry-pick only the healthiest people, and enroll them in plans only available outside the exchange. This would leave older, relatively less-healthy people inside the exchange.”

“The details matter,” Etherton wrote in comments to the draft plan on OSPIRG’s website. “Done right, the exchange will pool the buying power of hundreds of thousands of Oregonians, so all of us can get a better deal on healthcare. But done wrong, the exchange will just be a nifty website with the same expensive plans and spotty coverage.”

Single-payer advocates hope the state goes a whole lot further.

“There are a lot of people who want to see the conversation about single payer still happen,” Dembrow said. “I hope the federal plan will work. I’d like to see the state really seize the moment.”

http://www.thelundreport.org/resource/oregon_to_look_at_single_payer_bill_next_session

Rampant underinsurance in children

Underinsurance among Children in the United States

By Michael D. Kogan, Ph.D., Paul W. Newacheck, Dr.P.H., Stephen J. Blumberg, Ph.D., Reem M. Ghandour, Dr.P.H., Gopal K. Singh, Ph.D., Bonnie B. Strickland, Ph.D., and Peter C. van Dyck, M.D., M.P.H.
The New England Journal of Medicine
August 25, 2010
ABSTRACT
Background
Recent interest in policy regarding children’s health insurance has focused on expanding coverage. Less attention has been devoted to the question of whether insurance sufficiently meets children’s needs.
Methods
We estimated underinsurance among U.S. children on the basis of data from the 2007 National Survey of Children’s Health (sample size, 91,642 children) regarding parents’ or guardians’ judgments of whether their children’s insurance covered needed services and providers and reasonably covered costs. Data on adequacy were combined with data on continuity of insurance coverage to classify children as never insured during the past year, sometimes insured during the past year, continuously insured but inadequately covered (i.e., underinsured), and continuously insured and adequately covered. We examined the association between this classification and five overall indicators of health care access and quality: delayed or forgone care, difficulty obtaining needed care from a specialist, no preventive care, no developmental screening at a preventive visit, and care not meeting the criteria of a medical home.
Results
We estimated that in 2007, 11 million children were without health insurance for all or part of the year, and 22.7% of children with continuous insurance coverage — 14.1 million children — were underinsured. Older children, Hispanic children, children in fair or poor health, and children with special health care needs were more likely to be underinsured. As compared with children who were continuously and adequately insured, uninsured and underinsured children were more likely to have problems with health care access and quality.
Conclusions
The number of underinsured children exceeded the number of children without insurance for all or part of the year studied. Access to health care and the quality of health care are suboptimal for uninsured and underinsured children. (Funded by the Health Resources and Services Administration.)
From the Discussion
We found that inadequate coverage of charges was far and away the most common source of underinsurance. We also found that children enrolled in private plans were more than three times as likely as their counterparts in public plans to have inadequate coverage of charges. This dramatic difference is probably the result of federal rules that permit only very limited cost sharing under Medicaid and modest cost sharing under the Children’s Health Insurance Program.
http://healthpolicyandreform.nejm.org/?p=12176&query=TOC

And…

Treating Underinsurance

By James M. Perrin, M.D.
Editorial, The New England Journal of Medicine
August 25, 2010
Health care reform, through the Patient Protection and Affordable Care Act of 2010, may improve access to needed health care services for people with chronic health conditions, including children. Key private insurance reforms, including the removal of provisions imposing lifetime limits or unreasonable limits on annual benefit, the removal of discriminatory premium rates, guaranteed availability of coverage, and dependent coverage for young people up the age of 26 years, may go a long way toward improving coverage for Americans and lowering out-of-pocket costs.
However, the growth in child and adolescent disability, combined with the problem of underinsurance and its effects on the quality of care and access to care, also highlights gaps that will remain in public insurance coverage even after the institution of safeguards affecting private coverage. The basic Medicaid program, unlike Medicare, includes long-term care benefits, such as care at home or in nursing homes and specialized therapies, and it serves as a vital source of financing for nursing home care (about 41% of current total nursing home support). The assumption that most children are healthy, however, has led policymakers to limit long-term care and coverage of a number of other benefits for chronic conditions in other programs for children. SCHIP provided a less generous benefit package — and excluded coverage of services for many chronic conditions (e.g., respiratory therapy, speech and language services, and home-based services) on the basis of the belief that the SCHIP population would not need such benefits. Research conducted since the enactment of SCHIP has indicated that substantial numbers of enrolled children have chronic conditions and could benefit from these services.
The Affordable Care Act calls for a major expansion in Medicaid, especially to provide insurance for a large number of currently uninsured and ineligible adults — that is, those under 65 years of age who have incomes below 133% of the federal poverty line (an estimated 12 million to 17 million people). Here, too, the benefit package will resemble the SCHIP (now CHIP) benefit, with an emphasis on coverage of care for acute conditions and less generous coverage of long-term care. Yet the members of the low-income adult population who will become eligible under this Medicaid expansion include substantial numbers of people with chronic conditions, especially mental health conditions. Here, too, for cases in which long-term care is needed, the Medicaid expansion may leave many newly insured people underinsured. For those instances in which the major epidemics of chronic conditions among adolescents have already begun to affect the young adult population, it is unlikely that many of these young people, even with their new Medicaid coverage, will receive the coverage they need for long-term care.
http://healthpolicyandreform.nejm.org/?p=12178&query=TOC

Being underinsured often results in the same or similar adverse outcomes as not being insured at all. This study demonstrates that the problem of underinsurance amongst children is even more widespread than being uninsured. Does the Patient Protection and Affordable Care Act (PPACA) adequately address this shameful injustice?
PPACA does expand coverage for children through the individual mandate to purchase private insurance, though this study demonstrates that private insurance plans were three times as likely as public insurance plans to have inadequate coverage of charges. Thus PPACA, while reducing the numbers who are uninsured, actually increases the incidence of underinsurance. Most will still be insured through private employer-sponsored plans. For those purchasing their plans through the exchanges, the subsidies will provide some relief but still will not be not adequate to eliminate underinsurance.
PPACA also expands Medicaid, though primarily for adults. Although Medicaid and CHIP cover out-of-pocket expenses better than do the private plans, the editorial by James Perrin explains how lower-income individuals in these programs may still be underinsured. This is particularly true of those with chronic conditions who may need long-term care.
An appropriately designed single payer system eliminates the problem of underinsurance by eliminating significant cost sharing for all appropriate health care services. The efficiencies and policies of the single payer model create enough savings to pay these costs equitably without increasing our national health expenditures.
As long as we remain content with merely tweaking PPACA, we will continue to live in a society that tolerates exposing individuals and families to the hardships created by underinsurance or by having no insurance at all. Certainly we must be a better nation than that.

PNHP Annual Meeting, Nov. 6, Denver

August 26, 2010

Dear Colleague,

We write to invite you to attend the Annual Meeting of Physicians for a National Health Program on Saturday, November 6, in Denver, Colorado. It will be preceded by our popular Leadership Training course, starting at 1 p.m. on Friday, November 5.

Both events will be held at the Sheraton Denver Downtown Hotel, 1550 Court Place, Denver. Reserve a room directly by calling the hotel at 800-325-3535 and mentioning PNHP ($149 single/double, $125 senior rate) by October 5.

Registration for the Annual Meeting is now available online here. Alternatively, you can print out a copy of the registration form here and mail or fax it in. To register for leadership training (space is limited) please call Matt Petty at 312-782-6006.

The theme of the meeting is “From PPACA to Single Payer: Next Steps for Single Payer Activists in the Wake of the Obama Health Plan” with talks by Amy Goodman, host of Democracy Now; PNHP co-founders Drs. David Himmelstein and Steffie Woolhandler; pharmaceutical industry critics Donald Light, Ph.D., and Dr. Joel Lexchin; Canadian surgeon Dr. Sherif Emil; labor activist Rose Roach; journalist T.R. Reid (“Sick Around the World”); Dr. Claudia Fegan (“Universal health care: What the U.S. can learn from the Canadian experience”); Dr. Margaret Flowers, arrested for protesting the exclusion of single payer by Sen. Baucus; PNHP state single-payer leaders and more.

Help us chart a course for effective single-payer activism in the states and nationally. Last year PNHPers testified before House and Senate committees, spoke at town hall and other meetings on reform from coast to coast, and made numerous media appearances, including on Bill Moyers, Bill Maher, Fox News, CNN, Colbert, Ed Schultz, Democracy Now and more.

Today, state single-payer movements from California to Vermont are taking the lead, even as PNHPers continue to turn up the heat nationally for reform, such as with the recent publication of op-eds calling for expanding and improving Medicare on its 45th birthday, July 30.

With the passage of PPACA, the surge of national media and congressional interest has ebbed, even as the need for fundamental reform continues to grow. As health care costs continue to escalate, it will become increasingly clear that our single-payer proposal is the only effective remedy for the crisis afflicting our health system.

Please join us as we assess the status of the new health law and plan PNHP’s policy and strategy going forward. Feel free to forward this message to your colleagues, as well.

Yours truly,

Quentin Young, M.D.
National Coordinator    

Ida Hellander, M.D.
Executive Director

P.S. If you can’t join us in Denver, please consider becoming a meeting supporter. Simply go to our donation page and indicate that you’d like to make a donation to support the Annual Meeting. Your name will be listed in the program book along with other supporters and your tax-deductible donation to PNHP will help assure that the meeting is a success. A donation of $100 or more will entitle you to a free copy of Dr. John Geyman’s excellent new book about the recent health reform “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform” (available mid-September).

Rx for Medicare’s birthday: Expand it

By Quentin Young
Chicago Tribune, August 5, 2010

Medicare, one of our nation’s most cherished social programs, turned 45 last week.

I was in active medical practice on July 30, 1965, when Medicare was signed into law by President Lyndon B. Johnson. Its impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

That was only the beginning. Through the years, Medicare dramatically reduced poverty among the elderly. It added new benefits like preventive care. It reduced racial and income-based disparities. It extended its coverage to the severely disabled. It laid the basis for nationwide, comparative health studies that have improved the quality of care for everyone.

In short, Medicare, a government-sponsored program that now covers over 45 million Americans, has been a triumphant success.

However, instead of celebrating, Medicare is facing ominous rumblings from President Obama’s debt commission and not-so-veiled threats from other quarters.

“Medicare’s going broke,” its market-obsessed critics say. “It’s dragging down the economy.”

Such alarms have been sounded about every six or seven years since Medicare began, but in real life it continues to thrive. Either the economy prospers, yielding greater tax revenues, or Congress tweaks the payroll tax by a tiny fraction of a percentage point, and immediately the projected shortfall disappears. (The last adjustment was in 1985, when the rate was increased to 1.45 percent from 1.30 percent.)

While it’s true aging baby boomers will make bigger demands on Medicare, again, modest adjustments today will assure its financial solvency tomorrow.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It lacks authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems – and to bring down skyrocketing health care costs at the same time – is to improve the program and, most important, to expand it to cover every person in the United States.

That’s right: Extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on u
nnecessary paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

Conventional wisdom suggests we should wait and see how the new health law plays out. But we’ve seen how comparable reforms have fared on the state level: They’ve invariably failed after only a few years, chiefly because they can’t control costs. Meanwhile more millions suffer.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them to ask Congress to enhance Medicare and to extend it to all.

http://www.chicagotribune.com/news/ct-oped-0805-pro-20100804,0,2770491.story

Happy birthday, Medicare

By Susanne L. King
The Berkshire (Mass.) Eagle, Friday July 30, 2010

Say “Happy Birthday” to Medicare, signed into law by President Lyndon Johnson 45 years ago, on July 30, 1965.

This national program provides health insurance coverage for everyone 65 years and older, regardless of income or health status, as well as covering people with disabilities. Our senior citizens love Medicare, which, along with Social Security, has substantially lowered poverty among the elderly, providing a secure safety net for our most vulnerable citizens.

Medicare is an example of a “single payer” health insurance program, in which health care dollars are administered by only one payer, the federal government. Medicare patients love the program for a number of reasons. Their premiums, deductibles and co-payments are reasonably priced. No one 65 and older can be denied coverage due to pre-existing conditions. Patients have their choice of doctors and hospitals, and are able to make decisions with their doctors about the care they need.

This safety net is now being threatened. President Obama has appointed a committee, the “National Commission on Fiscal Responsibility and Reform,” to make recommendations to Congress for reducing our federal deficit. Unfortunately, some members of this commission are already considering cuts to Medicare and Social Security benefits. Other solutions for reducing the deficit, like cutting the military budget, taxing the rich, negotiating drug costs, and eliminating the waste of the private health insurance industry by enacting a single-payer health insurance program, are not being considered. The commission is expected to make its recommendations to the House of Representatives after the fall elections, with a vote anticipated in December during a lame duck period of Congress.

Instead of cutting Medicare benefits, a better solution is to eliminate the failed and very costly for-profit “multiple payer” model, that includes hundreds of private health insurance companies with their high administrative costs and exorbitant CEO salaries, as well as their intrusion into the doctor-patient relationship. A much more cost-effective insurance approach would be to improve and expand Medicare to include everyone. At a time when our nation faces high unemployment, and fiscal crises, an expanded Medicare program would be a boon for individuals, small businesses, towns and states.

How would such a program produce savings and control health care costs? First, with Medicare, administrative costs are much lower than for private insurance companies. Administrative savings would be about $400 billion/year, enough money to provide coverage for everyone. Second, prescription drug prices would be negotiated, and drug costs could be lowered by 40 percent, bringing U.S prices in line with other developed countries. Third, an expanded Medicare system could establish global budgets for health care facilities.

The majority of Americans support Medicare and an expansion of this program to provide single-payer health insurance for everyone. Last week this was demonstrated again when participants in town meetings sponsored by “America Speaks” demanded single-payer as the option to solve the health care crisis, and 71 percent voted to not cut Medicare and Medicaid.

Our public and private dollars are flowing into the coffers of the private health insurance industry. These insurance companies continue to squeeze patients and health care providers financially, while paying their executives enormous salaries and bonuses. In 2009, the United Health Group, one of the biggest health insurance companies, paid CEO Stephen Helmsley a compensation package of over $107. 5 million. A recent conference of health economists in Chicago concluded that increasing consolidation in the health insurance industry has led to higher premiums, fewer jobs for health care workers, and reduced physician earnings.

Obama’s commission should not recommend cutting Medicare benefits. Write to your senators and representatives, and let them know how you feel about preserving, and expanding Medicare. Ask them to improve and strengthen Medicare by making it available to everyone, so that in coming years we will all be able to enjoy and celebrate the birthday of this life-saving health insurance program.

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

http://www.berkshireeagle.com/columnists/ci_15636458

For a model health care system, how about Australia's?

‘Medicare for all’ isn’t just an expression in Australia, it’s a reality, and there aren’t any death panels or government intervention in the choice of doctors or treatment. Bill Claiborne, a longtime Washington Post reporter now living in Australia, describes the system.

By William Claiborne
Nieman Watchdog, Aug. 24, 2010

MELBOURNE–During the long, rancorous public debate over American health care reform I heard and read quite a bit of incendiary rhetoric in the media about “socialized medicine” in countries like Australia, where I have lived for the last decade as an American immigrant (and now dual national). But I don’t recall reading very much about how public-option universal health care systems like Australia’s actually work, from the perspective of someone who is able, from personal experience, to compare the health care systems in both countries.

What I remember from the debate in the U.S. Senate late last year and early this year was quite a bit of reporting of allegations of “death panels,” the imminent “Europeanization” of the United States, the exaggerated fears of a “government takeover” of medicine and of perceived threats to freedom of choice in selecting doctors. Okay, I appreciate the fact that conflict and controversy are the engines of journalism when covering emotive stories like health care reform. But I believe that the debate would have been better served if more reporters had come down to Australia and asked us, “How, exactly, does your health care system work?”

The discussion in America hasn’t been settled; some are urging repeal of what was enacted; some want a much stronger plan. So a look at health care in Australia is still appropriate. Here are a few questions I’d ask:

Q. Is Australia’s universal health care system socialized medicine?

No, not by any reasonable definition. The 35-year-old universal health care system is a hybrid of public and private plans. Every permanent resident or citizen in Australia — that’s everyone, regardless of age — is covered by the government’s Medicare program and is entitled to highly-subsidized, or even free, treatment by doctors in their offices, and fully-covered treatment and care in public hospitals. I go to a primary care physician who charges the maximum-allowable $60 (all currency figures in this report are in U.S. dollars at the current exchange rate) per visit, half of which is automatically refunded into my bank account by Medicare after I pay the fee with my debit card. Many doctors, like the one my wife sees,”bulk bill” their patients’ fees to Medicare and no money changes hands at the office. We each chose our own doctor for our own personal reasons. The only “government takeover” is in the refunding of half of my doctor’s fee, thereby making health care more affordable.

When I recently underwent cataract surgery in both eyes, I chose one of Melbourne’s top retina and cataract surgeons (on my GP’s recommendation). Because I supplement Medicare with an eminently affordable private insurance policy, I had virtually no waiting period, and a week later when I had the surgery my only expense was a $250 co-pay (tax deductible) for everything — surgeon, anesthetist, hospital costs, prescription drugs, follow-up visits, the works. Moreover, over the years my primary care doctor has from time to time sent me to specialists for various examinations and in-hospital procedures, such as a colonoscopy and an angiogram, and the costs have always been minimal or nonexistent. He didn’t have to consult any government body before referring me. He just sent me to the specialists. That doesn’t sound like “socialized medicine” or “government intrusion” to me.

The system isn’t perfect; what health care system is? Yes, occasionally there are published reports of people waiting long periods for admittance to public hospitals, or put on gurneys for hours in an emergency ward of an overcrowded public hospital. That happens anywhere, even in the United States. But overall I think any objective person would have to say that Australia’s health care system is pretty damned good. I speak from experience on that question.

Q. How does private health insurance blend with public Medicare?

As I’ve said, everyone is covered by Medicare. But if someone whose income exceeds $62,000 cannot or will not join a supplemental privare health plan, he/she pays a 1 per cent surcharge over the 1-1/2 per cent Medicare levy that everyone (except low-income earners) pays in income taxes. This is a carrot-and-stick approach, and consequently nearly half of Australians opt in for private health insurance, which not only reimburses coverage gaps in physician and hospital fees, but entitles the purchaser to avoid long waiting periods at public hospitals and obtain private rooms in private hospitals. For obvious reasons touching on class distinctions there’s a bit of ongoing controversy over this two-tier system, but its supporters say it alleviates the pressure on free public hospitals and helps keep health coverage affordable for all.

To encourage people to take up private coverage, the government subsidizes 30 per cent of their insurance premiums, increasing to up to 40 per cent in rebates for people over 65. My wife and I each pay an annual premium of $750, after the rebate, for private insurance. We think that’s quite affordable.

Q. Is there a safety net for blow-out medical costs?

Yes. Medicare covers all of any fee gaps once a family reaches an annual threshold of total gap costs. For my wife and me the threshold is $1,000. For low-income earners it is $500. If we pay more than $1,000 in a year in out-of-pocket medical expenses, we have no co-pays for the rest of the year.

Q. Does Medicare provide prescription coverage?

Yes. The Pharmaceutical Benefits Scheme not only subsidizes prescribed drugs but controls the retail prices through negotiations between a Pharmaceutical Pricing Authority and the pharmaceutical companies. Regardless of the cost of a drug, my co-pay per monthly prescription is $30. If my family’s total co-pay gap reaches a threshold of $1,140 (which it hasn’t yet) my co-pay virtually disappears. For low-income (under $62,000 a year) earners there is no gap threshold and the co-pay never exceeds $4.80.

Q. How does the government pay for all of this?

The Medicare program currently costs about $17.8 billion a year, and is rising about 4 per cent annually in real terms. That doesn’t sound like much in American terms, but for a country with a population of only 22 million it is fairly hefty. It is about 35 per cent of the total federal health budget ($50.5 billion), which includes the cost of running all public hospitals as well as Medicare. The health budget, in turn, is about 16 per cent of the total federal spending for the current fiscal year ($313.2 billion).

The government pays for universal, publicly-funded health care because historically Australian governments — conservative and liberal alike — have cared for the health and well being of its people. The only spending item in the federal budget larger than health costs is social security and welfare, at $102.3 billion. Defense spending is at $18.7 billion. That says something about Australian values, I think.

When my Australian friends hear or read that our Medicare system is dismissed by a fair number of American politicians and their constituents as “socialism” they laugh.

And, after nearly a decade of enjoying the benefits of a benevolent — and efficient — health care policy, I laugh right along with them. All the way to the bank.

Bill Claiborne, now living in Australia, was a Washington Post reporter for 32 years, mostly in foreign and national news positions.

For a model health care system, how about Australia’s?

‘Medicare for all’ isn’t just an expression in Australia, it’s a reality, and there aren’t any death panels or government intervention in the choice of doctors or treatment. Bill Claiborne, a longtime Washington Post reporter now living in Australia, describes the system.

By William Claiborne
Nieman Watchdog, Aug. 24, 2010

MELBOURNE–During the long, rancorous public debate over American health care reform I heard and read quite a bit of incendiary rhetoric in the media about “socialized medicine” in countries like Australia, where I have lived for the last decade as an American immigrant (and now dual national). But I don’t recall reading very much about how public-option universal health care systems like Australia’s actually work, from the perspective of someone who is able, from personal experience, to compare the health care systems in both countries.

What I remember from the debate in the U.S. Senate late last year and early this year was quite a bit of reporting of allegations of “death panels,” the imminent “Europeanization” of the United States, the exaggerated fears of a “government takeover” of medicine and of perceived threats to freedom of choice in selecting doctors. Okay, I appreciate the fact that conflict and controversy are the engines of journalism when covering emotive stories like health care reform. But I believe that the debate would have been better served if more reporters had come down to Australia and asked us, “How, exactly, does your health care system work?”

The discussion in America hasn’t been settled; some are urging repeal of what was enacted; some want a much stronger plan. So a look at health care in Australia is still appropriate. Here are a few questions I’d ask:

Q. Is Australia’s universal health care system socialized medicine?

No, not by any reasonable definition. The 35-year-old universal health care system is a hybrid of public and private plans. Every permanent resident or citizen in Australia — that’s everyone, regardless of age — is covered by the government’s Medicare program and is entitled to highly-subsidized, or even free, treatment by doctors in their offices, and fully-covered treatment and care in public hospitals. I go to a primary care physician who charges the maximum-allowable $60 (all currency figures in this report are in U.S. dollars at the current exchange rate) per visit, half of which is automatically refunded into my bank account by Medicare after I pay the fee with my debit card. Many doctors, like the one my wife sees,”bulk bill” their patients’ fees to Medicare and no money changes hands at the office. We each chose our own doctor for our own personal reasons. The only “government takeover” is in the refunding of half of my doctor’s fee, thereby making health care more affordable.

When I recently underwent cataract surgery in both eyes, I chose one of Melbourne’s top retina and cataract surgeons (on my GP’s recommendation). Because I supplement Medicare with an eminently affordable private insurance policy, I had virtually no waiting period, and a week later when I had the surgery my only expense was a $250 co-pay (tax deductible) for everything — surgeon, anesthetist, hospital costs, prescription drugs, follow-up visits, the works. Moreover, over the years my primary care doctor has from time to time sent me to specialists for various examinations and in-hospital procedures, such as a colonoscopy and an angiogram, and the costs have always been minimal or nonexistent. He didn’t have to consult any government body before referring me. He just sent me to the specialists. That doesn’t sound like “socialized medicine” or “government intrusion” to me.

The system isn’t perfect; what health care system is? Yes, occasionally there are published reports of people waiting long periods for admittance to public hospitals, or put on gurneys for hours in an emergency ward of an overcrowded public hospital. That happens anywhere, even in the United States. But overall I think any objective person would have to say that Australia’s health care system is pretty damned good. I speak from experience on that question.

Q. How does private health insurance blend with public Medicare?

As I’ve said, everyone is covered by Medicare. But if someone whose income exceeds $62,000 cannot or will not join a supplemental privare health plan, he/she pays a 1 per cent surcharge over the 1-1/2 per cent Medicare levy that everyone (except low-income earners) pays in income taxes. This is a carrot-and-stick approach, and consequently nearly half of Australians opt in for private health insurance, which not only reimburses coverage gaps in physician and hospital fees, but entitles the purchaser to avoid long waiting periods at public hospitals and obtain private rooms in private hospitals. For obvious reasons touching on class distinctions there’s a bit of ongoing controversy over this two-tier system, but its supporters say it alleviates the pressure on free public hospitals and helps keep health coverage affordable for all.

To encourage people to take up private coverage, the government subsidizes 30 per cent of their insurance premiums, increasing to up to 40 per cent in rebates for people over 65. My wife and I each pay an annual premium of $750, after the rebate, for private insurance. We think that’s quite affordable.

Q. Is there a safety net for blow-out medical costs?

Yes. Medicare covers all of any fee gaps once a family reaches an annual threshold of total gap costs. For my wife and me the threshold is $1,000. For low-income earners it is $500. If we pay more than $1,000 in a year in out-of-pocket medical expenses, we have no co-pays for the rest of the year.

Q. Does Medicare provide prescription coverage?

Yes. The Pharmaceutical Benefits Scheme not only subsidizes prescribed drugs but controls the retail prices through negotiations between a Pharmaceutical Pricing Authority and the pharmaceutical companies. Regardless of the cost of a drug, my co-pay per monthly prescription is $30. If my family’s total co-pay gap reaches a threshold of $1,140 (which it hasn’t yet) my co-pay virtually disappears. For low-income (under $62,000 a year) earners there is no gap threshold and the co-pay never exceeds $4.80.

Q. How does the government pay for all of this?

The Medicare program currently costs about $17.8 billion a year, and is rising about 4 per cent annually in real terms. That doesn’t sound like much in American terms, but for a country with a population of only 22 million it is fairly hefty. It is about 35 per cent of the total federal health budget ($50.5 billion), which includes the cost of running all public hospitals as well as Medicare. The health budget, in turn, is about 16 per cent of the total federal spending for the current fiscal year ($313.2 billion).

The government pays for universal, publicly-funded health care because historically Australian governments — conservative and liberal alike — have cared for the health and well being of its people. The only spending item in the federal budget larger than health costs is social security and welfare, at $102.3 billion. Defense spending is at $18.7 billion. That says something about Australian values, I think.

When my Australian friends hear or read that our Medicare system is dismissed by a fair number of American politicians and their constituents as “socialism” they laugh.

And, after nearly a decade of enjoying the benefits of a benevolent — and efficient — health care policy, I laugh right along with them. All the way to the bank.

Bill Claiborne, now living in Australia, was a Washington Post reporter for 32 years, mostly in foreign and national news positions.

Affordable Care Act is wrong framework to fix adverse selection

States Should Structure Insurance Exchanges to Minimize Adverse Selection

By Sarah Lueck
Center on Budget and Policy Priorities
August 17, 2010

The health reform law (the Affordable Care Act) relies primarily on states to establish health insurance exchanges — marketplaces that provide affordable, good-quality coverage options to individuals and small businesses. But it gives states substantial flexibility in how they structure the exchanges.

Adverse selection — the separation of healthier and less-healthy people into different insurance arrangements — will occur if a disproportionate number of people who are in poorer health and have high health expenses enroll in coverage through the insurance exchanges, while healthier, lower-cost people disproportionately enroll in plans offered through the individual and small-business markets outside the exchanges. If that occurs, the cost of exchange coverage will be higher than the cost of plans offered in outside markets. That would drive up costs not only for consumers and small firms purchasing coverage through the exchanges, but also for the federal government, which must provide premium subsidies to enable low- and moderate-income people to afford coverage in the exchanges.

Higher premiums would depress participation in the exchanges by individuals and small businesses, particularly by those people and firms that can obtain better deals in outside markets. That, in turn, could raise premiums even higher in the exchanges and could ultimately result in their failure over time.

Risk Adjustment and Risk Pooling Will Reduce But Not Prevent Adverse Selection

The law also requires use of a risk-adjustment system, in which plans with sicker-than-average overall enrollments receive payments to compensate them for their resulting higher costs. The payments would come from plans that enroll healthier-than-average people that do not cost as much to cover.

As CBO has warned, the inability of current risk-adjustment systems to fully adjust for differences in health care costs between low- and high-cost groups means that, among plans in the same risk-adjustment system, “premiums for enrollees in plans that attract higher-cost beneficiaries [could] rise substantially over time.”

Another potentially helpful provision of the Affordable Care Act requires a “single risk pool,” meaning that each insurer operating inside and outside of an exchange will be required to treat all of its enrollees as a single group when setting premiums.

These pooling requirements, however, have significant limitations — for example, the risk-pooling requirement would apply only to insurers that choose to sell products both inside and outside an exchange. And as noted below, even in cases when insurers do sell products in both markets, it is likely to be difficult to enforce the requirement and ensure that risk is actually being pooled. In addition, the requirement that insurers offering identical plans in both markets charge the same premium in both places is weakened by the fact that the Affordable Care Act does not require insurers participating in both markets to offer the same plans inside and outside the exchange.

Some Elements of the Affordable Care Act Leave Exchanges at Risk for Adverse Selection

Under the Affordable Care Act, the existing individual and small-group markets can continue to operate outside the exchanges. Many of the law’s requirements relating to individual and small-group insurance plans will apply regardless of whether the plans are offered inside or outside the exchanges. For example, all new plans offered — whether through the exchanges or through outside markets — will have to provide a package of “essential benefits” and a minimum level of coverage (as measured by actuarial value). In addition, the law’s new “rating rules,” including those that prevent insurers from charging different prices based on a person’s health status, will apply to new individual-market and small-group plans regardless of whether the plans are offered inside or outside the exchanges.

But various other Affordable Care Act requirements apply only to health plans offered through an exchange, such as requirements related to the adequacy of provider networks, reporting on health care quality, grievance procedures, marketing practices, and benefit design. In addition, the law allows the Secretary of the U.S. Department of Health and Human Services to set additional standards for plans offered through the exchange, which plans sold outside an exchange are not required by federal law to meet.

This leaves substantial opportunity for adverse selection because insurers in these external markets will effectively be competing for enrollees against the exchange plans, but will not have to comply with standards that are as strict. Insurers operating outside the exchanges could seek to take advantage of these looser rules to attract healthier people and businesses, while leaving sicker people to enroll in coverage through the exchanges. As a result, the differences in rules would likely create an unlevel playing field and thereby increase the likelihood of adverse selection against the exchanges unless states institute protective measures.

In addition, under the Affordable Care Act, states have the option of setting up two separate exchanges — one for individuals and another for small businesses. States that do so may find that the exchanges lack the necessary volume to attract a sufficient number of insurers, ensure a large enough pool of enrollees that is well-balanced between the healthy and the sick, and achieve the economies of scale that can keep an exchange’s administrative costs low.

(This paper focuses on the risk of adverse selection between a health insurance exchange and outside health insurance markets. Another type of adverse selection could occur among plans within an exchange; this will be the subject of a future analysis.)

http://www.cbpp.org/cms/index.cfm?fa=view&id=3267

Comment: 

By Don McCanne, MD

Any health care financing system that divides health care funds into separate risk pools inevitably experiences adverse selection. In fact, private insurers do all that they can to see that their own risk pools contain low-cost healthier individuals while shifting higher-cost individuals into other public or private risk pools. As this article indicates, numerous regulations can be introduced that may reduce the magnitude of these differences, but they can never be eliminated.

When Medicare was financed using a single risk pool, adverse selection did not exist. Once private insurers were allowed to offer options to the traditional Medicare program (Medicare + Choice and then Medicare Advantage), multiple risk pools were established providing an opening for private insurers to game the system – and game it they did. They skirted the rules to selectively market the healthier sector of the Medicare population. They further pushed up their overpayments by upcoding the diagnoses – creating the deception that their enrollees were sicker than they actually were so that they wouldn’t be subject to risk adjustment (adjusting payments to reflect the health status of those in the pool).

Who suffers? Individuals, employers, taxpayers, health care providers. Who benefits? The private insurers.

Adverse selection was not simply an inconvenient policy problem that the legislators had to fiddle with merely because they rejected the concept of a single universal risk pool that eliminates the problem of adverse selection. Far worse, it was a deliberate policy decision supported by the leadership of the private insurance industry who held the hands of the legislators as they led them down the primrose path to the everlasting bonfire
that they call reform.

The Center on Budget and Policy Priorities (CBPP) report lists a few policy tweaks that are an attempt to patch some of the loopholes, but there are two major problems with their recommendations.

First, since the insurance exchanges are established on a state by state basis, each and every state must have its own enlightened and caring leadership that would oversee the intensive oversight efforts that will be required to reduce (but not eliminate) these injustices. That will never happen in most states.

The greater problem with the CBPP analysis and recommendations is that they completely excluded any consideration of the solution that really would work – a single universal risk pool through a single payer national health program, such as an improved Medicare for all.

Affordable Care Act is wrong framework to fix adverse selection

States Should Structure Insurance Exchanges to Minimize Adverse Selection

By Sarah Lueck
Center on Budget and Policy Priorities
August 17, 2010
The health reform law (the Affordable Care Act) relies primarily on states to establish health insurance exchanges — marketplaces that provide affordable, good-quality coverage options to individuals and small businesses. But it gives states substantial flexibility in how they structure the exchanges.
Adverse selection — the separation of healthier and less-healthy people into different insurance arrangements — will occur if a disproportionate number of people who are in poorer health and have high health expenses enroll in coverage through the insurance exchanges, while healthier, lower-cost people disproportionately enroll in plans offered through the individual and small-business markets outside the exchanges. If that occurs, the cost of exchange coverage will be higher than the cost of plans offered in outside markets. That would drive up costs not only for consumers and small firms purchasing coverage through the exchanges, but also for the federal government, which must provide premium subsidies to enable low- and moderate-income people to afford coverage in the exchanges.
Higher premiums would depress participation in the exchanges by individuals and small businesses, particularly by those people and firms that can obtain better deals in outside markets. That, in turn, could raise premiums even higher in the exchanges and could ultimately result in their failure over time.
Risk Adjustment and Risk Pooling Will Reduce But Not Prevent Adverse Selection
The law also requires use of a risk-adjustment system, in which plans with sicker-than-average overall enrollments receive payments to compensate them for their resulting higher costs. The payments would come from plans that enroll healthier-than-average people that do not cost as much to cover.
As CBO has warned, the inability of current risk-adjustment systems to fully adjust for differences in health care costs between low- and high-cost groups means that, among plans in the same risk-adjustment system, “premiums for enrollees in plans that attract higher-cost beneficiaries [could] rise substantially over time.”
Another potentially helpful provision of the Affordable Care Act requires a “single risk pool,” meaning that each insurer operating inside and outside of an exchange will be required to treat all of its enrollees as a single group when setting premiums.
These pooling requirements, however, have significant limitations — for example, the risk-pooling requirement would apply only to insurers that choose to sell products both inside and outside an exchange. And as noted below, even in cases when insurers do sell products in both markets, it is likely to be difficult to enforce the requirement and ensure that risk is actually being pooled. In addition, the requirement that insurers offering identical plans in both markets charge the same premium in both places is weakened by the fact that the Affordable Care Act does not require insurers participating in both markets to offer the same plans inside and outside the exchange.
Some Elements of the Affordable Care Act Leave Exchanges at Risk for Adverse Selection
Under the Affordable Care Act, the existing individual and small-group markets can continue to operate outside the exchanges. Many of the law’s requirements relating to individual and small-group insurance plans will apply regardless of whether the plans are offered inside or outside the exchanges. For example, all new plans offered — whether through the exchanges or through outside markets — will have to provide a package of “essential benefits” and a minimum level of coverage (as measured by actuarial value). In addition, the law’s new “rating rules,” including those that prevent insurers from charging different prices based on a person’s health status, will apply to new individual-market and small-group plans regardless of whether the plans are offered inside or outside the exchanges.
But various other Affordable Care Act requirements apply only to health plans offered through an exchange, such as requirements related to the adequacy of provider networks, reporting on health care quality, grievance procedures, marketing practices, and benefit design. In addition, the law allows the Secretary of the U.S. Department of Health and Human Services to set additional standards for plans offered through the exchange, which plans sold outside an exchange are not required by federal law to meet.
This leaves substantial opportunity for adverse selection because insurers in these external markets will effectively be competing for enrollees against the exchange plans, but will not have to comply with standards that are as strict. Insurers operating outside the exchanges could seek to take advantage of these looser rules to attract healthier people and businesses, while leaving sicker people to enroll in coverage through the exchanges. As a result, the differences in rules would likely create an unlevel playing field and thereby increase the likelihood of adverse selection against the exchanges unless states institute protective measures.
In addition, under the Affordable Care Act, states have the option of setting up two separate exchanges — one for individuals and another for small businesses. States that do so may find that the exchanges lack the necessary volume to attract a sufficient number of insurers, ensure a large enough pool of enrollees that is well-balanced between the healthy and the sick, and achieve the economies of scale that can keep an exchange’s administrative costs low.
(This paper focuses on the risk of adverse selection between a health insurance exchange and outside health insurance markets. Another type of adverse selection could occur among plans within an exchange; this will be the subject of a future analysis.)
http://www.cbpp.org/cms/index.cfm?fa=view&id=3267

Any health care financing system that divides health care funds into separate risk pools inevitably experiences adverse selection. In fact, private insurers do all that they can to see that their own risk pools contain low-cost healthier individuals while shifting higher-cost individuals into other public or private risk pools. As this article indicates, numerous regulations can be introduced that may reduce the magnitude of these differences, but they can never be eliminated.
When Medicare was financed using a single risk pool, adverse selection did not exist. Once private insurers were allowed to offer options to the traditional Medicare program (Medicare + Choice and then Medicare Advantage), multiple risk pools were established providing an opening for private insurers to game the system – and game it they did. They skirted the rules to selectively market the healthier sector of the Medicare population. They further pushed up their overpayments by upcoding the diagnoses – creating the deception that their enrollees were sicker than they actually were so that they wouldn’t be subject to risk adjustment (adjusting payments to reflect the health status of those in the pool).
Who suffers? Individuals, employers, taxpayers, health care providers. Who benefits? The private insurers.
Adverse selection was not simply an inconvenient policy problem that the legislators had to fiddle with merely because they rejected the concept of a single universal risk pool that eliminates the problem of adverse selection. Far worse, it was a deliberate policy decision supported by the leadership of the private insurance industry who held the hands of the legislators as they led them down the primrose path to the everlasting bonfire that they call reform.
The Center on Budget and Policy Priorities (CBPP) report lists a few policy tweaks that are an attempt to patch some of the loopholes, but there are two major problems with their recommendations.
First, since the insurance exchanges are established on a state by state basis, each and every state must have its own enlightened and caring leadership that would oversee the intensive oversight efforts that will be required to reduce (but not eliminate) these injustices. That will never happen in most states.
The greater problem with the CBPP analysis and recommendations is that they completely excluded any consideration of the solution that really would work – a single universal risk pool through a single payer national health program, such as an improved Medicare for all.