PNHP

New Health Affairs article on administrative waste

New Health Affairs article on administrative waste

Saving Billions Of Dollars — And Physicians’ Time — By Streamlining Billing Practices

By Bonnie B. Blanchfield, James L. Heffernan, Bradford Osgood, Rosemary R. Sheehan and Gregg S. Meyer
Health Affairs
April 29, 2010
Abstract
The U.S. system of billing third parties for health care services is complex, expensive, and inefficient. Physicians end up using nearly 12 percent of their net patient service revenue to cover the costs of excessive administrative complexity. A single transparent set of payment rules for multiple payers, a single claim form, and standard rules of submission, among other innovations, would reduce the burden on the billing offices of physician organizations. On a national scale, our hypothetical modeling of these changes would translate into $7 billion of savings annually for physician and clinical services. Four hours of professional time per physician and five hours of practice support staff time could be saved each week.
Opportunity For Reform
The growth in administrative complexity has been largely overlooked as an opportunity for health care reform, with administrative expenses being viewed as a relatively mild influence on the growth in health spending. The Patient Protection and Affordable Care Act of 2010 does not contain major provisions to limit excessive administrative complexity. However, it does require that health plans begin to standardize the transfer of electronic data, which will cut down some of the duplicative information technology costs. The law does not specifically address the need for comprehensive uniformity of all data and information requirements.
The results of this study enumerate the inefficiencies engendered by excessive administrative complexity. We also hope that they will provide detail to enable understanding of the magnitude of these costs, and to inspire multistakeholder discussions around proposals of incremental reforms that standardize payment processing rules across payers. The current cost of excessive complexity would not be tolerated by employers from any other type of vendor. We believe that once fully explained, the current administrative burden will be recognized as intolerable by patients, purchasers, and policy makers.
Thus far, health reform has not resulted in a single-payer mandate that replaces the U.S. health insurance industry and nationalizes billing and payment processes. But the evidence of the system costs from excessive complexity in our case study indicates that imposing a standard set of payment requirements, increased payment-rule transparency, standardized forms, and a standard set of data exchange requirements remains an important and high-value target for future policy reform efforts.
An incremental move to one set of payment rules would yield significant dollar savings as well as work-life and productivity opportunities for physicians and their office staffs. Done carefully, administrative simplification could still leave room for a diversity of insurance products and could promote innovation without relying on blunt and opaque administrative processes as a tool.
The savings from reducing administrative complexity could be translated into decreased costs in general. These decreased costs would be of greater magnitude than estimated here. Many of the changes under the single-rule-set scenario would result in decreased costs for payers as well, and would provide resources that could be passed on as savings to purchasers and patients or could be used to provide additional needed health services.
Achieving these savings would not require restructuring the basic market-system tenets of our complex health care system through, for example, mandating a single-payer approach. Rather, mandating a single set of rules, a single claim form, standard rules of submission, and transparent payment adjudication — with corresponding savings to both providers and payers — could provide systemwide savings that could translate into better care for Americans.
http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.0075v1

This study confirms the previously well documented administrative waste that occurs in physicians’ practices due to the complexity of complying with the various requirements of multiple payers in our fragmented system of health care financing. However, the authors do a disservice by perpetuating the myth that all we need is a single billing form and a single set of rules, thereby obviating the need to switch to a single payer model of health care financing.
The authors estimate that a single claim form and simplified rules would save about $7 billion yearly. Yet the single payer model has been projected to save about $400 billion yearly. What are these authors overlooking?
First is the profound administrative waste intrinsic to the private insurance industry. It is so great that our legislators up front granted them the right to retain 15 to 20 percent of insurance premiums just to pay these costs (plus profits).
Although this article indicates that the administrative burden on the physicians is great, the authors still would not salvage all of the waste that is recoverable since they contend that the insurers could still continue to provide a diversity of innovative insurance products, perpetuating the inevitable administrative complexity.
Anyone who has looked at a hospital bill understands the great administrative complexity of hospital payment systems under our multi-payer system. Under a single payer system, hospital financing would be provided by global budgets based on legitimate costs, much like our fire and police departments. The labor-intensive, complex hospital chargemaster disappears.
Bulk purchasing would be used for pharmaceuticals and medical supplies, again greatly reducing the administrative waste.
More waste is generated when payers and providers try to work the system to their own advantages – an understandable response in a complex and opaque system. A single payer system provides much greater precision and transparency in payment processes.
It is not as if the authors didn’t understand these differences. They cite the landmark paper of Woolhandler, Campbell and Himmelstein showing the dramatic reduction in administrative waste in Canada compared to the United states, after Canada changed to a single payer system of financing. But they seem to sweep the conclusions under the carpet while insisting that all we need is a simple form (which we already have – CMS 1500) and simple rules (which we will never have with the diversity of insurance products and insurer innovation that they support).
Perhaps the most outrageous comments in this paper are the following:
“Prior studies of this problem have examined the relative overall administrative costs of health care in the United States, particularly in comparison to those in Canada. However, these studies have been able to provide only an overall view of the costs and do not provide specific direction to foster improvements. As a result, these findings have done little to move stakeholders in the U.S. health care system — including patients, providers, payers, purchasers, and policy makers — to confront excessive administrative complexity as a target for reform.”
No specific direction!? The single payer advocates have been vociferous in showing the direction in which we must head! Google “health care administrative costs.” There are over 45 million results, and the first one is the landmark NEJM article by Woolhandler, Campbell and Himmelstein. People who deny that there is adequate evidence that a single payer system would provide us the savings that we need to provide health care to everyone are simply liars!

Health care reform will cause heachaches, and much more

By Claudia Chaufan
Santa Cruz Sentinel
04/25/2010

Right after the passage of the Patient Protection and Affordable Care Act, Sentinel reporter Kurtis Alexander listed among its benefits that close to two-thirds of Santa Cruz’s County 45,000 uninsured residents would become insured, and that those under 26 years of age would now be allowed to remain in their parents’ plans.

Is this great news and should we uncork the champagne? Not yet. Here go selected facts for the reader to assess:

First, health insurance is just a means to the real thing: health care. Yet the promised coverage is an umbrella full of holes under pouring rain. Under the hundreds of pages of the bill, one discovers plans that pay as little as 60 percent of “covered services” — and what this means is anybody’s guess. We do know, however, that there will be “four levels” of coverage, of varying prices. Guess what will drive people’s “choice” of level? Probably not their medical needs.

We also know that skimpy coverage can be as bad as no coverage. Harvard researchers have shown that close to 80 percent of medical bankruptcies occur among the insured. Yet deductibles, co-pays, and co-insurance render their policies worthless and health care ultimately unaffordable. As to “lifetime caps,” many among those pushed to bankruptcy go broke way before they reach those caps, which apply only to “covered services” anyway. “Uncovered” ones, even if medically necessary, are on us.

Second, being “allowed” coverage under one’s parents’ plan assuming one’s parents have one is an “advantage” if the alternative is nothing. But of course this alternative is false. Young adults in all industrialized nations except for us have a right to health care. Their medical bills are paid by pools of shared savings to which everybody contributes a predictable proportion of income. Profit from selling policies for medically necessary services is virtually banned. One can buy the “over and above” through private insurance or cash, of course. And they pay a fraction of our price tag.

Third, the promise that insurers will no longer be able to cancel policies is the greatest scam. They are still allowed to cancel them for “fraud,” the number one cause insurers allege today for cancelling policies when people get sick.

Last, the act leaves 23 million uninsured by 2019, according to the Congressional Budget Office. This translates into 23,000 deaths annually.

Did it need to be like this? Not at all. Had “all the options” been on the table, as promised by President Obama, Americans may have achieved what others have enjoyed for decades: the ease to pursue our dreams, including our dream job, without fearing that we or our loved ones won’t be able to see a doctor.

But of course there were strong countervailing forces. As the PBS-Frontline production “Obama’s Deal” showed, the administration struck several backroom deals that left us with a bill virtually written by a major insurer, WellPoint Inc. So it succeeded in passing “reform” by legally binding us to buy shoddy products, some of us with “help” subsidies from our own pockets, thus consolidating the major transfer of wealth from Main Street to Wall Street of the decade second only to the transfer to finance.

Can we do something about it? Yes we can. We can support the right of states to try the best ways to provide health care to the population. This is the goal of SB 810, a single payer bill introduced by state Sen. Mark Leno. This bill would implement a publicly financed, privately delivered, single payer system that would provide comprehensive coverage to all California residents and allow the choices that really matter — of health professionals and needed services — at a price that not only “the budget” but individuals and families can afford.

Californians can show the way.

Dr. Claudia Chaufan is an assistant professor of Health Policy and Sociology at the Institute for Health and Aging, University of California San Francisco, and vice president of the California Chapter of Physicians for a National Health Program, a national organization that advocates for National Social Insurance along a single payer model.

http://www.santacruzsentinel.com/ci_14955537

CMS Actuary's report on financial effects of PPACA

Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended

By Richard S. Foster, Chief Actuary
Centers for Medicare and Medicaid Services
Office of the Actuary
April 22, 2010

The estimated effects of the PPACA (Patient Protection and Affordable Care Act) on overall national health expenditures (NHE) are shown in table 5 (at link below).  In aggregate, we estimate that for calendar years 2010 through 2019, NHE would increase by $311 billion, or 0.9 percent, over the updated baseline projection that was released on June 29, 2009. The NHE share of GDP is projected to be 21.0 percent in 2019, compared to 20.8 percent under prior law.

http://graphics8.nytimes.com/packages/pdf/health/oactmemo1.pdf

Comment: 

By Don McCanne, MD

Although much attention was given to the CBO (Congressional Budget Office) estimates of the financial impact of the PPACA (Patient Protection and Affordable Care Act), CBO’s report was concerned primarily with the impact of the reform on the federal budget, taking into consideration the net costs of the program enacted and the offset of new revenues. The report from the Office of the Actuary of CMS (Centers for Medicare and Medicaid Services) is of much more practical importance for most of us since it describes the impact on our national health expenditures (NHE) – what we will be paying collectively for health care in the future.

To no surprise, we will be paying more than we would have had there been no reform enacted. More people will have coverage through an expansion of Medicaid/CHIP and through subsidized plans to be offered in the new state insurance exchanges. Expanding coverage improves access and thus increases spending. Some are impressed by the fact that the increase in NHE will be only 0.9 percent more than the projected NHE would be without reform.

Keep in mind that without reform, our NHE would have increased from 17.8 percent of GDP (Gross Domestic Product) in 2010 to 20.8 percent in 2019. When it was decided to make health care reform a priority, one of the major reasons was that this increase was considered to be nearly intolerable. The PPACA will increase this even more – to 21.0 percent of GDP – an even less tolerable number. That amounts to a staggering $4,670 billion NHE in 2019 alone.

What should be even more alarming are some of the measures in the bill that kept these numbers from being even higher:

* A major portion of the expansion is in Medicaid, a welfare program that reduces health expenditures by simply paying much lower rates. A continued lack of willing providers is inevitable, especially after the temporary reinforcement of primary care rates expires. If they are not allowed to expire, NHE will be even higher assuming that rates for specialized services will not be reduced further as an offset.

* Another major portion of the newly insured will receive their coverage through the state insurance exchanges. This report projects less increase in health expenditures because of “significant discounts negotiated by private health insurance plans.” Why would these “discounts” be any greater in the exchanges that they are now in the existing private insurance markets? Looking for a reduction in NHE through the magic of the marketplace within government established exchanges is not realistic.

* The excise tax on employer-sponsored plans with higher premiums is expected to “increase rapidly” after 2019, per this report. Employers will respond by reducing benefits, thereby increasing out-of-pocket costs for the employees and their families. This may also slow growth in health expenditures, but by the perverse policy of erecting financial barriers to beneficial health care services. Not paying for care that people should have obviously is not a rational way to slow the growth of our NHE.

* The $5 billion authorized for the national high-risk insurance pool is expected to be depleted very soon, resulting in substantial premium increases to sustain the program, in turn resulting in lower participation rates. Not spending money on high-risk pools will limit expenditures, but at what cost?

* Scheduled “productivity adjustments” to Medicare payment updates will further slow the growth in Medicare payments at a time when providers are already very concerned about current rates. The report states, “the Medicare productivity adjustments could become unsustainable even within the next 10 years.” Slowing growth in NHE through an “unsustainable” process certainly can’t be relied upon.

* The Independent Payment Advisory Board for Medicare is tasked with recommending further reductions in Medicare spending, without reducing benefits. Such recommendations could further stress an “unsustainable” process.

* Some of the reduction in health expenditures would occur because of a decline in the numbers covered by employer-sponsored plans which traditionally have had relatively generous benefits. Again, reducing benefits for services that people need is an inappropriate method of reducing total health expenditures.

We do need to control the excess growth in our national health expenditures, but not by methods that impair access to beneficial services, such as those in the PPACA.

If we adopted a single payer national health program, we could slow spending by eliminating the profound administrative excesses, by improving pricing though negotiation with health care professionals, by global budgeting of hospitals, by negotiated bulk purchasing of drugs and health care supplies, by evidence-based decisions on covering appropriate services but not ineffective and deleterious services, and by separate budgeting of capital improvements, thereby slowing the over-utilization that is characteristic of systems with excess capacity.

For the physical and financial health of all of us, let’s replace PPACA with an improved Medicare that takes care of everyone.

CMS Actuary’s report on financial effects of PPACA

Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended

By Richard S. Foster, Chief Actuary
Centers for Medicare and Medicaid Services
Office of the Actuary
April 22, 2010

The estimated effects of the PPACA (Patient Protection and Affordable Care Act) on overall national health expenditures (NHE) are shown in table 5 (at link below).  In aggregate, we estimate that for calendar years 2010 through 2019, NHE would increase by $311 billion, or 0.9 percent, over the updated baseline projection that was released on June 29, 2009. The NHE share of GDP is projected to be 21.0 percent in 2019, compared to 20.8 percent under prior law.

http://graphics8.nytimes.com/packages/pdf/health/oactmemo1.pdf

Comment: 

By Don McCanne, MD

Although much attention was given to the CBO (Congressional Budget Office) estimates of the financial impact of the PPACA (Patient Protection and Affordable Care Act), CBO’s report was concerned primarily with the impact of the reform on the federal budget, taking into consideration the net costs of the program enacted and the offset of new revenues. The report from the Office of the Actuary of CMS (Centers for Medicare and Medicaid Services) is of much more practical importance for most of us since it describes the impact on our national health expenditures (NHE) – what we will be paying collectively for health care in the future.

To no surprise, we will be paying more than we would have had there been no reform enacted. More people will have coverage through an expansion of Medicaid/CHIP and through subsidized plans to be offered in the new state insurance exchanges. Expanding coverage improves access and thus increases spending. Some are impressed by the fact that the increase in NHE will be only 0.9 percent more than the projected NHE would be without reform.

Keep in mind that without reform, our NHE would have increased from 17.8 percent of GDP (Gross Domestic Product) in 2010 to 20.8 percent in 2019. When it was decided to make health care reform a priority, one of the major reasons was that this increase was considered to be nearly intolerable. The PPACA will increase this even more – to 21.0 percent of GDP – an even less tolerable number. That amounts to a staggering $4,670 billion NHE in 2019 alone.

What should be even more alarming are some of the measures in the bill that kept these numbers from being even higher:

* A major portion of the expansion is in Medicaid, a welfare program that reduces health expenditures by simply paying much lower rates. A continued lack of willing providers is inevitable, especially after the temporary reinforcement of primary care rates expires. If they are not allowed to expire, NHE will be even higher assuming that rates for specialized services will not be reduced further as an offset.

* Another major portion of the newly insured will receive their coverage through the state insurance exchanges. This report projects less increase in health expenditures because of “significant discounts negotiated by private health insurance plans.” Why would these “discounts” be any greater in the exchanges that they are now in the existing private insurance markets? Looking for a reduction in NHE through the magic of the marketplace within government established exchanges is not realistic.

* The excise tax on employer-sponsored plans with higher premiums is expected to “increase rapidly” after 2019, per this report. Employers will respond by reducing benefits, thereby increasing out-of-pocket costs for the employees and their families. This may also slow growth in health expenditures, but by the perverse policy of erecting financial barriers to beneficial health care services. Not paying for care that people should have obviously is not a rational way to slow the growth of our NHE.

* The $5 billion authorized for the national high-risk insurance pool is expected to be depleted very soon, resulting in substantial premium increases to sustain the program, in turn resulting in lower participation rates. Not spending money on high-risk pools will limit expenditures, but at what cost?

* Scheduled “productivity adjustments” to Medicare payment updates will further slow the growth in Medicare payments at a time when providers are already very concerned about current rates. The report states, “the Medicare productivity adjustments could become unsustainable even within the next 10 years.” Slowing growth in NHE through an “unsustainable” process certainly can’t be relied upon.

* The Independent Payment Advisory Board for Medicare is tasked with recommending further reductions in Medicare spending, without reducing benefits. Such recommendations could further stress an “unsustainable” process.

* Some of the reduction in health expenditures would occur because of a decline in the numbers covered by employer-sponsored plans which traditionally have had relatively generous benefits. Again, reducing benefits for services that people need is an inappropriate method of reducing total health expenditures.

We do need to control the excess growth in our national health expenditures, but not by methods that impair access to beneficial services, such as those in the PPACA.

If we adopted a single payer national health program, we could slow spending by eliminating the profound administrative excesses, by improving pricing though negotiation with health care professionals, by global budgeting of hospitals, by negotiated bulk purchasing of drugs and health care supplies, by evidence-based decisions on covering appropriate services but not ineffective and deleterious services, and by separate budgeting of capital improvements, thereby slowing the over-utilization that is characteristic of systems with excess capacity.

For the physical and financial health of all of us, let’s replace PPACA with an improved Medicare that takes care of everyone.

CMS Actuary's report on financial effects of PPACA

Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended

By Richard S. Foster, Chief Actuary
Centers for Medicare and Medicaid Services
Office of the Actuary
April 22, 2010
The estimated effects of the PPACA (Patient Protection and Affordable Care Act) on overall national health expenditures (NHE) are shown in table 5 (at link below).  In aggregate, we estimate that for calendar years 2010 through 2019, NHE would increase by $311 billion, or 0.9 percent, over the updated baseline projection that was released on June 29, 2009. The NHE share of GDP is projected to be 21.0 percent in 2019, compared to 20.8 percent under prior law.
http://graphics8.nytimes.com/packages/pdf/health/oactmemo1.pdf

Although much attention was given to the CBO (Congressional Budget Office) estimates of the financial impact of the PPACA (Patient Protection and Affordable Care Act), CBO’s report was concerned primarily with the impact of the reform on the federal budget, taking into consideration the net costs of the program enacted and the offset of new revenues. The report from the Office of the Actuary of CMS (Centers for Medicare and Medicaid Services) is of much more practical importance for most of us since it describes the impact on our national health expenditures (NHE) – what we will be paying collectively for health care in the future.
To no surprise, we will be paying more than we would have had there been no reform enacted. More people will have coverage through an expansion of Medicaid/CHIP and through subsidized plans to be offered in the new state insurance exchanges. Expanding coverage improves access and thus increases spending. Some are impressed by the fact that the increase in NHE will be only 0.9 percent more than the projected NHE would be without reform.
Keep in mind that without reform, our NHE would have increased from 17.8 percent of GDP (Gross Domestic Product) in 2010 to 20.8 percent in 2019. When it was decided to make health care reform a priority, one of the major reasons was that this increase was considered to be nearly intolerable. The PPACA will increase this even more – to 21.0 percent of GDP – an even less tolerable number. That amounts to a staggering $4,670 billion NHE in 2019 alone.
What should be even more alarming are some of the measures in the bill that kept these numbers from being even higher:
* A major portion of the expansion is in Medicaid, a welfare program that reduces health expenditures by simply paying much lower rates. A continued lack of willing providers is inevitable, especially after the temporary reinforcement of primary care rates expires. If they are not allowed to expire, NHE will be even higher assuming that rates for specialized services will not be reduced further as an offset.
* Another major portion of the newly insured will receive their coverage through the state insurance exchanges. This report projects less increase in health expenditures because of “significant discounts negotiated by private health insurance plans.” Why would these “discounts” be any greater in the exchanges that they are now in the existing private insurance markets? Looking for a reduction in NHE through the magic of the marketplace within government established exchanges is not realistic.
* The excise tax on employer-sponsored plans with higher premiums is expected to “increase rapidly” after 2019, per this report. Employers will respond by reducing benefits, thereby increasing out-of-pocket costs for the employees and their families. This may also slow growth in health expenditures, but by the perverse policy of erecting financial barriers to beneficial health care services. Not paying for care that people should have obviously is not a rational way to slow the growth of our NHE.
* The $5 billion authorized for the national high-risk insurance pool is expected to be depleted very soon, resulting in substantial premium increases to sustain the program, in turn resulting in lower participation rates. Not spending money on high-risk pools will limit expenditures, but at what cost?
* Scheduled “productivity adjustments” to Medicare payment updates will further slow the growth in Medicare payments at a time when providers are already very concerned about current rates. The report states, “the Medicare productivity adjustments could become unsustainable even within the next 10 years.” Slowing growth in NHE through an “unsustainable” process certainly can’t be relied upon.
* The Independent Payment Advisory Board for Medicare is tasked with recommending further reductions in Medicare spending, without reducing benefits. Such recommendations could further stress an “unsustainable” process.
* Some of the reduction in health expenditures would occur because of a decline in the numbers covered by employer-sponsored plans which traditionally have had relatively generous benefits. Again, reducing benefits for services that people need is an inappropriate method of reducing total health expenditures.
We do need to control the excess growth in our national health expenditures, but not by methods that impair access to beneficial services, such as those in the PPACA.
If we adopted a single payer national health program, we could slow spending by eliminating the profound administrative excesses, by improving pricing though negotiation with health care professionals, by global budgeting of hospitals, by negotiated bulk purchasing of drugs and health care supplies, by evidence-based decisions on covering appropriate services but not ineffective and deleterious services, and by separate budgeting of capital improvements, thereby slowing the over-utilization that is characteristic of systems with excess capacity.
For the physical and financial health of all of us, let’s replace PPACA with an improved Medicare that takes care of everyone.

CMS Actuary’s report on financial effects of PPACA

Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended

By Richard S. Foster, Chief Actuary
Centers for Medicare and Medicaid Services
Office of the Actuary
April 22, 2010

The estimated effects of the PPACA (Patient Protection and Affordable Care Act) on overall national health expenditures (NHE) are shown in table 5 (at link below).  In aggregate, we estimate that for calendar years 2010 through 2019, NHE would increase by $311 billion, or 0.9 percent, over the updated baseline projection that was released on June 29, 2009. The NHE share of GDP is projected to be 21.0 percent in 2019, compared to 20.8 percent under prior law.

http://graphics8.nytimes.com/packages/pdf/health/oactmemo1.pdf

Although much attention was given to the CBO (Congressional Budget Office) estimates of the financial impact of the PPACA (Patient Protection and Affordable Care Act), CBO’s report was concerned primarily with the impact of the reform on the federal budget, taking into consideration the net costs of the program enacted and the offset of new revenues. The report from the Office of the Actuary of CMS (Centers for Medicare and Medicaid Services) is of much more practical importance for most of us since it describes the impact on our national health expenditures (NHE) – what we will be paying collectively for health care in the future.

To no surprise, we will be paying more than we would have had there been no reform enacted. More people will have coverage through an expansion of Medicaid/CHIP and through subsidized plans to be offered in the new state insurance exchanges. Expanding coverage improves access and thus increases spending. Some are impressed by the fact that the increase in NHE will be only 0.9 percent more than the projected NHE would be without reform.

Keep in mind that without reform, our NHE would have increased from 17.8 percent of GDP (Gross Domestic Product) in 2010 to 20.8 percent in 2019. When it was decided to make health care reform a priority, one of the major reasons was that this increase was considered to be nearly intolerable. The PPACA will increase this even more – to 21.0 percent of GDP – an even less tolerable number. That amounts to a staggering $4,670 billion NHE in 2019 alone.

What should be even more alarming are some of the measures in the bill that kept these numbers from being even higher:

* A major portion of the expansion is in Medicaid, a welfare program that reduces health expenditures by simply paying much lower rates. A continued lack of willing providers is inevitable, especially after the temporary reinforcement of primary care rates expires. If they are not allowed to expire, NHE will be even higher assuming that rates for specialized services will not be reduced further as an offset.

* Another major portion of the newly insured will receive their coverage through the state insurance exchanges. This report projects less increase in health expenditures because of “significant discounts negotiated by private health insurance plans.” Why would these “discounts” be any greater in the exchanges that they are now in the existing private insurance markets? Looking for a reduction in NHE through the magic of the marketplace within government established exchanges is not realistic.

* The excise tax on employer-sponsored plans with higher premiums is expected to “increase rapidly” after 2019, per this report. Employers will respond by reducing benefits, thereby increasing out-of-pocket costs for the employees and their families. This may also slow growth in health expenditures, but by the perverse policy of erecting financial barriers to beneficial health care services. Not paying for care that people should have obviously is not a rational way to slow the growth of our NHE.

* The $5 billion authorized for the national high-risk insurance pool is expected to be depleted very soon, resulting in substantial premium increases to sustain the program, in turn resulting in lower participation rates. Not spending money on high-risk pools will limit expenditures, but at what cost?

* Scheduled “productivity adjustments” to Medicare payment updates will further slow the growth in Medicare payments at a time when providers are already very concerned about current rates. The report states, “the Medicare productivity adjustments could become unsustainable even within the next 10 years.” Slowing growth in NHE through an “unsustainable” process certainly can’t be relied upon.

* The Independent Payment Advisory Board for Medicare is tasked with recommending further reductions in Medicare spending, without reducing benefits. Such recommendations could further stress an “unsustainable” process.

* Some of the reduction in health expenditures would occur because of a decline in the numbers covered by employer-sponsored plans which traditionally have had relatively generous benefits. Again, reducing benefits for services that people need is an inappropriate method of reducing total health expenditures.

We do need to control the excess growth in our national health expenditures, but not by methods that impair access to beneficial services, such as those in the PPACA.

If we adopted a single payer national health program, we could slow spending by eliminating the profound administrative excesses, by improving pricing though negotiation with health care professionals, by global budgeting of hospitals, by negotiated bulk purchasing of drugs and health care supplies, by evidence-based decisions on covering appropriate services but not ineffective and deleterious services, and by separate budgeting of capital improvements, thereby slowing the over-utilization that is characteristic of systems with excess capacity.

For the physical and financial health of all of us, let’s replace PPACA with an improved Medicare that takes care of everyone.

PBS ombudsman: Ignoring single payer was a mistake

Single-Minded About Single-Payer: The Ombudsman Column

By Michael Getler
PBS, April 23, 2010

PBS’s venerable public affairs and investigative series Frontline is, I confess, a favorite of mine, and has been for as long as I can remember watching public television. …

That doesn’t mean that at times it doesn’t stumble, or produce something that draws questioning and substantive criticism from viewers. Indeed, Frontline has been the subject of several ombudsman columns over the years. Yet one of the distinguishing things about Frontline from where I sit is that many of those who write at times to express disagreement frequently do so by also saying, first, how much they respect the program. In other words, even when it is bad, in their view, it’s still good.

At least some of that ambivalence was in evidence this week when our office was deluged with almost a thousand critical e-mails from people who said they were upset and angry that an hour-long look back at how the White House ultimately hammered out a historic agreement on health care, aptly titled “Obama’s Deal,” failed to deal with the single-payer system advocated by many of those who were not part of the deal.

Many of these e-mails appeared to have been generated in response to a handful of websites that criticized the program for what they saw as failures to deal fairly or adequately with this single-payer option and with one of its major proponents, Dr. Margaret Flowers. She is an activist member of Physicians for a National Health Program (PNHP), who also appeared in the film, and was interviewed briefly on camera.

The PNHP is a non-profit organization that claims 17,000 members — doctors, medical students and health-care workers — and is dedicated exclusively to a single-payer system of national health insurance, with the government as the single payer in what they say would be an expanded and improved version of the existing Medicare program that would cover all Americans.

Dr. Flowers’ letter to me is posted below …

But first, some things that struck me as I watched the program, and some later thoughts about the single-payer criticism from Flowers and others. …

Not on, or Off, the Bandwagon

The specific absence of the single-payer theme, or even mention of it, did not strike me as I watched the film. I was aware of that approach to reform and the degree to which it had a large following. But it never really was on the table as something the administration wanted as its main health-care reform proposal and, as a viewer, I saw “Obama’s Deal” as what journalists would call a tick-tock, an attempt to reconstruct how something important, for better or worse, actually happened.

Yet I believe the critics make a couple of important points that I agree with, and that I, too, find puzzling about Frontline’s approach to this issue. The single-payer plan, as Producer Michael Kirk points out in his response printed below, was never considered by the White House or congressional leaders as a viable political option and therefore did not play a significant role in last year’s political debate and deal making.

On the other hand, this is not a typical throw-away or easily cast aside idea. A public opinion poll by CBS News and the New York Times in February 2009 reported 59 percent of respondents said the government should provide health insurance, and a study published in the Annals of Internal Medicine concluded that the same percentage of doctors “supported legislation to establish national health insurance.” A bill introduced years earlier in a House committee by Rep. John Conyers (D-Mich.) supporting the single-payer plan through an expansion of Medicare had 87 co-sponsors as of February 2010 (more than any other universal health-care bill) and lots of labor union support.

So, while the hard-nosed journalistic decision may be to focus on the real options and debate, it seems to me that to ignore something that was out there and popular with millions of people and thousands of health-care professionals but not really on the table, was a mistake. Although obviously tight on time, the producers should have found 30 seconds to take this into account because many Americans support it yet the deal makers never mention it nor is the politics of discarding it addressed.

What is also puzzling to me is that this is the second time that producers of major Frontline programs on health care have decided not even to mention the single-payer system with respect to would-be reform. The other program was a March 31, 2009, broadcast of “Sick Around America” which provoked a substantial amount of controversy and that I also wrote about at the time.  …

PNHP note: The full text of Mr. Getler’s commentary, including Dr. Flowers’ letter and the replies to her from Frontline series editor Ken Dornstein and the program’s producer Michael Kirk, can be found here:

http://www.pbs.org/ombudsman/

More nurses, less death

By Stacey Burling
Philadelphia Inquirer Staff Writer
Philadelphia Business Today, April 20, 2010

Ten to 13 percent fewer surgical patients in New Jersey and Pennsylvania would die if hospitals in those states had as many nurses as California law requires, according to a University of Pennsylvania study published Tuesday.

The study of 1.1 million patients in 2005 and 2006 found that the nurse-to-patient ratios mandated in California could have saved the lives of 468 patients in New Jersey and Pennsylvania over a two-year period.

Linda Aiken, who led the study and directs the Center for Health Outcomes and Policy Research at Penn, said improved nurse staffing likely could save “many thousands a year” nationally.

The study was based on reports to states of deaths within 30 days of surgery and surveys completed by 22,336 nurses. It was published in the journal Health Services Research. Aiken said 18 states, including Pennsylvania, were considering legislation on nurse-staffing levels.

She decided to compare California to other states rather than look at what happened in California before and after the law so that people would see this as a broader issue. “What happens in California,” she said, “is relevant for other parts of the country.”

California became the first, and only, state to enforce minimum nurse-to-patient standards in 2004. For example, it says one nurse can be responsible for no more than five patients on a medical-surgical unit and two in an intensive-care unit.

Aiken’s study found that, on average, nurses in California medical-surgical units cared for two fewer patients than nurses in New Jersey and 1.7 fewer than in Pennsylvania. It also found that nurses in California liked their jobs better and were less likely to feel burned out, an important finding because of the projected shortage of nurses.

Bills have been introduced in Pennsylvania that would either set minimum ratios or require hospitals to establish committees that would develop a “safe staffing plan” for nurses. New Jersey last year began requiring hospitals to report staffing ratios to the Department of Health and Senior Services.

Nurse-to-patient ratios are among the issues dividing 1,500 striking workers and their administrators at Temple University Hospital.

The strikers, who are nurses and allied professionals represented by PASNAP, the Pennsylvania Association of Staff Nurses and Allied Professionals, have proposed staffing requirements similar to those in California.

Patricia Eakin, PASNAP’s president, said nurses often encountered staffing levels at Temple they considered “unsafe.” The union has only one contract that includes staffing ratios, at Mercy Suburban Hospital in East Norriton.

When nurses have to care for too many patients, they may not be able to deliver pain drugs on time or keep a close enough eye on patients with troubling symptoms, Eakin said. It can take 90 minutes to stabilize one patient whose heart stops. “Then you’re behind on everything else,” she said.

Sandy Gomberg, interim chief executive officer at Temple, said the hospital would not agree to required ratios. She said staffing was too complex – a mixture of patient needs, nurse skills, available technology, and unit geography – to reduce to one number. “Quality patient care cannot be boiled down to a math problem,” said Gomberg, who is a nurse.

Aiken said the new study followed decades of research showing that patient outcomes were better when nurses cared for fewer patients.

She said many hospitals in Pennsylvania and New Jersey already met California’s nursing requirements. “Some hospitals are quite good and some hospitals really have unsafe staffing by the standards of California,” she said. Her report did not identify specific hospitals.

Aline Holmes, senior vice president for clinical affairs for the New Jersey Hospital Association, said two-thirds of hospitals in New Jersey had medical-surgical unit nurse-to-patient ratios of 1 to 5.5 or less. She said previous studies had not shown that California’s mandates led to better patient outcomes. She thinks hospitals should determine staffing based on how sick patients are.

Hospital Staffing

Number of nurses to patients as mandated by California legislature.

Nurse/patient Unit Type ratio
Medical-surgical 1:5
Pediatric 1:4
Intensive-care units 1:2
Oncology 1:5
Labor/delivery 1:3
SOURCE: Health Services Research

http://www.philly.com/philly/business/20100420_More_nurses__less_death.html

A Rejoinder to Atul Gawande: How to Get Things Wrong

By Helen Redmond
FireDogLake
Wednesday April 21, 2010

HOW TO GET THINGS WRONG

I thought I understood Atul Gawande. I’ve read his books. They give me hope the medical culture of doctors and particularly of surgeons in the United States had changed. Dr. Gawande writes with clinical clarity, beauty, empathy and frustration about work inside the dysfunctional American health care system. Nothing escapes his surgically trained eyes  inside the operating room or out: nosocomial infections, medication errors, aging in America, military casualties. Gawande is obsessed with how to get things right so patients aren’t harmed or killed. He’s the kind of man who has the honesty, the humility and the cajones to apologize to a patient for almost killing him. And then calls the guy a few months later to see how he’s doing.

Gawande’s new book, The Checklist Manifesto: How to Get Things Right, makes the case for cooperation not competition, more democracy in medicine, the centrality of teamwork and the importance of respect and dignity for all health care providers and patients. As a medical social worker on the frontlines of the health care crisis for 15 years, I share Dr. Gawande’s values.

So I don’t understand why in his article in the New Yorker on April 5th titled “WHAT NOW?” Gawande not only supports the Democrat’s health care bill, he defends the most coercive and punitive aspect of the bill: the individual mandate. He isn’t concerned the legislation doesn’t “get things right,” that it doesn’t reform the health care system based on the cooperative, democratic ideas and values he so passionately espouses.

Gawande believes the bill “could prove as momentous as Medicare.” It will not. The core ideology of Medicare is the belief health care is an entitlement, a guaranteed right. It was a government takeover of health care for the elderly supported by the majority of Americans. Single-payer for sixty-five and older.

Gawande’s article outlines the opposition to Medicare by the American Medical Association (AMA) and the entrenched racism in the south during the year it took to enact the program. He explains President Johnson’s role in implementing Medicare but far more important and instructive is the role of grassroots activists, hundreds of thousands of seniors and union members, who fought to win Medicare. In Jill Quadagno’s book, “One Nation Uninsured – Why the U.S. Has No National Health Insurance,” she uncovers this hidden, ordinary people’s history as opposed to “Great Presidents/White Men make history.” The AFL-CIO created the National Council of Senior Citizens (NCSC.) Blue Cartenson, a lead organizer, explained, “We had to make it a cause and we made it a cause… We charged the atmosphere like a campaign… We were a little bitty outfit that was tackling the whole AMA in a little apartment on Capitol Hill….” The movement understood it had to confront the doctor’s lies and attacked their positions relentlessly. They published a pamphlet entitled, “Operation Negative” that sought to “discredit the AMA on the basis of their record.” Busloads of seniors crisscrossed the country advocating for the passage of Medicare at meetings and rallies. Imagine angry and activist seniors rallying for a government takeover of their health care. Once Medicare was established, the formerly and vociferously opposed physicians set about gouging the government. One doctor confessed, “No health care program has ever strained the ethics of the medical profession as Medicare is doing… I’ll admit that I try to take as much Medicare money from Uncle Sam as I possibly can…” Physician avarice led to fraud, abuse and later to implementation of a series of cost control measures doctors complain about to this day.

The civil rights movement set the stage for the integration of hospitals and clinics. Public protests to integrate hospitals and all-white medical societies began after the passage of Brown v. Board of Education in 1954. Activists organized pickets and protests at the headquarters of white medical societies and hospitals. In 1960, four students sat down at a Woolworth’s lunch counter in Greensborough North Carolina and unleashed the struggle to smash Jim Crow and desegregate every institution in society. There were “kneel-ins” in churches, “sleep-ins” in motel lobbies and “watch-ins” in movie theaters.

To be sure, the intervention of the federal government was important, but the highly charged political atmosphere created by the civil rights movement that demanded equality in southern states was crucial to the enactment of Medicare.

In the New Yorker article Gawande posits,“The medical world will wage no civil resistance.” He’s right. The most powerful resistance is being waged by the health insurance industry both privately and publicly. Did it not give Gawande pause when just days after the health care bill passed in March the insurance industry disputed President Obama’s claim that within six months children with pre-existing conditions would be covered? Insurers insisted they had until 2014. Children, sick, disabled and dying children…. And what did Dr. Gawande think in April when insurance companies in the state he practices medicine in, Massachusetts, tried to raise rates up to 34 percent? Insurance regulators said “no” to the insurers for the first time in 33 years! That didn’t stop the greedy bastards though; they filed a lawsuit against the state agency to reverse the decision.

In an interview on Democracy Now!, Dr. Gawande said Massachusetts had near- universal coverage and, “It’s like many European countries now.” Massachusetts has the most expensive premiums in the country, 300,000 are uninsured and there are four levels of coverage: gold, silver, bronze and young adult. Not like Europe at all, actually. I lived, studied and worked in Spain for almost two years – no one is uninsured, everyone receives the same coverage, including the undocumented. The word “uninsured” isn’t in the Spanish medical lexicon.

It’s in insurance company DNA  D for denial, N for NASDAQ and A for avoidance of the sick  to eliminate or blunt regulation that threatens profit margins. There is an escape hatch for insurers and a trapdoor for patients just below each proffered reform. Facts: no regulation of premiums; age-rating  insurers can charge up to three times more for the “near elderly” (a designation I despise); companies can charge as much as 50 percent more for people who engage in “unhealthy behaviors” (the two new words for pre-existing condition); gender-rated premiums in businesses employing over 100 employees.

Starting in 2011, companies will be required to spend 80 to 85 cents out of every premium dollar on health care. Insurers loathe this new regulation and so the gaming has begun to ensure a medical loss ratio favorable to Wall Street investors. Why pay out more for health care if you don’t have to? The trick is to reclassify administrative expenses as medical expenses. WellPoint has already “reclassified” more than half a billion dollars of administrative expenses as medical expenses.

Gawande lets the predatory insurance companies off the hook when he argues the success of health care reform is the responsibility of providers and local communities and declares, “We are the ones to determine whether costs are controlled and health care improves…”

The “historic” legislation Gawande hails just forces millions to buy steerage berths on the Titanic. The ship will sink. It is a mathematical certainty.

Perhaps most disquieting is what Dr. Gawande writes toward the end of WHAT NOW?, “The most interesting, under-discussed, and potentially revolutionary aspect of the law is that it doesn’t pretend to have the answers.” Huh? For over a year the Democratic Party carr
ied out an internecine battle full of rancor, high drama and daily, dire declarations of doom and then threw women, labor and the undocumented overboard to pass a bill that doesn’t have an answer to end the health care crisis? Absolutely unacceptable. Unacceptable when 45,000 human beings die every year because they lack access to health care. Unacceptable when nearly 25 million are underinsured and medical debt is the leading cause of bankruptcy. Unacceptable when racial and ethnic disparities in health care persist.

The enormity of all the unnecessary pain, suffering and death begs the question history books in the future will attempt to answer: Why didn’t we end it sooner? Why didn’t we eliminate the Jim Crow insurance industry instead of giving them more power and profits and enact a government-run, single-payer system based on the notion that health care is a human right and on the values of social solidarity, equality and freedom?

And how is it Atul Gawande the researcher and physician who believes in science, well-controlled studies, statistics, possesses a profound respect for human life and desperately wants to get it right in order to save lives  who held a dying patient’s bleeding heart between his fingers and compressed the cardiac muscle until it started beating again  supports a bill that in 2019 still leaves 23 million people uninsured and therefore at higher risk of death?

Gawande has got things wrong.

http://seminal.firedoglake.com/diary/42425

Frontline Disguises Single-Payer Advocates as Public-Option Promoters

By Peter Hart
Fair and Accuracy in Reporting
04/20/2010

The PBS program Frontline on April 13 offered a look at the White House drive for healthcare reform titled Obama’s Deal. Like a previous Frontline special about the U.S. healthcare system, the program failed to adequately include single-payer. But the way the show did it this time was remarkable.

Margaret Flowers of Physicians for a National Health Program was interviewed by Frontline–leading one to suspect that the show might include some discussion of truly universal healthcare systems like single-payer (aka Medicare for All).

But the program was a major disappointment. As she wrote (Consortium News, 4/15/10) after it aired, “Curiously, just as it was in the health ‘debate,’ single-payer, improved Medicare for All, was also excluded from the film.”

The strange thing is that Flowers actually appears on the show (albeit briefly), in a scene recounting how single-payer activists disrupted a Senate Finance Committee hearing last May. But the protesters’ views are muddled by Frontline.

As the program explained it, insurance industry lobbyists were working to kill the public option from the Senate bill. At this point single-payer activists appear. As Flowers explained:

The producers at Frontline carefully cut single-payer out of the film. When the host, Mr. [Michael] Kirk, interviewed me for “Obama’s Deal,” we spoke extensively of the single-payer movement and my arrest with other single-payer advocates in the Senate Finance Committee last May. However, our action in Senate Finance was then misidentified as “those on the left” who led a “counterattack” because of “liberal outrage” at being excluded.

The framing of the Frontline segment would lead viewers to believe these activists were public-option proponents, which they are not. Groups like PNHP were critical of the public option–a government-run insurance plan that would be offered to some as an alternative to mandatory private health insurance–arguing that it would leave the insurance industry intact as dominant players in the healthcare business.

After Frontline aired footage of the arrests of single-payer activists, a voice says: “So what Chairman Baucus has decided this option cannot be part of the discussion at a Senate hearing? Now, I think that’s wrong. I don’t think it’s fair.” The implication was that “option” here refers to the public option– since no other option had been mentioned.

That voice was actually MSNBC host Ed Schultz–a supporter of single-payer.  His full quote (5/7/09) would have made that clear:

Now, let me explain single-payer for just a minute.

The money comes from one source, the government. Now, you and I pay taxes, OK. The government pays the bill. It’s that simple.

Patients are not caught in the middle between doctors and insurance companies, no game-playing here. There’s no middleman. You know? There’s no decision-makers between you and your doctor. It’s a clean deal.

So what Chairman Baucus has decided, this option cannot be part of the discussion at a Senate hearing? Now, I think that’s wrong. I don’t think it’s fair.

Thus single-payer activists were transformed into advocates for the public option.

This is not the first time that Frontline has decided that a conversation about healthcare reform should exclude single-payer from the discussion. The March 31, 2009 Frontline special Sick Around America avoided discussions of national healthcare plans. This omission led Frontline correspondent T.R. Reid–who had hosted a previous Frontline special  (4/15/08) that examined various public healthcare models– to withdraw from the project.

PBS ombud Michael Getler agreed with those who thought the show missed a chance to discuss single-payer. It looks like the program has done so again.

http://www.fair.org/blog/2010/04/20/frontline-disguises-single-payer-advocates-as-public-option-promoters/

Will regulatory oversight of premium increases slow spending?

Democrats seek greater control over health insurance rates

By Noam Levey
Los Angeles Times
April 21, 2010

Congressional Democrats have begun pushing legislation giving government regulators greater authority to block big increases in health insurance premiums.

The move, which comes less than a month after President Obama signed the healthcare legislation, is aimed at giving all states the power to stop premium hikes deemed excessive and allowing the federal government to step in if the states don’t act.

“There is no need for federal involvement in states with insurance commissioners who are protecting consumers,” (Sen. Dianne) Feinstein said Tuesday.

“Health plan premiums are a symptom, not a cause of the problem,” said Karen Ignagni, who heads America’s Health Insurance Plans, the industry’s Washington-based lobbying arm.

http://www.latimes.com/business/la-fi-health-premiums-20100421,0,2986100,full.story

Comment: 

By Don McCanne, MD

The cause of high health insurance premiums is high health care costs. State insurance regulators have no control over that, nor over the administrative costs of the insurers. If insurance company profits are abusive, then regulators can pare back profits to a reasonable level.

The problem is that insurance company profits are an almost undetectable portion of our $2.5 trillion national health expenditures (NHE). Dramatically reducing insurer profits will not even appear as a footnote in the report of our NHE. The terrible waste is not in insurer profits but in the profound administrative inefficiencies of a fragmented system based on a multitude of private and public plans.

Karen Ignagni of America’s Health Insurance Plans is correct when she says that insurance premiums are a symptom and not a cause of the problem. High health care costs are. Unfortunately, her industry has been and will continue to be ineffective in controlling rising costs. Throughout the reform process she had stated repeatedly, in effect, that the government must provide the solutions to rising costs.

Under the reform model approved by Congress and the President, there are no effective solutions. Merely experimenting with meager health policy proposals holds little promise for effective cost containment at the level that we need. (Those who contend that the independent Medicare advisory board would be effective should keep in mind that it would ratchet down Medicare while allowing the private insurers free run. That could be a disaster for Medicare.)

Of course, the government solution that Karen Ignagni doesn’t want, but one that would be truly effective, would be an improved Medicare that covers everyone. (Is there an echo in here?)

Will regulatory oversight of premium increases slow spending?

Democrats seek greater control over health insurance rates

By Noam Levey
Los Angeles Times
April 21, 2010
Congressional Democrats have begun pushing legislation giving government regulators greater authority to block big increases in health insurance premiums.
The move, which comes less than a month after President Obama signed the healthcare legislation, is aimed at giving all states the power to stop premium hikes deemed excessive and allowing the federal government to step in if the states don’t act.
“There is no need for federal involvement in states with insurance commissioners who are protecting consumers,” (Sen. Dianne) Feinstein said Tuesday.
“Health plan premiums are a symptom, not a cause of the problem,” said Karen Ignagni, who heads America’s Health Insurance Plans, the industry’s Washington-based lobbying arm.
http://www.latimes.com/business/la-fi-health-premiums-20100421,0,2986100,full.story

The cause of high health insurance premiums is high health care costs. State insurance regulators have no control over that, nor over the administrative costs of the insurers. If insurance company profits are abusive, then regulators can pare back profits to a reasonable level.
The problem is that insurance company profits are an almost undetectable portion of our $2.5 trillion national health expenditures (NHE). Dramatically reducing insurer profits will not even appear as a footnote in the report of our NHE. The terrible waste is not in insurer profits but in the profound administrative inefficiencies of a fragmented system based on a multitude of private and public plans.
Karen Ignagni of America’s Health Insurance Plans is correct when she says that insurance premiums are a symptom and not a cause of the problem. High health care costs are. Unfortunately, her industry has been and will continue to be ineffective in controlling rising costs. Throughout the reform process she had stated repeatedly, in effect, that the government must provide the solutions to rising costs.
Under the reform model approved by Congress and the President, there are no effective solutions. Merely experimenting with meager health policy proposals holds little promise for effective cost containment at the level that we need. (Those who contend that the independent Medicare advisory board would be effective should keep in mind that it would ratchet down Medicare while allowing the private insurers free run. That could be a disaster for Medicare.)
Of course, the government solution that Karen Ignagni doesn’t want, but one that would be truly effective, would be an improved Medicare that covers everyone. (Is there an echo in here?)