Thursday, July 30, 2015

Fwd: qotd: At 50 years, time to improve Medicare

Quote-of-the-day mailing list

-------- Forwarded Message --------
Subject: qotd: At 50 years, time to improve Medicare
Date: Thu, 30 Jul 2015 06:29:14 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The Commonwealth Fund
July 8, 2015
Modernizing Medicare's Benefit Design and Low-Income Subsidies to Ensure
Access and Affordability
By Cathy Schoen, Karen Davis, Christine Buttorff, and Martin Andersen


Insurance coverage through the traditional Medicare program is complex,
fragmented, and incomplete. Beneficiaries must purchase supplemental
private insurance to fill in the gaps. While impoverished beneficiaries
may receive supplemental coverage through Medicaid and subsidies for
prescription drugs, help is limited for people with incomes above the
poverty level. This patchwork quilt leads to confusion for beneficiaries
and high administrative costs, while also undermining coverage and care
coordination. Most important, Medicare's benefits fail to limit
out-of-pocket costs or ensure adequate financial protection, especially
for beneficiaries with low incomes and serious health problems.


There is a pressing need for reform. An estimated 20 million of
Medicare's 52 million beneficiaries live on incomes below 200 percent of
the federal poverty level. Nine million beneficiaries have complex care
needs with serious functional limitations that hinder their ability to
carry out daily activities. Although the poorest are eligible for
Medicaid to supplement Medicare, under current policies beneficiaries
with low or modest incomes are eligible for only limited help with
paying for premiums or medical care expenses.

The absence of a ceiling on out-of-pocket costs can undermine the
financial security and exhaust the resources of even higher-income
beneficiaries. That's why most beneficiaries supplement Medicare's core
benefits with coverage sold by private insurers, often purchasing
multiple plans. This fragmented coverage is inefficient, generates high
administrative costs, and undermines efforts to improve coordination of
patient care and prevent avoidable hospitalizations.

Current Medicare Benefits and Low-Income Provisions

Medicare has separate deductibles and cost-sharing provisions for Part A
hospital, skilled nursing facility, and home health services and for
Part B physician, lab, and diagnostic benefits, with no limit on annual
out-of-pocket spending for covered services. Part A includes a $1,216
deductible per hospital episode and substantial cost-sharing for
longer-term hospitalization or skilled nursing stays after a
hospitalization. Part B has a $104.90 monthly premium ($1,259 per year
per person), a separate $147 annual deductible, and open-ended
coinsurance of 20 percent for physician services (including surgeons and
other hospital inpatient physicians), therapy, durable medical
equipment, and outpatient services with no limit on out-of-pocket spending.

For prescription drug coverage, beneficiaries must buy a Part D plan
with a separate premium that averages around $440 a year plus a
deductible and cost-sharing that varies across private plans. The
Affordable Care Act (ACA) is phasing out Medicare's gap in drug
coverage—the "doughnut hole"—but beneficiaries requiring specialty drugs
or multiple medications can still face substantial costs.

Supplemental private coverage to fill in Medicare's deductibles and
cost-sharing is costly, with Medigap premiums adding over $2,000 a year,
depending on geographic area. It is also inefficient, with 20 percent of
the premium, on average, going toward administrative costs.

Some low-income beneficiaries are eligible for assistance paying their
Parts A and B cost-sharing and Part B premiums. Medicaid covers Medicare
cost-sharing up to 100 percent of the poverty level and provides
subsidies for Part B premiums up to 135 percent of poverty for those
meeting income and asset tests.6 Personal asset limits for beneficiaries
seeking extra help with Medicare premiums or cost-sharing are $7,160 for
an individual and $10,750 for a couple (in 2014).

In contrast to Medicare, the ACA eliminates asset tests and provides
substantial premium and cost-sharing subsidies up to 200 percent of
poverty for the under-65 population and expands Medicaid to 138 percent
of poverty for participating states.7 ACA provisions exclude Medicare
beneficiaries. As a result, lower-income older adults who age into
Medicare will face increased financial burdens for coverage and care.

Underprotected and Underinsured Medicare Beneficiaries

Facing gaps in benefits and premium costs, an estimated 25 percent of
all beneficiaries and 40 percent with incomes below twice the poverty
level spent 20 percent or more of their income for premiums plus medical
care costs in 2014.

An estimated one of five beneficiaries—11 million people—spent at least
10 percent of their income on medical care alone in 2014, not including
premiums. Despite having Medicare, they were underinsured, spending a
high share of their income on medical care. The risk of being
underinsured was highest for low-income beneficiaries: an estimated
one-third of those with incomes up to 150 percent of poverty, and 30
percent of those with incomes between 150 percent and 200 percent of
poverty were underinsured.

Such high financial burdens undermine access to care, deplete incomes,
and drain resources. Notably, a recent study found that the elderly in
the United States are far more likely to go without care because of the
cost and face problems paying medical bills than their counterparts in
10 other high-income countries. Beneficiaries with complex care needs
are particularly at risk.

Policy Options to Modernize Benefits and Improve Low-Income Protections

To modernize Medicare's core benefits and update policies related to
low-income beneficiaries, the brief discusses two complementary options.
The first would offer a new Medicare-sponsored plan choice. Available
for an extra premium, it would provide an integrated design with
prescription coverage, more-affordable cost-sharing, and a limit on
out-of-pocket costs—making supplemental coverage unnecessary. The second
option would expand subsidies for Medicare's premiums and reduce
cost-sharing for beneficiaries with incomes up to 200 percent of the
federal poverty level in ways that align with the Affordable Care Act's
policies for the under-65 population.


Comment by Don McCanne

At the 50th anniversary of Medicare we can be thankful for the
assistance it has provided to our seniors and those with long term
disabilities in improving access to care and in making health care more
affordable for them. However, Medicare does have significant
deficiencies and this is a good time to look at them and see what we can
do to improve the program.

Probably the most glaring defect is that the coverage is inadequate,
especially for those with modest incomes. Premiums for Parts B and D,
deductibles for Parts A, B and D, 20% coinsurance for Part B, other
forms of cost sharing, and the lack of a ceiling on out-of-pocket costs
all combined can create severe financial hardships for far too many.
Medicare should be structured to ensure health security without
threatening exposure to financial insecurity.

To cover these high out-of-pocket costs, some purchase Medigap plans.
But these plans are overpriced, partly because they consume 20% of the
premiums for administration. Plus they add administrative complexity for
the providers because of having to interact with two payers - Medicare
plus the Medigap plan. Employer-sponsored retiree health plans may
provide wraparound coverage for Medicare, but this is administratively
inefficient as well. More comprehensive coverage by Medicare would
relieve employers of their responsibilities for their retiree health
plans for the Medicare-eligible population, plus it would free up funds
that could be added to retiree pensions. Very low income individuals may
qualify for Medicaid coverage, though these dual-eligible individuals,
to their dismay, are now often being forced into managed care plans
designed for the welfare population. Others select private Medicare
Advantage plans, but the government unfairly pays the private plans more
- two-thirds of which is kept by the insurers instead of going toward
patient benefits. Although Medicare Advantage plans reduce spending for
the beneficiaries, they do so by wasting an inordinate amount of
taxpayer dollars on non-medical administrative excesses and insurer profits.

The authors of this brief do recommend creating a new Medicare option -
"Medicare Essential" - available for an extra premium, which would
integrate more benefits and place a ceiling on out-of-pocket costs,
obviating the need for supplemental coverage. They would also protect
low-income individuals by adding premium subsidies and cost sharing
reductions, based on income, much like the subsidies for the plans in
the ACA exchanges. These changes would certainly reduce the financial
burden that Medicare beneficiaries face, but their analysis of the
impact of these two policies shows that 15 percent of Medicare
beneficiaries would still be paying over 20 percent of their income on
care and premiums.

A better solution would be to go ahead and roll the benefits of these
various supplemental or complementary programs into the traditional
Medicare program so that it could be administered as one single program,
but to also achieve greater efficiency by eliminating all of the
premiums, deductibles, coinsurance and other cost sharing, and instead
funding all care through a single, equitably-funded Medicare risk pool.
Carrying that one step further, the maximum efficiency would be attained
by expanding that risk pool to cover absolutely everyone so that we
would all have prepaid health care whenever we needed it.

After 50 years, it is clear that Medicare needs improvement, though it
still has strong support of the public. The time is ripe for not only
improving it, but also expanding it to cover everyone. Let us hope that
we do not have to wait another 50 years to get it right.

Wednesday, July 29, 2015

Fwd: qotd: Rep. McDermott introduces H.R.3241: State-Based Universal Health Care Act

Quote-of-the-day mailing list

-------- Forwarded Message --------
Subject: qotd: Rep. McDermott introduces H.R.3241: State-Based
Universal Health Care Act
Date: Wed, 29 Jul 2015 11:13:03 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

U.S. House of Representatives
July 28, 2015
Rep. Jim McDermott
Statement Introducing the State-Based Universal Health Care Act of 2015

Mr. Speaker, I rise today to introduce legislation that will give states
the tools they need to guarantee the health security of their citizens.
The State-Based Universal Health Care Act of 2015 establishes a new
procedure through which states may apply for a waiver of federal law in
order to design and implement single-payer health care systems. This
will allow states to achieve universal coverage and control costs by
removing greed and inefficiency from the system.

One of the many achievements of the Affordable Care Act is its
provisions that grant states the authority to innovate in their health
care systems. Under Section 1332 of the law, a state may apply for a
State Innovation Waiver that will provide it with control of federal
dollars that otherwise would have been spent on premium tax credits and
cost-sharing reductions for its residents. Through this waiver, a state
may design a system to cover its residents, so long as benefits are at
least as comprehensive and affordable as those offered by Qualified
Health Plans available on the Exchanges.

However, even with this flexibility, numerous barriers limit states'
ability to design true single-payer systems. Existing waivers are narrow
in scope, requiring states to seek out imperfect and convoluted
solutions to circumvent federal limitations. A sweeping preemption
provision in the Employee Retirement Income Security Act (ERISA) denies
states authority to regulate employer-sponsored health plans. And, due
to the complexities of our existing federal health programs, it is
essentially impossible for a state to design a single benefit package
that can be administered simply and efficiently on behalf of all of its

The State-Based Universal Health Care Act removes these barriers. It
builds upon the ACA's State Innovation Waiver by offering states new
tools that will allow them to truly innovate in health care. Under this
legislation, a state may apply for a Universal Health Care Waiver that
will grant it authority over federal health care dollars that otherwise
would have been spent on the state's residents. To the extent necessary
to design a universal system, a state may waive provisions of federal
law relating to the following:

* The rules governing premium tax credits and cost-sharing reductions,
as provided for in existing waiver authority under Section 1332 of the ACA.

* Provisions necessary for states to pool funds that otherwise would be
spent on behalf of residents enrolled in Medicare, Medicaid, CHIP,
TRICARE, and the Federal Employee Health Benefits Program.

* ERISA's preemption clause, which currently forbids states from
enacting legislation relating to employee health benefit programs.

Any state seeking a Universal Health Care Waiver must design a system
that covers substantially all of its residents. The benefits that each
citizen receives must be at least as comprehensive and no less
affordable than what would have been provided under any federal health
programs for which its residents otherwise would have been eligible.
Once enacted, the state plan must be publicly administered, and it may
not add to the federal deficit.

The Affordable Care Act was a landmark achievement and a strong first
step toward achieving health security in this country. However, we still
have a tremendous amount of work left to do. The United States spends by
far the most per capita on health care, yet we fail to achieve superior
outcomes or even guarantee coverage as a basic human right. Insurance
companies are a powerful force in our economy, enjoying billions in
profits and growing power in the marketplace. Meanwhile, hospitals are
consolidating at an astonishing rate, raising new questions about the
quality of patient care and the future of medicine. What's more, we have
failed to make meaningful efforts to combat the skyrocketing costs of
prescription drugs, threatening patient access to treatments and the
financial sustainability of the entire system.

As we explore ways to build upon the successes of the ACA, it is
critical that we look for creative solutions to the challenges that
still exist. Granting states tools to design single-payer systems will
help spur necessary innovation, achieve universal coverage, and control
costs. It is time to take this next step as we continue to move forward
in our historic effort to guarantee the health security of every American.

H.R.3241: State-Based Universal Health Care Act of 2015


Comment by Don McCanne

State efforts to establish single payer systems have had difficulties
because the existing waiver processes for use of federal funds have been
quite limited in their scope, and ERISA restrains state regulation of
employer-sponsored health plans. The workarounds have been difficult and
are a major reason that several states with promising proposals have
backed off on their efforts.

Rep. Jim McDermott has now introduced H.R.3241, the State-Based
Universal Health Care Act of 2015, which would allow states to include
in a universal health insurance risk pool all funds that are currently
used for federal health programs, including Medicare, Medicaid, CHIP,
TRICARE, FEHBP, and the subsidies for plans in the ACA exchanges, plus,
by eliminating ERISA restrictions, states could establish a more
equitable method of financing in replacing funds currently paid into
employer-sponsored plans. Those crafting state single payer legislation
would have a field day if H.R.3241 were to become law, though they would
face many other technical issues which will not be addressed here.

What could be wrong with this proposal? Conservatives are dreaming of
the day that they can receive Medicaid funds as block grants to the
states. It does not take much imagination to think what they would do
with those block grants, especially when you look at their current
behavior. The Medicaid waivers they are requesting both privatize the
program and shift more costs to the patients, and some governors are
even refusing federal funds, calling instead for block grants over which
they would have much greater control. Under H.R.3241, essentially all
federal health program funds would granted to the states in what would
be, in essence, block grants. Although the Act calls for universality,
comprehensiveness, affordability, and public administration, clearly the
conservatives would game the system, much to the detriment of patients.

We really do need a national single-payer health program, and that is
why we cannot allow ourselves to be diverted from supporting legislation
such as H.R.676, the Expanded & Improved Medicare for All Act,
introduced by Rep. John Conyers, now with 63 cosponsors. Whatever else
we do, our advocacy for a national program must be steadfast.

As we work on trying to change the politics on the national scene, it
certainly would be reasonable for state reform advocates to continue
their efforts. Some in the trenches hope that conservatives would be
attracted to shifting more control to the states through legislation
such as this. But keep in mind the risk of this as we watch the
suffering of low-income individuals and families in those states that
already refuse to collaborate with Medicaid, in spite of the gift of
federal funds.

Another risk is that if H.R.3241 gains traction, single payer supporters
may abandon national efforts, just as they abandoned single payer
support when the "public option" was under consideration. Abandoning a
national effort in deference to your own state increases the risk that
our brothers and sisters in other states would be left out.

Everybody in, nobody out.

Tuesday, July 28, 2015

Fwd: qotd: Is the California ACA exchange a model for the nation?

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-------- Forwarded Message --------
Subject: qotd: Is the California ACA exchange a model for the nation?
Date: Tue, 28 Jul 2015 13:38:00 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Los Angeles Times
July 27, 2015
Op-Ed Obamacare works in California. Here's why.
By Peter V. Lee, James C. Robinson

Early reports that 2016 health insurance premiums would increase in
double digits brought out the usual cadre of critics to claim — once
again — that Obamacare is not financially sustainable.

We now have the full picture in California, where we are proving that
health insurance exchanges can keep prices in check. Residents who
enroll through Covered California, our statewide exchange, will see only
modest 4% increases in 2016. Those selecting the lowest-priced plans
actually will save 4.5%.

These low premiums were made possible because California law gave
Covered California the power to actively negotiate on behalf of its 1.3
million consumers. The board and staff of Covered California have used
this authority. That's helping the Affordable Care Act work as intended
— using market forces to hold down costs.

So how exactly is California getting such good results? First, Covered
California selects which plans can be sold through the exchange. This
gives it leverage with the insurers, which want to reach this source of
new customers. Those insurers then are able to negotiate better deals
from hospitals and doctors. In contrast, the federal health insurance
marketplace and other state exchanges take all comers and do not force
insurers to improve plans to get their products onto the exchanges.

In 2014 and 2015, Covered California turned away several plans because
of serious concerns about high prices, inadequate physician networks or
weak administrative capabilities.

Covered California also negotiates directly with health insurers on
prices. We pressure carriers to keep premiums as low as possible and
offer robust networks of doctors and hospitals. Passive insurance
exchanges, including the 37 states that are part of the federal
marketplace, allow insurers to charge whichever rates pass regulatory
muster and cover however many doctors they want.

Equally important, Covered California standardizes the deductibles and
other characteristics of plans offered. That empowers consumers, who can
make apples-to-apples comparisons. Standardization also allays fears
that low-premium plans might be complicated or rife with coverage
exclusions. Californians can rest assured that their coverage means they
can get the treatment they need without first paying a deductible that
can be thousands of dollars.

Moreover, the benefit of standard plans and negotiated prices accrue to
anyone who buys individual health insurance. Again, because of how
California law implemented the ACA, the rates Covered California
negotiates must also apply to policies those plans sell outside the

Covered California is using its heft to improve patient care and
outcomes too. Contracts with insurers require that they participate in
quality improvement programs, reduce ethnic and geographic disparities
in access to care, and provide patients with access to doctors and
hospitals that meet their needs.

Taken together, this process generates a better set of insurance options
than do the federal and state insurance exchanges that adopt a passive
market approach.

Free market forces can be a powerful tool to contain health costs. But
for that tool to work, consumers need the support of an active purchaser
that can go toe-to-toe with the insurers. Other states and the federal
exchange would be wise to look at what's working in California.

(Peter V. Lee is the executive director of Covered California. James C.
Robinson is a professor of health economics at UC Berkeley.)


Los Angeles Times
July 28, 2015
Covered California's good news on premium hikes comes with trade-offs
By The Times Editorial Board

The 2010 federal healthcare reform law made it easier for millions of
Americans to obtain insurance coverage, but it didn't stop the cost of
that coverage from rising considerably faster than inflation. So it was
a welcome surprise Monday when officials at Covered California, the
state's health insurance exchange, announced that the average premiums
for individual policies in 2016 would be only about 4% higher than they
are this year, and only about 2% higher in Los Angeles County. Mixed in
with the good news for consumers, though, were some trade-offs that
won't make everyone happy. The announcement offers lessons for consumers
and policymakers, not all of which are easy to stomach.

Monday's announcement illustrates how competition among doctors and
hospitals in Southern California is helping to hold down premiums.
Consumers in remote or rural areas, and even in some parts of Northern
California, who do not have such competitive marketplaces but are
dominated by one or two hospital systems may face double-digit increases
in their premiums in 2016. They can cut their costs significantly by
switching insurers, but doing so may require them to find a new set of
doctors — Covered California has encouraged insurers to compete by
assembling different lineups of doctors and hospitals. That's a
potentially huge barrier to people with chronic conditions and those who
don't have the time or inclination to get into the details of their
insurance plans.

Here's another trade-off. Close to 90% of those insured through Covered
California receive subsidies for their premiums, which makes premiums
less of a problem for many than their policy's out-of-pocket costs. To
hold down those costs in 2016, the exchange is introducing a new
standard "benefit design," or common set of policy features. This design
eliminates deductibles for more basic services and caps the costs of
expensive prescription drugs. At the same time, though, it makes
emergency services and hospitalizations more expensive, especially for
those choosing the tier of coverage with the least expensive premiums.
That should help many consumers, but not those in cheaper plans who are
hit with a major illness or injury.

Unlike the exchanges in most states, Covered California actively
negotiates with insurers over rates and plan designs. There's a
trade-off here too: Some insurers aren't offering plans through the
exchange to consumers in all or part of the state because they didn't
meet the exchange's demands.

That's not to give short shrift to what Covered California has been
doing. It's simply to acknowledge that the changes wrought by the 2010
law have yielded a market for individual policies that demands not just
an active exchange but attentive consumers aware of the trade-offs
implicit in their choices.


Comment by Don McCanne

Peter Lee and James Robinson tell us that the Affordable Care Act (ACA)
is working as intended - "using market forces to hold down costs," and
that California proves it by holding average premium increases down to
4% for the second consecutive year. But Covered California functions as
an "active purchaser." Does that mean it is functioning as an agent
facilitating a free market between buyers and sellers of insurance, or
is it functioning as a bureaucratic regulator dictating which insurers
and which products are allowed in the exchange markets?

The last half century has confirmed that free markets in health
insurance are highly dysfunctional. The reason that Covered California
is working is that it is very highly regulated, dictating which insurers
can participate, what benefits their plans must offer beyond those
mandated by ACA, while aggressively negotiating with insurers on prices,
rejecting those that are too high.

By requiring more rigid standardization of negotiated prices, benefits,
and lower deductibles, plan selection for buyers is less difficult.
Although this standardization defeats the free market principles wherein
choice would be between plans with much greater variability in these
parameters, it reduces the risk for the individual that a given selected
plan would be grossly inadequate in the face of significant medical need.

Thus given the limitations of ACA, the strong arm tactics of these
bureaucrats benefit patients compared to simply turning them loose in a
free market of unregulated health plans.

But there are important trade-offs. Because the exchange plans are
supposed to compete, they are requiring plans to have different
compositions of provider networks so that patients would have a choice
of which restricted list of providers they could use. That could be
difficult for patients with chronic problems whose professionals were
scattered amongst different networks. Also yearly premium adjustments
can leave patients with a choice of paying a higher, less affordable
premium or changing to another plan with a different provider network,
disrupting continuity of care.

The administrators of Covered California have recognized the financial
barriers created by the very high deductibles that have become
commonplace today. They rightfully established a new standard benefit
design that eliminates the deductibles for basic services. But to avoid
the necessity of premium increases they have had to allow greater cost
sharing for emergencies and hospitalizations - creating financial
hardships for those with the greatest needs for adequate coverage.

Trying to do the best with what ACA allows, they have crafted plans that
limit choices of providers, expose the most vulnerable patients to high
out-of-pocket costs, while keeping insurance premiums only modestly
above the level they were before ACA was enacted.

What is missing here? They have failed to recover the profound
administrative waste inherent in our dysfunctional financing system -
waste that goes away simply by changing to single payer financing. Also
they could be more effective negotiators if they were a single public
monopsony - a single-payer purchaser - instead of trying to negotiate
with only a portion of the multiple players in our fragmented financing
system. The efficiencies would free up enough funds to provide all
essential services for everyone in a system with free choice of health
care professionals that is affordable for all through equitable public

The honorable administrators of Covered California have shown us what
can be done under ACA. Their efforts are admirable, but their results
fall tragically short of what we need simply because they were limited
by the fundamental defects in our financing infrastructure. Just think
of what they could do for us if we gave them an improved Medicare for
all with which to work.