Thursday, September 30, 2010

qotd: Provider rate cuts and new benefit restrictions in Medicaid

Kaiser Family Foundation
September 2010
Hoping for Economic Recovery, Preparing for Health Reform: A Look at Medicaid Spending, Coverage and Policy Trends
by Vernon K. Smith, Ph.D., Kathleen Gifford and Eileen Ellis

In FY 2010, 48 states implemented at least one new policy to control cost and 46 states plan to do so in FY 2011 with some states reporting program reductions in multiple areas. While many states mentioned that ARRA (American Recovery and Reinvestment Act of 2009) helped to avoid or mitigate provider rate cuts, states still took action in this area. In FY 2010, 39 states implemented a provider rate cut or freeze compared to 33 states in FY 2009. In FY 2011, 37 states have planned provider rate restrictions. More than any other area, provider rates are linked to economic conditions. Under budget pressure, states turn to rate cuts to have an immediate budget impact and when conditions improve states are able to restore or enhance rates. States must balance the need to control costs with ensuring that provider rates are sufficient to maintain participation and access to services for enrollees.

In FY 2010, 20 states implemented benefit restrictions, the largest number in one year since the surveys began in 2001 and double the number from FY 2009. In addition to this record level of benefit restrictions in FY 2010, 14 states have planned benefit restrictions in FY 2011. These benefit restrictions include the elimination of covered benefits as well as the application of utilization controls or limits for existing benefits.

Under health reform, Medicaid will be expanded to cover nearly all individuals with incomes below 133 percent of poverty resulting in a large adult expansion in most states, particularly adults without dependent children who had historically been barred from coverage under the program. This expansion provides the foundation for new coverage under health reform. Not surprisingly, Medicaid officials are playing a lead role in preparing for health reform implementation, in many cases alongside insurance commissioners. Some of the key challenges that states will face in implementing reform include implementing the Medicaid expansion, transitioning to a new income eligibility methodology for Medicaid, setting up Health Insurance Exchanges and re-designing eligibility systems to coordinate with the Exchanges. These challenges are magnified by recent administrative cuts and state workforce reductions limiting states' capacity to focus on new responsibilities. Many states said that they need
timely regulations and guidance as well as financial support to help them move forward and meet tight implementation timelines.

Comment:  In spite of the infusion of funds from the American Recovery and Reinvestment Act of 2009 (ARRA), states are implementing Medicaid provider rate cuts and implementing Medicaid benefit restrictions. Yet with the enactment of the Patient Protection and Affordable Care Act (ACA), the Medicaid program will be greatly expanded to include almost everyone with incomes below 133 percent of poverty.

Medicaid always has been and always will be a welfare program for low-income individuals. Serving a population that lacks an adequate political voice, it also has been and always will be a chronically underfunded program.

Most physicians who do accept Medicaid patients do so, in spite of inadequate reimbursement, because they believe that everyone should have health care. With a much greater volume of Medicaid patients some physicians will certainly face the dilemma of crowd-out of privately insured patients because of the Medicaid overload in their appointment schedules. 

Imagine a physician facing Medicaid overload, declining net revenues, and frustrations of trying to help patients negotiate a system with diminishing benefits and with impaired access to specialized services because of a lack of willing providers. 

Certainly some physicians will feel that they have no other choice than to close their practices to Medicaid patients. What will that do to other physician practices that are already overloaded with Medicaid patients?

Adverse selection can sink insurers, but it would be much more tragic to see adverse selection sink the practices of those physicians who are trying their hardest to do the right thing.

If everyone were in the same health care program, say an improved Medicare for all, an underfunded, segregated sector of stigmatized and humiliated welfare patients wouldn't even exist. They would have access to the same care the rest of us have. Wouldn't that be nice for a change.

Wednesday, September 29, 2010

qotd: What if everyone had Medicare?

San Francisco Chronicle
September 24, 2010
What if everyone had Medicare?
By Henry Abrons

The Census Bureau released its annual report on income, poverty and health insurance coverage in the United States earlier this month, and it's no surprise to learn that we're in bad shape. The number of people living in poverty was 43.6 million (14.3 percent), up sharply from 2008, and real per capita income declined 1 percent.

Looking at health insurance, the situation is truly dire. There was a dramatic spike in the uninsured - 4.3 million more, to a record 50.7 million - in spite of the expansion of government health insurance rolls by nearly 6 million.

Those opposing government health insurance should ponder the fact that private health insurance coverage dropped to the lowest level since comparable data were first collected in 1987. On the other hand, those who look to the new health reform law - the Patient Protection and Affordable Care Act (PPACA) - for a solution should be deeply disturbed.

PPACA was not designed to provide universal coverage. In fact, if the new law works as planned, in 2019 there will still be 23 million uninsured. Yet the consequence of being uninsured can be lethal: Research published last year shows about 45,000 deaths annually can be linked to lack of coverage. That number is probably more than 50,000 today.

As Don McCanne, senior health policy fellow at Physicians for a National Health Program, has observed, PPACA is an underinsurance program. Employers, seeing little relief, will expand the present trend of shifting more insurance and health care costs onto employees.

Individuals buying plans in the new insurance exchanges (which won't start until 2014) will discover that subsidies are inadequate to avoid financial hardship. Inevitably, they will end up with underinsurance, spotty coverage and high deductibles.

And workers who are unemployed or without employment-based insurance will move into Medicaid (Medi-Cal in California), where providers are reimbursed at such low rates that many will not accept patients.

When Congress passed the new law last spring, it based its decision on a faulty assumption - namely, that the rest of the population will have sustainable private health insurance. But between 2008 and 2009, the number of people covered by private health insurance decreased from 201.0 million to 194.5 million, and the number covered by employment-based health insurance declined from 176.3 million to 169.7 million.

If this trend continues, as it's bound to do under current economic conditions, the ranks of the uninsured will expand and the new law will fall far short of the mark - either the cost will exceed projections, or coverage will be need to be reduced.

The Census Bureau report underscores the urgency of going beyond the Obama administration and swiftly implementing a more fundamental reform - a single-payer national health insurance program - improved Medicare for all.

Improved Medicare-for-all, by replacing our dysfunctional patchwork of private health insurers with a single, streamlined system of financing, would save about $400 billion annually in unnecessary paperwork and bureaucracy. That's enough to cover all of those now uninsured and to provide every person in the United States with quality, comprehensive coverage.

A single-payer plan would also furnish us with effective cost-control tools, like the ability to negotiate fees and purchase medications in bulk. It would permit patients to go to the doctor and hospital of their choice.

Short of a full national plan, some states, like ours, are eyeing a state-based single-payer model. The new health law allows states to experiment with different models of reform, but not until 2017. Congress should move that date forward. There is no time to waste.

(Henry Abrons, M.D., is a member of Physicians for a National Health Program-California -

Comment:  Henry Abrons' message is certainly very familiar to supporters of an improved Medicare for all, but we have to keep repeating it over and over until more people start listening.

Tuesday, September 28, 2010

qotd: Incomes and health costs

U.S. Census Bureau
September 28, 2010
Census Bureau Releases 2009 American Community Survey Data

Median Household Income

Real median household income in the United States fell between 2008 and 2009 — decreasing by 2.9 percent from $51,726 to $50,221.


September 27, 2010
U.S. Health Care Cost Rate Increases Reach Highest Levels in Five Years, According to New Data from Hewitt Associates

According to Hewitt's analysis, the average total health care premium per employee for large companies will be $9,821 in 2011, up from $9,028 in 2010. The amount employees will be asked to contribute toward this cost is $2,209, or 22.5 percent of the total health care premium. This is up 12.4 percent from 2010, when employees contributed $1,966, or 21.8 percent of the total health care premium. Average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are expected to be $2,177 in 2011—a 12.5 percent increase from 2010 ($1,934). These projections mean that in a decade, total health care premiums will have more than doubled, from $4,083 in 2001 to $9,821 in 2011. Employees' share of medical costs—including employee contributions and out-of-pocket costs—will have more than tripled, from $1,229 in 2001 to $4,386 in 2011.


Milliman Medical Index

The annual Milliman Medical Index (MMI) reports total annual medical spending for a typical American family of four covered by an employer-sponsored preferred provider organization (PPO) program. The MMI represents the total cost of payments to healthcare providers, and excludes the non-medical administrative component of health plan premiums.

The total 2010 medical cost for a typical American family of four is $18,074.

Comment:  Think about this. Median household income is now back down to $50,000. The average cost of health care for a family of four with an employer-sponsored PPO plan is $18,000. Premiums for employer-sponsored plans have doubled in the last decade, while the employees' spending on health care has tripled!

The Patient Protection and Accountable Care Act (PPACA) was specifically designed to leave the large market of employer-sponsored private health plans intact - the "you can keep the insurance you have..." strategy for reform. Most individuals and families will see little change as a result of PPACA since they will continue to receive their insurance coverage through their employment.

Very specifically, employees of larger companies will not see premium subsidies like for those who purchase plans in the state exchanges, nor will they see the subsidies for out-of-pocket expenses. The architects of PPACA decided that employer contributions to the premiums would obviate the need for subsidies - glibly suppressing the fact that employer contributions are actually paid by the employees in the form of forgone wage increases.

The health care financing structure of PPACA is an unmitigated disaster. For most families, health care costs will encroach at increasing percentages on their budgets for basic essentials such as housing, food, and transportation, not to mention education, retirement plans, and other discretionary expenses. The $18,000 in average health care costs for a family of four is already over one-third of the median household income of $50,000.

We desperately need to enact policies that will bring costs under control while establishing an equitable method of financing that makes health care affordable for everyone. PPACA doesn't even come close. What will work is a single-payer national health program - an improved Medicare that includes everyone.

(Why aren't people talking about this? Why is all of the media coverage about the tweaks to our fragmented, dysfunctional system - tweaks that will never get us there? Doesn't anyone care?)

Monday, September 27, 2010

qotd: AP/Stanford/RWJ poll - Should health law have done more?

The Washington Post
September 26, 2010
AP Poll: Many think health overhaul should do more
By Ricardo Alonso-Zaldivar and Jennifer Agiesta

A new AP poll finds that Americans who think the law should have done more outnumber those who think the government should stay out of health care by 2-to-1.

The poll found that about four in 10 adults think the new law did not go far enough to change the health care system, regardless of whether they support the law, oppose it or remain neutral. On the other side, about one in five say they oppose the law because they think the federal government should not be involved in health care at all.


The Associated Press
2010 Health Care Reform Survey
By Stanford University with the Robert Wood Johnson Foundation

HC1. In general, do you favor, oppose, or neither favor nor oppose the law changing the health care system that the U.S. Congress passed last March?

9% - Favor strongly
21% - Favor somewhat
30% - Neither favor nor oppose
17% - Oppose somewhat
23% - Oppose strongly
0% - Refused

(Ask if HC1 = oppose strongly, oppose somewhat or neither favor nor oppose):

HC1A. Which of the following best expresses your view of the health care law that Congress passed last March?

28% - I oppose most or all of the changes made by the law
20% - I oppose a few of the changes made by the law
23% - I favor most or all of the changes made by the law, but I think that law doesn't do enough to improve the health care system
28% - I oppose the law because I think the federal government should not be involved in health care at all
1% - Refused

(Ask if HC1 = favor strongly, favor somewhat or neither favor nor oppose):

HC1B. Do you think that the health care law passed last March by Congress should have done more to change the health care system, or do you not think that?

61% - It should have done more
36% - Do not think that
3% - Refused

HC2. How much, if at all, should the health care system in the United States be CHANGED from what it was like in February, 2010, before Congress passed the law to change the system? Would you say it should be changed…

17% - A great deal
22% - A lot
35% - A moderate amount
16% - A little
9% - Not at all
1% - Refused

PR6a. Do you favor, oppose, or neither favor nor oppose a law that would require every American to have health insurance, or pay money to the government as a penalty if they do not, unless the person is very poor?

8% - Strongly favor
17% - Somewhat favor
25% - Neither favor not oppose
16% - Somewhat oppose
33% - Strongly oppose
8% - Refused

Poll results (32 pages):

Comment:  Twice as many Americans believe that the Patient Protection and Affordable Care Act should have done more to change the health care system than those who believe that the government should not be involved in health care at all, according to a release this weekend on the AP/Stanford/RWJ poll. Framed this way the statement would lead you to believe that the majority of Americans want more reform, when, according to this poll, only about two-fifths hold that view, whereas only one-fifth believe that the government should not be involved at all.

Another confusing result stems from the fact that those favoring reform and those opposing reform were asked two different questions (HC1A and HC1B), yet those neither favoring nor opposed were asked both questions. It would not be surprising to learn that those favoring reform would want to see more done, but it would have been helpful to know how many of those opposed were opposed because not near enough was done. The number probably would have been fairly small since only 23 percent of those opposed plus those neutral wanted more done.

There are some conclusions that we can draw from the poll that do seem to be valid:

*  Nine-tenths of Americans agree that the health care system should be changed from what it was like before the legislation passed.

*  Four-fifths favor "making sure that more Americans get the health care they need." 

*  Four-fifths favor "reducing the amount of money that patients pay for health care."

*  Half are opposed and only one-fourth favor the individual mandate to either buy health insurance or pay a penalty - an essential element of a system based on private health plans.

*  Those polled were split on their understanding of various measures that may or may not have been included in the legislation. Thus these are the opinions of a relatively uninformed electorate.

The reassuring findings in this poll are that Americans do support the goals of reform: 1) Americans should have the health care that they need, and 2) Health care should be affordable for patients.

The poll also shows that the public is not well informed on health policy, so we need to do a much better job in showing them how they can achieve the health care reform goals that they want by enacting an improved Medicare program that covers everyone.

Friday, September 24, 2010

qotd: Uwe Reinhardt on The Perennial Quest to Lower Health Care Spending

The New York Times
September 14, 2010
The Perennial Quest to Lower Health Care Spending
By Uwe Reinhardt

... the nation bravely set upon the mission of reducing the left-hand side of the dreaded health care equation — that is, National Health Care Spending = National Health Care Incomes — without the temerity of touching its right side. For obvious reasons, touching the right side always turns out to be the third rail of health reform.

Last year, health care spending in the United States absorbed slightly more than 17 percent of G.D.P. (For most other industrialized nations, the figure is still around 10 percent or less.)

What would the critics have the president and Congress do?

To explore that question, let us deconstruct national health spending, as shown in the chart below. Here we artificially assume that there is a well-defined thing called "health care," measurable in standard units that have a defined single price per unit. Thus the rendering is merely conceptual, a guide to order the discussion.

NHE = Pg x Qg x Ng + Pp x Qp x Np
NHE = national health expenditures
Pg = prices for health care paid by public insurers
Pp = prices for health care paid by private insurers
Qg = volume of health care used per capita under public insurance
Qp = volume of health care used per capita under private insurance
Ng = number of persons served under public insurance
Np = number of persons served under private insurance

What, then, can any president and Congress do to the variables on the right side of that equation to reduce the future trajectory of national health spending on the left-hand side, especially in the current political climate?

As we have learned in the last year, any attempt to bend down the future trajectory of public-sector fees (Pg) will be met with outcries:

(1) that hospitals and doctors will be driven into bankruptcy;
(2) that publicly-insured individuals will lose access to physicians who will refuse to work for the low public-sector fees;
(3) that doctors, hospitals and other providers who do treat publicly-insured patients have no choice but to recover more of their costs from private payers, who are assumed to have little countervailing market power to resist such increased charges.

Therefore, strike Pg from a strategy of bending the cost curve.

The future trajectory of the volume variable, Qg, might possibly be bent down ever so slightly through cost-effectiveness analysis of alternative therapeutic approaches, or by more widespread use of living wills – an idea once actively promoted by Newt Gingrich.

But those ideas were met in the past year by dark allusions to "rationing," to Nazi-style death panels and to "killing Granny." Therefore, strike lowering Qg, as well, from a strategy for bending the cost curve.

Another option is to reduce the time path of the number of people served by public insurance (Ng).

This could be done by raising eligibility thresholds for Medicaid, or raising the eligibility age for Medicare, or partially privatizing Medicare through Medicare Advantage plans, or by converting the program from a defined benefit to a defined contribution program. But any of these options would merely move health spending off the books of government and into private-sector health spending.

There is no robust empirical evidence to suggest that such a shift would lower national health spending, unless the move increased the number of uninsured Americans for whom, on average, per capita health spending is less than half of the spending incurred on similarly situated insured Americans.

In fact, shifting Medicare beneficiaries out of traditional Medicare into private Medicare Advantage plans in past years is known to have increased the burden on taxpayers and is apt to have increased overall health spending. Therefore, strike Ng as well, unless we want the number of uninsured to climb.

In sum, any attempt to reduce health spending on the public-spending side (Pg x Qg x Ng) is limited by powerful political constraints and is unlikely to reduce overall health spending – especially if the providers of health care have the market power to recoup from private payers any reductions in public health spending coming their way.

This leaves private-sector spending as a potential source of reductions in health spending. But what control does any president or Congress have over those variables (Pp x Qp x Np)?

The last president with the temerity to control spending in the private sector directly was Richard Nixon, who imposed outright price controls on the sector the mid-1970s. One can only imagine what storm of protest that approach would unleash today.

Can private insurers or patients be counted on to bend down the future path of private-sector health care prices Pp? I doubt it.

For one, neither has left a stellar record in this regard over the last three decades. Furthermore, the cost-shift argument alluded to above suggests that in most local health care markets, private payers have rather limited power to exert much downward pressure on the prices they are charged for health care.

Thus, if the future path of private-sector health spending will be deflected downward at all, it will most likely come through reductions in the per-capita utilization (Qp). That may be achieved through ever-higher cost-sharing by patients at point of service – that is, through ever-higher deductibles and ever-higher coinsurance, if not outright lack of health insurance.

Some analysts think that higher cost-sharing will also force down prices (Pp), as patients, using their own money, shop around for a deal. But that could happen only if the veil of secrecy that has traditionally kept private-sector prices opaque from patients could be lifted.

So far the quest to get this done has had only limited and temporary success.

One should, of course, not labor under the illusion that reducing use of health care (Qp) through higher cost-sharing by patients would avoid rationing health care. As every economist knows, using price and ability to pay is merely one of several approaches to rationing scarce resources among unlimited wants.

Thus, absent some miracle – for example, that bundled payments per episode of illness to so-called Accountable Health Organizations will actually serve to bend down the future time path of health spending noticeably – the nation is likely to rely in the years ahead on rationing more and more of health care by income class.

Perhaps this is what the legendary "median voter" now wants.

My posted response:

2.  Don McCanne, San Juan Capistrano, CA
September 24th, 2010

Of course, other nations do provide all of their citizens with health care at a much lower level of national health expenditures (NHE). So what is there in this conceptual rendering (Professor Reinhardt's formula) that other nations have discovered and applied that we haven't?

In his May 8, 2009 blog, Professor Reinhardt provided a taxonomy of public and private financing and health insurance. Essentially all other nations have found success by using some form of social insurance. Even when private insurers are used, they function much more in the G (government) portion of the equation than they do in the P (private) portion.

Professor Reinhardt also co-authored a landmark article titled, "It's the Prices, Stupid." Thus the secret of other nations: Even if they use private insurance plans, they control national health expenditures through various means of government control of prices. In contrast, the volume of health care and number of persons remain relatively fixed. Private control of prices (market control) has played a negligible role in controlling NHE.

Although Professor Reinhardt can describe several models through which this can be accomplished, some of us remain convinced that the simplest and most efficient model would be a single payer national health program - an improved Medicare that covered everyone. Regardless, the Patient Protection and Accountable Care Act won't get us there.

Thursday, September 23, 2010

qotd: Insurers can't survive on 20% of the premiums?

The New York Times
September 22, 2010
States Ask for Phase-In on Insurance Change
By Robert Pear

State insurance regulators told the White House on Wednesday that health insurance markets in some states would be disrupted unless President Obama gave insurers a temporary dispensation from one major provision of the new health care law.

The provision requires insurance companies to spend at least 80 cents of every premium dollar on medical care, rather than administrative expenses, executive salaries and profits.

State officials said they feared that some companies would withdraw from the individual insurance market next year because they could not meet the 80 percent requirement.

Kevin M. McCarty, the Florida insurance commissioner and vice president of the National Association of Insurance Commissioners, said the new law was causing "a paradigm shift" in the insurance industry, and he predicted: "Some companies' business plans simply will not be successful. There will be some casualties. They either have to adjust their business plans or perish."


Kaiser Slides

Distribution of National Health Expenditures, by Type of Service, 2008

30.7% - Hospital care
21.2% - Physician and clinical services
10.0% - Prescription drugs
5.9% - Nursing home care
2.8% - Home health care
12.9% - Other personal health care
16.5% - Other health spending

CMS, Office of Actuary, National Health Statistics Group:

Comment:  It is mind-boggling to think that 21 percent of our national health expenditures (NHE) are directed to physicians and clinical services, whereas many private insurers are now protesting that they cannot survive on 20 percent of the funds which they control - the insurance premiums that they collect.

Taking a closer look at those numbers, one-fifth of all health expenditures go to physicians and clinical services, whereas these insurers who are having difficulties complying with an 80 percent medical loss ratio are consuming over one-fifth of the funds used only for benefits covered by their plans - not one-fifth of the NHE. In fact, 30.9 percent of private insurance premiums do go to physicians and clinical services.

Since these numbers are more comparable, let's look at them to see the value that we are receiving.

Physicians make most of the decisions on what care their patients receive, thus they are controlling much of spending of the insurance premiums. Not only are they making these spending decisions, they are also providing their professional expertise and clinical skills for which they are compensated - 31 percent of the premium dollars. In a sense, the physicians are making the business decisions of health care spending as an uncompensated additional service - decisions which are very important for the patients' health. 

What about these insurers who need more than 20 percent of the premiums for their own intrinsic needs? They are using two-thirds as much of the premiums as physicians are receiving, but for what? It's not for making decisions on how the funds will be spent; physicians are doing that. Do they really need that much just for claims processing? What other important services do they provide? Taking away our choices by establishing restrictive provider networks? Why should we be paying for a detrimental service that we don't even want?

What's the solution? What will give us greater value? Shall we pay these insurers half again as much and throw out the doctors and have the insurers take over the practice of medicine? Or shall we throw out the insurers and replace them with public stewards who can provide better administrative services at a small fraction of the cost?

What will the White House decide? Let the insurers have as much as the physicians are receiving? Right now they're listening to the whining of the insurers, and single payer advocates are still not welcome.

Wednesday, September 22, 2010

qotd: GlaxoSmithKline's research priorities are for blockbusters, not patients

The New England Journal of Medicine
September 19, 2010
Products at Risk
Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.

In this issue of the Journal, we publish the results of a clinical trial investigating step-up control in adult patients with asthma whose disease was not well controlled by low-dose inhaled glucocorticoids. This study, which compared the utility of treating such patients with inhaled tiotropium bromide, inhaled salmeterol, or higher doses of inhaled glucocorticoids, was conceived and implemented by the National Heart, Lung, and Blood Institute's Asthma Clinical Research Network (ACRN). The study constitutes comparative effectiveness research, in which the products of a number of different companies are compared in a well-defined clinical setting. Simply put, the companies' products are put "at risk" in a trial to determine whether the various treatments are superior or noninferior to one another.

The study design, a three-way crossover, required that the investigators have active drug and placebo for tiotropium and salmeterol. As is common is such situations, the investigators took a mature version of the study protocol to the manufacturers of these drugs and asked them to supply active drug and matching placebo inhalers. Boehringer Ingelheim (the manufacturer of tiotropium) agreed to provide the materials, but GlaxoSmithKline (the manufacturer of Salmeterol) refused. Because of Glaxo's refusal, the investigators had to spend $900,000 from the National Institutes of Health (NIH) — and therefore from taxpayers — to repackage the active drug and to create a visually identical placebo for use in the trial. The NIH deserves credit for providing the funds to obtain the Glaxo drug when the company declined. In the end, the study results provided the truth — that tiotropium is not inferior to salmeterol for this indication.

Many drug companies realize that it is in their best interest to provide these materials, not only because the research that is completed by an independent group may show findings in their favor, but also because it is part of their responsibility to the community to allow their products to be tested against the competition by legitimate third parties. They recognize that their mission, like GlaxoSmithKline's stated goal, is "to improve the quality of human life" rather than to simply increase market share.

The most precious commodity that drug manufacturers possess is the trust of their research subjects, and to maintain this trust they need to be willing to put their products at risk. When they refuse to provide their drugs to legitimate investigators, the researchers will get their studies done without company help. It will take more time and cost more money, but in the end, the research will be done and the company will be perceived as having acted in its own self-interest rather than having worked to enhance the health of the community.

Comment:  Everyone agrees, or should agree, on the need for more comparative effectiveness research. We need more information about which medications provide greater benefit to patients, and which ones provide greater value - lower costs without compromises in therapeutic benefit.

During the process of creating the Patient Protection and Affordable Care Act (PPACA), it was not only the private insurance industry that was given carte blanche by the White House, but it was also the pharmaceutical industry. The representatives of both industries professed to supporting solutions that would benefit the American patient, and, in return, they were given legislation that will infuse hundreds of billions of dollars into their own coffers.

GlaxoSmithKline now gives us a hint of their sincerity. Although they state that their mission is "to improve the quality of human life," it is clear that increasing market share is a much higher priority for them. They will not participate in a study that potentially could dent the sales of a blockbuster product.

The pharmaceutical firms and the private insurance industry got a great deal from President Obama and Congress, and patients got a bad deal. We desperately need to set aside the health care financing structure of PPACA, and enact a program that would benefit patients first - an improved Medicare for all.

Tuesday, September 21, 2010

qotd: Private insurers stealing from HSA accounts

Crain's Detroit Business
September 19, 2010
Wrangling over 'wrapping': Insurers raise rates for employers who use cost-cutting plan
By Jay Greene

Some health insurers in Southeast Michigan are beginning to charge higher premiums to employers who offer high-deductible employee health plans and then "wrap" the plans by buying gap insurance or giving workers subsidies to cover the deductibles. 

The reason? Insurers say usage of health care services is going up because employees bear little or no responsibility for health care costs. 

"Often, employers go the high-deductible route and then cover the deductible by funding an employee's (health savings account) to a point where the employee no longer has any skin in the game," said Steve Selinsky, director of sales and marketing with BeneSys, a Troy-based third-party administrator of insurance services.

Wrapping refers to when employers increase their health plan deductible, which lowers premium costs, and then reimburse employees for all, or a part, of their health expenses falling under the increased deductible.

This differs from the original concept of high-deductible plans, in which employees were responsible for deductibles of up to $5,000, but typically $1,000-$2,500, and so had a financial incentive to eliminate unnecessary care and seek lower-cost, higher-quality treatments. John Dunn, vice president of middle- and small-group sales for Blue Cross, said Blue Cross data shows that there is a 4 percent to 8 percent difference in utilization and expenses between those plans that are wrapped and those that are not. 

He said Blue Cross in January will start charging employers that wrap between 4 percent and 8 percent more to account for the expected higher utilization. 

Don Whitford, vice president of sales with Priority Health, said the health plan earlier this year began charging higher rates — 12 percent to 18 percent more — for companies that wrap their high-deductible health plans. 

(Jon Clement, vice president of finance of Health Alliance Plan) said HAP decided five years ago to price its high-deductible plans to assume a higher utilization rate that would accommodate employer decisions to wrap their plans.

Comment:  As more employers are moving to high-deductible health plans to take advantage of the lower premiums, private insurers, being the market innovators that they are, were not going to stand by as they watch potential premium dollars move into health savings accounts or other options such as flexible spending accounts or health reimbursement arrangements.

From the insurers' perspective, the high deductible is for the purpose of creating financial barriers to health care access. If the patient is forced to pay a significant amount out of pocket - the deductible - before insurance coverage kicks in, then the patient is going to forgo health care, much of it beneficial, simply because it is too expensive. Since it is less likely that the deductible threshold would be met, that reduces the chances of the insurer having to pay out any benefits at all.

The rationale of the health savings accounts, which pay health care costs before the deductibles are met, is that patients would be better shoppers since they are using their own funds from the accounts which they own, achieving the same purpose as the deductibles alone. In theory, the health savings accounts are funded by the premium savings - savings that reduce insurer revenues.

Now the insurers contend that the accounts allow patients to be spendthrifts. They insist that patients are much more likely to spend the funds if they come from a delegated savings account than they would if they came from other personal savings or current income. They are using this as an excuse to recover the premium discount for the high-deductible plans - in essence, reaching into the health savings accounts and stealing the employees' own funds (though indirectly through higher premiums paid by the employee in payroll deductions or forgone wage increases).

Although this is yet one more addition to the litany of reasons that high-deductible plans with health savings accounts are a highly flawed method of financing health care, it is much more a further indictment of the private insurance industry which will always find a way to make another buck off of our health misfortunes.

An improved Medicare for all would eliminate these thieves.

Monday, September 20, 2010

qotd: Single payer an issue in Vermont gubernatorial election

Shumlin - Picture of Health

"... Vermont needs a single payer system. Get the insurance companies out of the picture. Let health benefits follow you, not depend on your employer, and reward doctors for making you better. As governor, I'll deliver real health care reform."

Peter Shumlin, candidate for Governor of Vermont

YouTube video:


Brian Dubie: Pure Vermont

"... set priorities, reduce regulations, roll the economy so that we can continue to make opportunities happen in our state."

Brian Dubie, candidate for Governor of Vermont

September 16, 2010
On the Money, Sept. 15: Dubie has $410,269 in cash; Shumlin has $61,965 on hand
By Anne Galloway

The numbers are in, and Lt. Gov. Brian Dubie, the Republican candidate for governor of Vermont, is the winner in the money race. Dubie has raised nearly three times more money than his Democratic opponent in the last campaign finance reporting period.

Dubie's supporters donated $150,215 to his campaign in the last month; Sen. Peter Shumlin, D-Windham, who recently emerged as the winner of a five-way Democratic primary race after a two-week recount, has raised $58,964 in the last 30 days.

Peter Shumlin for Governor:

Brian Dubie for Governor:

Comment:  PNHP does not endorse political candidates.

Today's message is of significance because it demonstrates once again that the single payer message can be carried beyond the party primaries and into the general election. Just as U.S. Senator Bernie Sanders (I-VT) has never abandoned the single payer message, so now Vermont State Senator Peter Shumlin is carrying the single payer message forward in his campaign for governor.

Peter Shumlin already had a track record on single payer, having been an original sponsor of S.88, a bill that would have established a single payer system in Vermont. He continued to support S.88 when it was modified to authorize a study on comprehensive reform for Vermont (Act 128), including an evaluation of the single payer model. That study is currently under way by Harvard Professor William Hsiao and his colleagues, and will be reported out in the near future.

In the money race for the campaign, Sen. Shumlin is well behind his opponent, Lt. Gov. Brian Dubie, since Democratic funds were split amongst five candidates in the primary, followed by a period of uncertainty because of a recount. This election provides the citizens of Vermont the opportunity to express their views on single payer reform, whether in support or opposed. It would be a shame if lack of funds prevented the voters from knowing that single payer is an important issue in this election.

Although we are very excited that the issue of single payer is moving further into mainstream politics, it must be emphasized that THIS MESSAGE IS NOT AN ENDORSEMENT NOR A SOLICITATION OF FUNDS FOR ANY POLITICAL CANDIDATE. Rather it is a plea for us to make every effort we can to be sure that we have a fully informed electorate.

Thursday, September 16, 2010

qotd: 4.3 million more without insurance

U.S. Census Bureau
September 2010

Income, Poverty, and Health Insurance Coverage in the United States: 2009

Health Insurance Coverage in the United States


* The percentage of people without health insurance increased to 16.7 percent in 2009 from 15.4 percent in 2008. The number of uninsured people increased to 50.7 million in 2009 from 46.3 million in 2008.

* The number of people with health insurance decreased to 253.6 million in 2009 from 255.1 million in 2008. This is the first year that the number of people with health insurance has decreased since 1987, the first year that comparable health insurance data were collected. The number of people covered by private health insurance decreased to 194.5 million in 2009 from 201.0 million in 2008. The number of people covered by government health insurance increased to 93.2 million in 2009 from 87.4 million in 2008.

* Between 2008 and 2009, the percentage of people covered by private health insurance decreased from 66.7 percent to 63.9 percent. The percentage of people covered by employment-based health insurance decreased to 55.8 percent in 2009, from 58.5 percent in 2008. The percentage of people covered by employment-based health insurance is the lowest since 1987, the first year that comparable health insurance data were collected. The number of people covered by employment-based health insurance decreased to 169.7 million in 2009, from 176.3 million in 2008.

* The percentage of people covered by government health insurance programs increased to 30.6 percent in 2009, from 29.0 percent in 2008. This is the highest percentage of people covered by government health insurance programs since 1987. The percentage and number of people covered by Medicaid increased to 15.7 percent or 47.8 million in 2009, from 14.1 percent or 42.6 million in 2008. The percentage and number of people covered by Medicaid is the highest since 1987. The percentage and number of people covered by Medicare in 2009 (14.3 percent and 43.4 million) were not statistically different from 2008.

* In 2009, 10.0 percent of children under 18, or 7.5 million, were without health insurance. These estimates were not statistically different from the 2008 estimates. The uninsured rate for children in poverty (15.1 percent) was greater than the rate for all children.

* Between 2008 and 2009, the uninsured rate and the number of uninsured for non-Hispanic Whites increased from 10.8 percent and 21.3 million to 12.0 percent and 23.7 million. The uninsured rate and the number of uninsured for Blacks increased from 19.1 percent and 7.3 million to 21.0 percent and 8.1 million.

* The percentage and number of uninsured Hispanics increased to 32.4 percent and 15.8 million in 2009, from 30.7 percent and 14.6 million in 2008.

Census Bureau press release:

PNHP press release:


Highlights of the 2009 health insurance highlights:

* Uninsured increased to 50.7 million - 16.7 percent of the population

* Private insurance decreased to 194.5 million - 63.9 percent

* Employment-based insurance decreased to 169.7 million - 55.8 percent

* Medicaid increased to 47.8 million - 15.7 percent

* Uninsured children remain at 7.5 million

* Racial and ethnic disparities in coverage have compounded

Those who oppose government solutions to the health care crisis will likely pass these worsening numbers off as an expected consequence of the sputtering economy and the new age of unemployment. They will pay little heed to the fact that the numbers are still intolerable when the economy is thriving; that isn't their concern.

Supporters of the Patient Protection and Affordable Care Act (PPACA) will no doubt be disturbed by these numbers, but it is very likely that they will make the most of them in selling PPACA by showing how it will dramatically reduce the numbers of uninsured. That is true. Many will be covered by Medicaid and by private health plans, even if far too many will still remain uninsured.

This Census Bureau report remains silent on one of the most important issues in health insurance - the numbers who are underinsured - those who will face financial hardship should medical needs arise.

PPACA is an underinsurance program. Employers will see little relief and will expand their present trend of shifting more insurance and health care costs onto their employees. Individuals buying plans in the new insurance exchanges will select underinsurance products with low actuarial values (30 to 40 percent of costs to be paid by the patient) with subsidies that are inadequate to avoid financial hardship. Many will move into the Medicaid program which has more expansive coverage, but which reimburses providers at such a low rate that far too many will not be willing to accept patients under this program. With Medicaid chasing away providers, it too has become another form of underinsurance.

Thus the touted increase in insurance enrollment under PPACA will be more than offset by the explosion in underinsurance - affecting the majority of Americans. At this point looking forward, this nefarious outcome is not obvious to most. But as underinsurance sneaks up on us, and more and more individuals are feeling the pain, they'll be ready. Ready for what? Ready for an improved Medicare that will always be there for us - in both good and bad economic times.

The PNHP press release (link above) provides a reality-based perspective of just what these numbers mean.

Wednesday, September 15, 2010

qotd: Hawaii teachers' health benefits threatened

Star Advertiser
September 15, 2010
Teachers sue over health plan
By Susan Essoyan

Hawaii public school teachers filed suit yesterday in Circuit Court to block changes in their health coverage, saying that the state's plan to do away with their health benefit trust fund is unconstitutional.

The suit, Kono et al. v. Lingle et al., seeks to represent more than 15,000 active and retired school teachers with health benefits in the Hawaii State Teachers Association Voluntary Employees' Beneficiary Association Trust.

The teachers are objecting to the state's plan to transfer their health benefit plans from "the financially sound" VEBA to the "insolvent or nearly insolvent" Employer-Union Health Benefits Trust Fund, according to the lawsuit.

"The forced transfer of the teachers into EUTF is designed to prop up that failing system on the backs of the teachers," said Paul Alston, attorney for the plaintiffs. "What they will get if they are forced to transfer is higher costs and inferior benefits. It is clearly unconstitutional to take away the valuable benefits the teachers have."

The suit contends that the change amounts to a breach of contract and violates the Hawaii Constitution by "diminishing or impairing" accrued benefits in the employees' retirement system. After the switch, teachers will face higher co-payments and curtailed drug coverage and services, it said.

The lawsuit also alleges that the state improperly took $3.96 million from the VEBA trust surplus, which otherwise would have been used as reserves, and put it into the general fund.

The Legislature passed a law to phase out the VEBA trust on Dec. 31, and assign teachers to Employer-Union Health Benefits Trust, which covers more than 94,000 state and county employees and retirees.

The court filing included an April 12 letter from Gov. Linda Lingle to legislators in which the governor called the Employer-Union Health Benefits Trust "insolvent," adding that "its governance is untenable." She noted that Aon Consulting, the trust's consultant, warned on March 31 that the trust fund would likely run out of money to cover expenses later this year.

Aon Consulting recommended a 26 percent increase in premiums as of July 1, but the Employer-Union Health Benefits Trust's board of trustees has voted to keep rates and benefits the same through December of this year.

Comment:  During Q&A at some of my speaking engagements, a common question from the audience: "Under a single payer, Medicare for all program, would I have to give up my excellent retired teachers' health benefit program that we fought so hard for all of these years?"

That's a very good question. These programs are often more comprehensive than Medicare. In fact, that is why we specify an improved Medicare as the framework for a single payer national health program. All essential health benefits would be included; deductibles, co-payments and coinsurance would be eliminated, and the administration of the program would be streamlined. There would be no need to maintain the teachers' health benefit program as a separate entity.

What is alarming about this report from Hawaii is that these sacrosanct programs are now vulnerable. The teachers' well-funded voluntary employees' beneficiary association trust (VEBA) is about to be dumped into the near-bankrupt health benefit trust established for other government employees. The double tragedy is that the teachers lose, and other government employees who should have the most secure of health benefit plans are also losing as more of their health care costs inevitably will be dumped on them.

If our best and most stable health insurance programs are facing this uncertain future, what does that say about the security of other private insurance programs within our fragmented system of financing health care?

The Patient Protection and Affordable Care Act (PPACA) rewards employers who dump their health benefit programs by requiring health care assessments that are only a fraction of what they pay in premiums for their existing insurance programs. Their employees then are forced, by mandate, to purchase plans within the exchanges. Though purchased through exchanges, these plans are merely a slightly more regulated reincarnation of the individual market - the least stable and least reliable of private insurance plans. The subsidies for these plans are the equivalent of vouchers, providing a mechanism for shifting ever more of health care costs to those individuals with the greatest health care needs.

The teachers of Hawaii are right to be concerned. They need to fight hard to protect their VEBA, at least long enough for us to enact an even better program for them and everyone else - an improved Medicare for all.

Tuesday, September 14, 2010

qotd: Racial disparities a death sentence for muscular dystrophy patients

September 13, 2010
Blacks with muscular dystrophy die 10-12 years younger than whites: new study

African Americans with muscular dystrophy die 10 to 12 years younger than their white counterparts, according to research published in today's (Tuesday, Sept. 14) issue of Neurology, the medical journal of the American Academy of Neurology.

The black-white mortality gap, which was calculated on the basis of 20 years of data, is among the largest ever observed in the annals of research into racial disparities in health care, say Dr. Nicte Mejia and Dr. Rachel Nardin, co-authors of the editorial. "Furthermore," they write, "white patients with MD [muscular dystrophy] enjoy increasing survival, while survival of black patients with MD barely budges," leading to an ongoing widening of that gap.

"Inequities in the health delivery system – and the multiple ways in which race constrains access to care – seem the most likely explanation for the observed MD black-white mortality gap," Mejia and Nardin write in their editorial. But they add that inadequate access to care due to lack of good quality health insurance may also be part of the picture.

"Nonelderly African Americans are 1.5 times more likely than whites to lack any type of insurance and about twice as likely to rely on Medicaid," they write, noting that lack of health insurance is linked to lack of access to care.

And while Medicaid, the public health program for the poor, compares favorably with private insurance in providing access to primary care, it falls short when it comes to providing access to the standard-of-care treatments needed to manage conditions like muscular dystrophy, they say.

These shortcomings of Medicaid coverage are "particularly worrisome because more than half of the new health coverage under the 2010 National Health Reform will be Medicaid."

In a separate comment made today, Nardin said, "Replacing the current U.S. health care financing system with a single-payer system that would ensure comprehensive insurance coverage for every American, regardless of race, would go a long way toward reducing this type of disparity."

Neurology: Widening gap in age at muscular dystrophy–associated death between blacks and whites, 1986–2005

Comment:  It is shameful that we have tolerated for so long a health care system that has failed to address the inequities and injustices exemplified by a widening black-white mortality gap in patients with muscular dystrophy - an inherited disorder inflicted on blameless victims.

Opponents of true reform (based on principles of health care justice) often blame the victim, implying that it is not the deficiencies in our health care system that are to blame, but it is the patients' own personal failures that result in their predicaments, and we have no responsibility to intervene.

Even the most callous opponents of reform may acknowledge that there are exceptions in which the victims cannot be blamed, but even in those instances, the unfavorable outcome is often attributed to other socioeconomic factors over which we have no control. The "leave me out of this" mentality certainly contributes to our national inertia.

Maybe we can't fix everything that's wrong with our health care system and with society in general, but what we can do is reject the message of the passive obstructionists who contend that we're each on our own, and join together in solidarity to address our societal deficiencies that have permitted terrible injustices such as sentencing muscular dystrophy patients to die a decade early merely because of their personal circumstances associated with being black.

The Patient Protection and Affordable Care Act will provide many of these unfortunate individuals with access to an insurance program, Medicaid, but as a chronically underfunded welfare program, that in no way ensures access to the actual medical care that they need. Many of them are already on this program, yet it doesn't prevent them from dying a decade earlier than they might otherwise.

Although we have much to repair in this nation, a very good place to start would be to enact a health care financing system that would ensure that all of us receive the health care that we need - an improved Medicare for all. Furthermore, since collectively we are multi-tasked, we can revitalize and expand simultaneously our work on all of the other social justice issues as well.

Monday, September 13, 2010

qotd: How much does defensive medicine waste?

Health Affairs
September 2010
Low Costs Of Defensive Medicine, Small Savings From Tort Reform
By J. William Thomas, Erika C. Ziller and Deborah A. Thayer

In this paper we present the costs of defensive medicine in thirty-five clinical specialties to determine whether malpractice liability reforms would greatly reduce health care costs. Defensive medicine includes tests and procedures ordered by physicians principally to reduce perceived threats of medical malpractice liability. The practice is commonly assumed to increase health care costs.

Across all specialties, reductions in medical malpractice premiums would lead to statistically significant savings in 2.0 percent of the conditions analyzed, but these are high-volume situations, comprising 35.8 percent of all episodes. However, the magnitude of savings that could be realized is small, accounting for less than 1 percent of medical care costs in every specialty. Across all thirty-five specialties, savings associated with a 10 percent premium reduction in medical malpractice premiums would be just 0.132 percent. Even if medical malpractice premiums were to be reduced as much as 30 percent, defensive medicine costs would decline no more than 0.4 percent.

Comment:  Will bringing an end to defensive medicine reduce our national health expenditures? According to this and other studies, yes, but not by much.

Defensive medicine represents those tests and procedures that physicians order for the purpose of reducing the risk of medical malpractice liability. These are not random tests, but they are tests selected to prevent the patient from suffering harm - an essential component of malpractice. 

If there were no liability exposure, why would a physician decide against ordering a test that might prevent a harmful outcome for the patient? Do physicians really believe that it is acceptable to gamble with the health of the patient by omitting potentially beneficial tests, yet is is not acceptable to place that same bet if a malpractice suit might ensue? Are these tests really for the benefit of the doctor and not for the benefit of the patient?

How often have you heard a physician confess to ordering a test that the patient didn't need, but the test was still necessary to prevent a lawsuit? That is a non sequitur. If the physician could be sued for not ordering the test, then the test was absolutely essential.

The point of today's message is that we keep looking in the wrong places for ways to try to control health care spending. Though we need malpractice reform for other reasons, we can't look at it as a source of significant health care savings.

The most important first step to begin to control runaway health care costs would be to replace our wasteful, dysfunctional health care financing system with a single payer national health program - an improved Medicare for everyone - a Medicare that provides us with the financial tools with which we could slow the rate of health care spending increases.

Friday, September 10, 2010

qotd: Fiscal Commission wants price signals for Medicare?


About the National Commission on Fiscal Responsibility and Reform

President Obama created the bipartisan National Commission on Fiscal Responsibility and Reform to address our nation's fiscal challenges. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.

The Commission will meet as a whole once a month while Congress is in session. The Commission will vote on a final report containing a set of recommendations to achieve its mission no later than December 1, 2010. The final report will require the approval of at least 14 of the Commission's 18 members.


September 9, 2010
Republicans Dominate Medicare Discussions On White House Fiscal Commission
By Brian Beutler 

The White House's fiscal commission has become a target for progressive activists in large part because a number of reports and public statements indicate that the panel will recommend benefit cuts to Social Security.

But the commissioners are also grappling with another sensitive entitlement program: Medicare. For a number of reasons, the commission is farther from consensus on Medicare than it is on Social Security. But the ideological conservatism of the Republicans on the commission -- and, indeed, of the commission as a whole -- combined with Democratic fatigue over health care reform mean that the center of gravity of discussions is tilted to the right.

"[B]asically you've got some Dems saying they don't want to jump back in the [health care reform] pool, so you've mainly got Republicans swimming in there on their own," says one source familiar with the commission's proceedings.

"There have been some discussions about cost-sharing. There have been some discussions about Medi-gap policies," the source says.

At a staff level, this source says, the feeling is that "there needs to be more skin in the game and people need to pay more...the whole argument that people don't understand how much health care costs and are wasteful."

"A lot of discussion on the commission has been that people need to get better price signals and be smarter shoppers," the second source said. "And that is very, very worrisome."

Comment:  Apparently President Obama's National Commission on Fiscal Responsibility and Reform is considering changes to Medicare that would make beneficiaries "smarter shoppers" by adopting innovations that would require them to pay more out of pocket for health care.

Considerations include reducing or eliminating Medi-gap policies, increasing deductibles and coinsurance, and using vouchers that would establish financial incentives to choose more Spartan private plans.

Although the commission theoretically is politically balanced, all of the Republican members are right-wing conservatives, and the Democrats are split between progressives and deficit hawks who would rather reduce government spending than increase tax revenues. If you check the list of commission members (available at the fiscal commission link above) it is difficult to identify with certainty the five members necessary to block these deleterious "consumer-directed" policies.

Single payer supporters are already finding some resistance from colleagues to the "Medicare for all" label, especially with the continued failure to resolve the SGR (sustainable growth rate) issue. Although we speak of an "improved" Medicare, that distinction is not always clear and certainly would not mean much when holding up a further handicapped Medicare program as a model of reform.

Should the commission end up making these outrageous recommendations, hopefully the 310 million of us would respond by insisting that Medicare be protected and improved, as opposed to latching onto former Senator Alan Simpson's infamous milk cow.

Thursday, September 9, 2010

qotd: Is national health spending rising?

Health Affairs
September 9, 2010
National Health Spending Projections: The Estimated Impact Of Reform Through 2019
By Andrea M. Sisko, Christopher J. Truffer, Sean P. Keehan, John A. Poisal, M. Kent Clemens and Andrew J. Madison (from the CMS Office of the Actuary)

Projected National Health Expenditures (NHE)

2010 - $2,600 billion (17.5% of GDP)
2019 - $4,571 billion (19.6% of GDP)


In this analysis, we have shown that the net impacts of key Affordable Care Act and other legislative provisions on total national health expenditures are moderate, but the underlying effects on payer spending levels and growth rates are much more pronounced and reflect the Affordable Care Act's many substantive changes to health care coverage and financing. As the provisions are implemented over time, their actual impacts may well differ considerably from these estimates.

Many important details of the legislation will evolve through regulatory activity and become more concrete. Moreover, behavioral responses to reform provisions on the part of health care providers and consumers, employers, and insurers are difficult to anticipate. These will become more apparent only after the bulk of reforms have been implemented in 2014.

Report - free download for the next two weeks only:

Comment:  What does this mean? Here are some of today's headlines of articles covering this report:

Health Plan Won't Fuel Big Spending, Report Says (New York Times)

Gov't: Spending to rise under health care overhaul (Washington Post/AP)

Government Economists Say Health Overhaul Won't Significantly Increase Spending (Kaiser Health News)

Health Outlays Still Seen Rising (Wall Street Journal)

Consumers to Pay Nine Percent More Out of Pocket (Fiscal Times)

Is health care spending rising or isn't it? The confusion stems from the fact that the additional increase in projected national health expenditures (NHE) resulting from the enactment of the Patient Protection and Affordable Care Act (PPACA) is relatively modest when compared to the projection of NHE without enactment of PPACA. Without PPACA, NHE for 2019 was projected to be $4.48 trillion (19.3% 0f GDP), whereas now the projection is $4.57 trillion (19.6% of GDP).

Thus the conflicting reporting reflects the "I told you so" arguments on both sides. The opponents of PPACA are saying that the promises of lower costs are not true, and this is yet one more report that shows that costs will increase. The proponents of reform are saying that this report proves that many more individuals will be covered without a significant increase in costs. This is the wrong debate.

The fact is that national health expenditures had been predicted to increase at a rate well in excess of inflation, and that PPACA will do nothing to slow that increase, though it will not make it much worse. What PPACA is doing instead is that it is rearranging the financing of health care in a manner that will result in more Americans - but not all - having some sort of health care coverage, but it does so in a way that can have a significant negative impact on patients and providers.

How can so many more people be covered without spending much more money? There are some hints in this report.

"For example, higher projected spending by a greater number of insured people is somewhat offset by the projected impact of the Medicare savings provisions and relatively lower prices paid to providers for services to newly insured Medicaid beneficiaries." 

Providers will be paid significantly less for the large influx of Medicaid patients, because of the reductions in Medicare payments, and especially because of the reductions that will be dictated by the Independent Payment Advisory Board. This could be disruptive to the care provided by the physicians and hospitals that are targeted by these reductions.

" By 2018, however, we project out-of-pocket spending growth of 9.6 percent — four percentage points faster than our February 2010 projection. This effect is mainly attributable to the excise tax on high-cost employer-sponsored plans, which is expected to result in greater cost sharing as many affected employers scale back coverage to minimize their tax exposure."

There are other measures in PPACA that will result in additional cost shifting to patients, such as the low actuarial value of the exchange plans with subsidies that are inadequate to prevent higher out-of-pocket spending. Making health care less affordable for those who need it does reduce spending, but at a terrible cost in impaired health outcomes.

Covering tens of millions more people for about the same spending, using our inefficient fragmented health care financing system, is being accomplished by making patients and their health care providers absorb the much higher costs. Just wait until we all feel the pain.

Wednesday, September 8, 2010

qotd: PacifiCare violated state law nearly 1 million times

Los Angeles Times
September 7, 2010
California regulators seek up to $9.9 billion in fines from PacifiCare
By Duke Helfand

California regulators are seeking fines of up to $9.9 billion from health insurer PacifiCare over allegations that it repeatedly mismanaged medical claims, lost thousands of patient documents, failed to pay doctors what they were owed and ignored calls to fix the problems.

In court filings and other documents, the California Department of Insurance says PacifiCare violated state law nearly 1 million times from 2006 to 2008 after it was purchased by UnitedHealth Group Inc., the nation's largest health insurance company by revenue.

"This is about intentional disregard for the interests of doctors, hospitals and patients in California, and the pursuit of cutting costs at any means possible," said Adam Cole, the insurance department's general counsel. "It's a story of intense corporate greed."

Comment:  The largest health insurer in the nation (in terms of revenue), UnitedHealth Group, through UnitedHealthcare's subsidiary - PacifiCare, violated California state insurance laws nearly a million times! This is the industry that the Patient Protection and Affordable Care Act was designed to protect instead of replacing, even though that meant that not everyone would be insured and many more would be underinsured. This was a trade-off that resulted in a loss on both ends.

This is more than the gross incompetence of an insurer that has failed to provide the excessive administrative services for which we are being gouged involuntarily. As the insurance department's general counsel said, "It's a story of intense corporate greed."

It's time to throw these incompetent thieves out, fix Medicare, and then provide it for everyone.

Tuesday, September 7, 2010

qotd: Is primary care relinquishing acute care?

Health Affairs
September 2010
Where Americans Get Acute Care: Increasingly, It's Not At Their Doctor's Office
By Stephen R. Pitts, Emily R. Carrier, Eugene C. Rich and Arthur L. Kellermann

Historically, general practitioners provided first-contact care in the United States. Today, however, only 42 percent of the 354 million annual visits for acute care — treatment for newly arising health problems — are made to patients' personal physicians. The rest are made to emergency departments (28 percent), specialists (20 percent), or outpatient departments (7 percent). Although fewer than 5 percent of doctors are emergency physicians, they handle a quarter of all acute care encounters and more than half of such visits by the uninsured. Health reform provisions in the Patient Protection and Affordable Care Act that advance patient-centered medical homes and accountable care organizations are intended to improve access to acute care. The challenge for reform will be to succeed in the current, complex acute care landscape.

Comment:  When you say "my physician," what do you mean? For most of us, that means the physician whom you call when you have a medical need. It's the physician who will always be there for you, or who will at least ensure that a colleague is available when taking an off-call breather or when on vacation. Yet, as this study shows, personal physicians or their associates provide care for only 42 percent of acute problems. Increasingly, patients can no longer rely on their doctor's office when they need acute care.

The policy community certainly recognizes the crisis in primary care. Much attention has been directed toward improving chronic care management within the primary care environment. Unfortunately, much of these efforts remain in the discussion phases, and only limited improvement has been made in the application of these relatively imprecisely defined concepts.

Yet what the primary care professional should be really good at - timely care of acute problems - has been almost completely ignored by the policy community. Physicians are too busy and don't have time to take care of their patients. (Although that thought certainly can be expanded upon, the irony is inescapable.)

What are some of the solutions?

*  Emergency departments (EDs) already are bearing the largest portion of the overload. Queues in EDs are enough of a problem without adding to the waiting room backlog of many individuals who would be more appropriately cared for in a less intensive environment, such as a primary care practice. Adding to the problems with our overcrowded EDs is the burden of having to care for over one-half of all uninsured individuals with acute care problems.

*  Patients in the next largest sector directly access specialists for their acute problems. Sometimes this may be quite appropriate, yet many times it may result in more expensive care for problems that would be more appropriately managed in a less expensive primary care environment. Also some patients who should be cared for by specialists may not be able to access them for several reasons, and, once again, the primary care physician would be in a better position to enable that access for the patient.

*  Outpatient departments of integrated health systems appropriately may fulfill the role as the acute care provider as long as arrangements are made for access outside of clinic hours. These departments are usually associated with larger institutions, and, as such, would never be much more than a niche provider of acute care services.

*  Retail clinics are capable of providing only the most basic of acute care services, and further fragment the coordinated care that should be provided in the primary care environment. Further, retail clinics skim off the easy, cash paying "customers" (a more appropriate term than "patients" in this retail environment). The same is true of urgent care centers and their customers, though they are usually capable of caring for a greater variety of problems.

*  Concierge physicians do provide greater personal attention, but for very high fees that most of us cannot afford. To provide this higher level of accessibility, they sharply reduce the number of patients in their practices, further compounding the problem of the critical shortage of primary care physicians.

*  Community health centers (CHCs) fulfill an important role in primary care, especially because they usually provide access for underserved patients in underserved communities. They provide acute care services during clinic hours, though patients often must rely on EDs when the clinics are closed. Most CHCs continue to struggle with finances. Also, most have difficulties in obtaining the cooperation of an adequate variety of specialists in providing care for more complex problems.

Members of Congress are quite aware of the profound deficiencies in our primary care infrastructure, so they included some measures in the Patient Protection and Affordable Care Act (PPACA) designed to address this issue. Will they help?

Funds are being allocated for primary care training programs. That is certainly a step in the right direction, but the funds are quite limited and will hardly make a dent in the problem.

More funds are being allocated for community health centers, again certainly a beneficial measure, but one which falls far short of meeting the need.

Some Medicare funds are being shifted from other services to primary care but not enough to even begin to narrow the compensation gap between primary care and the surgical specialists. Why would medical students, saddled with education debt, choose primary care with its long hours and modest pay, when specialties promise higher pay and more free time?

PPACA contains measures to promote the medical home model - theoretically the ideal primary care model. Although medical home demonstration projects are under way, it will be a long time before the specifics of the model will be precisely defined and ready for universal application. Further, the logistics of permeating the nation with medical homes may be beyond the capabilities of our public and private stewards working within the limitations of our dysfunctional financing system. Though the medical home model shows great promise, we need a financing system that will make it much more feasible.

The great hope of PPACA has been pinned on accountable care organizations (ACOs). This Health Affairs article defines ACOs as "integrated or virtually integrated delivery systems that will provide care for a defined population in a range of settings, linked by health information technology." The supporters of ACOs have described everything from full service integrated health care delivery systems to "virtual" systems that are not connected by much more than an information technology system.

Although the providers of health care may seek to create innovative ACO systems that theoretically would improve patient care, it is likely that the emphasis will be on, not just controlling, but actually reducing spending. The ghost of managed care past will be embellished through the "integrated and accountable" efforts of the insurers partnering with health delivery entrepreneurs. Only the patients, patient-oriented health care professionals, and the patient-oriented hospitals will be losers.

Whatever you need - preventive services, continuing care for your chronic condition, or timely management of an acute problem - wouldn't it be nice if you always had available your own personal physician's team to meet your needs? With our fragmented, dysfunctional system of financing health care, it is unlikely that in the future this will be more than a dream for the majority of us.

If we had our own Medicare-for-all monopsony (single purchaser of health care) it could become a reality for all of us. We would simply insist that a primary care system coordinating a full complement of specialized services is all that we're going to pay for. The insurers and health profession entrepreneurs can take a hike.

Friday, September 3, 2010

qotd: A message from Sen. Mark Leno on the California single payer bill

A special message from Senator Mark Leno on SB 810, the California Universal Health Care Act:

September 3, 2010

Dear Friends,

By now most of you have heard the disappointing news that our bill, SB 810, the California Universal Health Care Act, was held on the Assembly Floor on the last night of session, effectively killing the measure until next year. Over my strong objections, Assembly leadership decided to hold the bill. Although we are greatly disappointed, we are determined to come back even stronger next year.

I want to thank and recognize the work of the California School Employees Association and California Nurses Association who worked hard to lobby members all year. I also want to recognize Health Care for All, California Physicians for a National Health Plan, Single Payer Now, California Alliance for Retired Americans, California Health Professional Student Alliance, League of Women Voters and the other dozen organizational members of our statewide alliance. Most importantly, I thank the thousands of advocates who made phone calls, requested meetings, attended rallies, and sent letters, faxes and emails, making it clear to legislators that the single payer health care movement is vibrant, strong and growing larger every day.

Our movement has always acknowledged that it is founded on a long-term vision and strategy. This setback does not change our work, it only emboldens it. For decades we have found the courage to speak out for single payer, even when others around us told us that now is not the right time. We have learned that fear and hesitation can only be overcome by courage and commitment – something with which our movement is rich. That is how we have come so far, and that is why we will win.

Without question, I commit to reintroducing this bill again next year, and to work ever harder with you to achieve the only real solution to our health care crisis – Medicare for All.

I encourage you to begin our work today to ensure the passage of this bill next session. Now is the time to educate your current representatives, and those who are seeking office, about the need for single payer universal health care and to ask for their support. More importantly, now is the time for you to educate your co-workers, neighbors, friends, and family members about why their elected officials should take a strong stance in support of Medicare for All.

We've always said that the closer we come, the harder our work will become. So often, it's "two steps forward, one step back." Let this temporary detour enliven us to work even harder to see single payer become a reality in California. With term limits, it is clear that each new class of representatives needs to be educated and reminded of how important this issue is to our state. Next year will bring a new governor and a new legislature – and consequently, new opportunities and challenges. To win, we must come closer together as allies, fight smarter, and work even harder.

As the author of SB 810, I believe deeply in you, this cause and this movement. Until every Californian has health care and no family faces medical bankruptcy, we will not be deterred. Until our state budget and entire economy are no longer being swallowed by health care costs, we will not cease. Until we have "Medicare for All," we will not stop fighting. We're the fastest growing grassroots movement in America, and we will win universal health care. Let's dig deep, redouble our efforts and get back to work.


Senator Mark Leno

qotd: Uwe Reinhardt on the details of the medical loss ratio

The New York Times
September 3, 2010
On Health Care, the Devil's in the Details
By Uwe E. Reinhardt

The recently passed Affordable Care Act requires heath insurance issuers to use at least some minimum fraction of revenue from the premiums it receives on medical services. While the idea might sound straightforward, this fraction, known as the "medical-loss ratio," is open to all sorts of creative arithmetic, and you can bet that interest groups from every corner are trying to get the math to add up in their favor.

Under the new law,  health insurers are supposed to spend at least 85 percent of premiums collected from large groups of insured on something defined as "medical benefits and activities that improve health care quality." For small groups and individually sold policies, the standard is lower, at 80 percent.

Put yourself in the shoes of the health care providers.

They would like to put as many of an insurer's outlays – other than provider payments – as can be justified into the denominators as "selling or administrative expense." That would put pressure on insurers to increase payments to providers or to spend less on administration to meet the ratio requirement. Therefore, providers typically plead for a very narrow definition of an insurer's outlays for "health care quality improvement" that, by statute, are to go into the numerator.

Health insurers, on the other hand, would like to pack as many of their outlays as possible into the numerator of the ratio.

In a letter to the commissioners, the president of America's Health Insurance Plans, which represents about 1,300 member companies that provide insurance for more than 200 million Americans, pleads for inclusion in "activities to improve health care quality" such items as fraud prevention and detection, utilization review, costs associated with administrative simplification and health-information technology expenses, and the cost of implementing the new International Classification of Diseases, or ICD-10, codes.

Finally, there are the commissions that insurers pay to brokers, who currently play an important role in the small-group and individual market for health insurers.

The commissions usually range between 4 and 8 percent of the premium, depending on the state, but sometimes are 20 percent of the premium in the first year of a policy before dropping to the normal range.

How these commissions are incorporated into the ratio can have a significant impact on the economics of insurance brokers, whose future role in health care is of great concern to the commissioners.

Comment:  My response, also posted at the link above:

10.  Don McCanne, San Juan Capistrano, CA
September 3rd, 2010

Focusing on narrow issues such as whether the administrative cost of brokers' fees somehow represents patient care or quality improvement as opposed to being an administrative expense distracts us from the much more important overriding issue of the profound administrative waste throughout our health care system that is related to the dysfunctional, fragmented manner in which we allocate health care spending.

The first consideration is the administrative cost of the private insurers. Should we really be allocating 15 to 20 percent of the insurance premiums to the private insurers for them to use for their own intrinsic purposes - funds that never make it to paying for health care? When you consider the very high health care expenditures in our nation, 15 to 20 percent is a huge allocation for non-medical purposes.

Another very important diversion of health care dollars is the cost of the administrative burden placed on hospitals and physicians merely to deal with our fragmented system of a multitude of public and private plans - especially in claims processing, including not only the protracted process of managing disputed claims, but also other administrative diversions such as negotiating and managing insurance company contracts.

This administrative burden on the providers has been estimated to consume about 12 percent of premium dollars. Thus the combined administrative costs merely for the insurance function will be about 27 to 32 percent of the insurance premium - a very high percentage of our very high priced system. That does not include all of the other essential administrative functions that hospitals and physicians face. What a waste!

It is unfortunate that consideration of a single publicly-financed and publicly-administered financing system was excluded before the reform negotiations began. Such a financing system - a single payer or an improved Medicare for all - would have dramatically reduced this profound administrative waste.

Even more important, a single financing system would have created our own public monopsony (single buyer of health care) in which we could ensure that we would be receiving maximum value in our health care purchasing - avoiding excessively high prices while ensuring that enough funds are available to maintain adequate capacity in the system. That is the cost control that we really need. And, oh yes... everyone is included!

Wasn't that the goal of reform? Cover everyone and control costs?