Tuesday, November 30, 2010

qotd: California's largest insurers continue to cheat

San Francisco Chronicle
November 30, 2010
Blue Shield, Kaiser among state insurers fined
By Victoria Colliver

State regulators Monday fined seven of California's largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

"Our clear and consistent message is that California's hospitals and physicians must be paid fairly and on time," said Cindy Ehnes, director of the Department of Managed Health Care, which is charged with regulating the states' health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the "tens of millions of dollars," Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

Five of the insurers, excluding Anthem and Blue Shield, were also found to have improper provider appeals processes.

When doctors and hospital officials try to dispute a claim, they often have to deal with the same individual who originally denied the claim in the appeals process, Ehnes said.

Cracking down on the health plans for not properly paying providers helps consumers, said Anthony Wright, executive director of Health Access California.

"Consumers would rather that the time and resources of health providers go to patient care, rather than in fighting to get insurers to pay correctly," he said.

Comment:  What services do the private insurers provide for us? Processing claims? They won't even do that right 20 percent of the time, according to this California audit. The total of $5 million in fines that they were assessed is so paltry that they have no incentive to discontinue their highly profitable policy of delaying and denying legitimate claims.

Let's have the members of Congress fire the insurers and set up our own national health program - an improved Medicare that covers everyone. If they won't do that then let's fire them, replacing them with responsible elected stewards who will.

Monday, November 29, 2010

qotd: Is Uwe Reinhardt for or against single payer?

The Fiscal Times
November 28, 2010
Reinhardt: Repeal Health Care, Make GOP Cut Costs
By John Greenwald

In a freewheeling interview with The Fiscal Times, (Uwe Reinhardt) critiques the new health care reform law — including its lack of cost containment — and recent proposals from the president's deficit-cutting panel. Never one to mince words, Reinhardt also discusses what he sees as the real culprit behind soaring health care costs, why he doubts a single payer health care system could work in the United States — and where he believes the country's founding fathers went wrong.

The Fiscal Times (TFT): What would a high-performing national health care system look like?

Uwe Reinhardt (UR): I think the Germans, the Swiss, the Dutch have a perfectly fine approach. It's not a single-payer system. While I'm a Canadian I am not for [single payer] in the U.S. because we do not have a political system that can handle it responsibly. Canada has a parliamentary system that insulates considerably the public program from lobbying.

TFT: So you favor universal coverage but not a single payer system?

UR: For other countries I do [favor single payer] but we can't run it. You need a responsible system of governance. Whatever you can say about U.S. governance, you cannot call it responsible. You really couldn't. I think the founding fathers gave us an impotent government that acts quite irresponsibly. I don't think parliamentary systems are that bad.

Comment:  Single payer advocates frequently are perplexed by Uwe Reinhardt's positions on health care reform.

He seems to support health care justice. He frequently uses the example of the waitress who is trying her best to support herself and her child, but who is unable to afford health care. By extrapolation, a just society would not let her or her child go without the essential health care services that they might need.

Yet what about single payer? He is a supporter for single payer, but for other countries. In this interview he states that he does not support single payer for the United States. The reason he gives is that "the founding fathers gave us an impotent government that acts quite irresponsibly."

Right now the British and the Canadians are facing an assault on their public health systems by their conservative governments. In the United States, we are facing an assault on our Medicare program by the conservatives and right-leaning moderates. Although we don't know how much damage, if any, will be done to the systems, it is highly probable that all three of the systems will survive intact considering the strong public support in each nation.

Does our government act irresponsibly? Wars? Income transfer from the workers to the wealthy? Neglect of poverty and other social inequities? Of course our leaders have been irresponsible, and so have the leaders of all other nations, but only at times. Social Security? Medicare? Our national parks? Most government activities are quite responsible and certainly do not set us apart from other nations.

Although Reinhardt criticizes the new health care reform law for failing to contain costs, he states, "The private sector is the inflationary component of health care, not Medicare or Medicaid." Can he seriously contend that these government programs are irresponsible and impotent when they continue to outperform the private plans on cost containment? Considering this, how can he support single payer for other nations, yet reject it for the United States?

Government impotence and irresponsibility are not reasons to reject single payer. They are merely an excuse as to why we haven't enacted it yet. What we need is more responsible people power. Let's get busy stirring it up.

Friday, November 26, 2010

qotd: Joseph Stiglitz on single payer

The Times of India
November 26, 2010
Rema Nagarajan interviews Joseph Stiglitz

Why have you been pitching for a single payer system for health insurance rather than a system where several private companies compete? 

The US model of private health insurers has been proven inefficient and expensive. Rather than provide better healthcare at lower costs, insurance companies innovate at finding better ways of discrimination. They are inefficient because they are trying to figure out how to insure people who don't need the cover and keep out people who need it. With many companies, they also need to spend on marketing and advertising. The incentives are all wrong and the transaction costs are very high and you have to give them a high profit. In health, social and private incentives are totally disparate. Competition does not work in healthcare especially in the health insurance market. Several countries like the UK, France and Sweden have a single payer system, differing only in the organisation of healthcare delivery. 

Several health insurance companies are setting up business here. Should India be worried? 

India would be in a terrible mess, given the size of its population, if it went down the wrong route (of private companies for health insurance). They should learn from the mess that the US has got into. Once the companies start making profits, special interests in politics will come into play and it will be difficult to get them out.

Comment:  Nobel laureate Joseph Stiglitz understands single payer. President Obama knows that he does. So why doesn't...

(No, health care reform shouldn't be reduced to a mere conundrum.)

Wednesday, November 24, 2010

qotd: Ezra Klein on prices and innovation

The Washington Post
November 23, 2010
Americans pay too much for health care -- in charts
By Ezra Klein

There are a lot of complicated explanations for why American health-care costs so much, but there are also some simple ones. Chief among them is "we pay too much." And I don't mean in general. I mean specifically. Mountains of research show that for every piece of care you might name -- a drug, a doctor visit, a diagnostic -- you'll pay far more in the United States than in other countries. 

(He posts charts demonstrating higher health care prices in the U.S.)

The most positive spin you can give this data is that we're paying to subsidize innovation for everyone, and though that's not ideal, it's better than that innovation not happening. The less positive spin is that we're just getting ripped off.

For an analytical take -- and a good look at the political economy of the problem -- read Alec MacGillis's October article on the subject.

Response posted by dmccanne:

The basic premise that our prices are higher than those of other nations is certainly correct. Alec MacGillis was precisely on target in the article that you cite.

But the claim that we "subsidize innovation for everyone" needs to be challenged.

Donald Light, in a Health Affairs article last year, wrote, "... a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity."

Also the Nobel prizes for C-T scanning and MRIs were shared with British scientists. So we don't even have an exclusive claim on our budget-busting technology. (In fact, the Beetles financed the British development of C-T scanners.)

And our outrageous pricing has proven that the private insurance industry has failed us miserably in its most important function - negotiating value in health care.

Our pharmaceutical and technological firms do excel in one regard. They know how to manipulate the political process to prevent an effective public role in setting best prices (legitimate costs and fair profits), even though all other nations have done so.

Maybe someday we'll be smart enough to follow their lead, but, until then, we'll keep paying dearly for the failures of our electorate to become adequately informed and then to take appropriate action in the polling booth.

Fixing Medicare and providing it for everyone would create a beneficent public monopsony (single purchaser) which would be capable of enforcing value in our health care purchases.

Even Milton Friedman's mentor, F.A. Hayek, wrote, in The Road to Serfdom, "Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision."

Klein article and responses:

International Federation of Health Plans - Comparative Prices:

Alec MacGillis - The price problem that health-care reform failed to cure:

Donald Light - Global Drug Discovery: Europe Is Ahead:

Tuesday, November 23, 2010

qotd: High-deductible health plans foster bad decisions by rich and poor

Archives of Internal Medicine
November 22, 2010
Health Care Use and Decision Making Among Lower-Income Families in High-Deductible Health Plans
By Jeffrey T. Kullgren, MD, MPH; Alison A. Galbraith, MD, MPH; Virginia L. Hinrichsen, MS, MPH; Irina Miroshnik, MS; Robert B. Penfold, PhD; Meredith B. Rosenthal, PhD; Bruce E. Landon, MD, MBA; Tracy A. Lieu, MD, MPH 

From the Introduction:

In early 2009, 23% of all nonelderly adults with private insurance, and nearly 50% of adults who purchased coverage through the nongroup market, were enrolled in an HDHP (high-deductible health plan). Because of their relatively low premiums, HDHPs are also playing a prominent role in expanding insurance coverage. For example, most individuals who have purchased unsubsidized plans through the Commonwealth Connector, the new health insurance exchange in Massachusetts, have selected products like HDHPs that offer low premiums with high levels of cost-sharing.

As enrollment in HDHPs has grown, many analysts have voiced concerns about the impact these plans may have on low-income families. Decades of health services research have demonstrated that higher levels of cost-sharing reduce health care utilization, sometimes with greater adverse consequences for low-income patients.

From the Comment:

We found that lower-income families with at least $500 in annualized out-of-pocket expenditures in an HDHP were more likely than higher-income families to delay or forego health care services owing to cost (57% vs 42%).

Overall, we observed relatively high rates of delayed or foregone care in both income groups, with nearly half of all families having either delayed or foregone care in the last 6 months owing to the cost. These rates were substantially higher than the 20% of the US population reporting either unmet need or delayed care in the previous 12 months in the 2007 Heath Tracking Household Survey.

Beyond the implications for clinicians, our findings have important implications for federal health reform. Reform legislation that establishes an individual health insurance mandate could lead more families to enroll in plans with high levels of cost-sharing, as has been seen following the implementation of coverage mandates in Massachusetts.


The New York Times
Prescriptions blog
November 22, 2010
Higher Deductibles, Lower Spending
By Reed Abelson

As more families find themselves enrolled in health plans with high deductibles, they are increasingly likely to delay or forgo medical care because of the out-of-pocket cost, a new study shows (the study cited above).

Do you think people are better and more savvy consumers when they share in the cost of their medical care?

Three reader responses:

12. Anonymous BE, Belgium
November 23rd, 2010

NO. Medical care should be free at the point of service. The whole point of health insurance is that no one should be financially worse off because they have health problems. High deductible plans violate this maxim.

Furthermore, people are not in a position to judge what is necessary or not. People listen to what their doctor says, and they do it, unless their lack of insurance coverage makes it a financial problem. Patients are not evaluating the effectiveness of various treatments - that is a job for doctors and scientists, not patients. Patients are not consumers - they are people who are suffering who place themselves in the hands of the medical profession.

13. GoozNews, Washington, DC
November 23rd, 2010

RE: eliminating useful v. non-useful care via higher co-pays. It's not an open question. The Rand Health Insurance Experiment, the only comprehensive study to date, showed that people were just as like to avoid necessary car as unnecessary care when forced to pay higher co-pays and deductibles. This is also common sense. When the quality of a good, in this case health services, has no relationship to price, and consumers lack accurate and timely information about what constitutes high quality, making rational decisions based on price is virtually impossible. It requires extensive research prior to the point of purchase -- highly impractical when it comes to health care, which is usually purchased under the duress of immediate illness. Those who advocate "more skin in the game" as the cure for rising health care costs fail to acknowledge these all-too-human realities, or what an economist might call pervasive marketplace failures.

23. Don McCanne, San Juan Capistrano, CA
November 23rd, 2010

What really matters is our total national health expenditures. We are already spreading the risk by contributing to our public and private insurance pools through taxes and/or premiums. So we should decide whether the financial barriers to care that high-deductible health plans create are worth the projected savings in our total health care spending.

Only one-fifth of us use four-fifths of all health care. For this sector of our population, deductibles are rapidly exceeded and have virtually no impact on total national health care spending. (It is in this sector where most of the Dartmouth variations occur, but that is another topic.)

For the four-fifths of us who are relatively healthy, most of us would not decline clearly appropriate care even if it is below the deductible, providing that we had the ability to pay for it. Only the worried-well, perhaps with a common cold, might use the health care system more than necessary, but that doesn't apply to most of us.

Although the trip to the doctor is almost always for legitimate reasons, perhaps ten percent of the time the marginal care offered might reasonably be declined, providing it is an informed decision. Studies show that about half of that care is still appropriate, so only five percent of care for healthier patients may be of no more value than receiving reassurance that no care is needed (which actually does have value in itself).

Since the four-fifths of us who are healthy consume only twenty percent of total health care, the five percent of our care that might deemed to be inappropriate constitutes only one percent of our national health expenditures (five percent of twenty percent). That one percent is the equivalent of only two or three months of health care inflation - not worthy of more than a footnote in our national health care budget.

We can control health care costs, but high-deductible health plans are not an effective mechanism. They certainly are not worth the price of denying beneficial care based on individual concerns over affordability.

Every other nation has controlled costs by establishing an effective model of social insurance. Unfortunately the model in the Patient Protection and Affordable care Act falls far short. What would work would be to improve the Medicare program and then include everyone. Several studies have shown that it would be the least expensive method of providing affordable care for absolutely everyone.

Comment:  This study of the impact of high-deductible health plans is unique in that it studied only families with over $500 in annual out-of-pocket medical expenses, thus they are families that do have some interaction with the health care system.

It is no surprise that 57 percent of these lower-income families with high-deductible health plans delayed or had foregone health care. What is less intuitive is that 42 percent of the higher-income families with high-deductible health plans also delayed or had foregone health care. Other studies indicate that about half of that care would have been beneficial, so we really should question the policy of using high-deductible health plans as a method of containing health care costs.

Another important concern is that individuals purchasing plans from the Massachusetts health insurance exchange are choosing high-deductible plans because of the lower premiums. The state exchanges to be established under the Patient Protection and Affordable Care Act will offer low-actuarial value plans as the standard. These plans are high-deductible plans that will likely attract most buyers. Bad policy.

When the evidence so clearly indicts high-deductible plans, why did Congress adopt them wholesale? Simply to accommodate the private insurers in preserving their markets by trying to keep their premiums affordable (which they're not anyway). 

It's time to dump the private insurers and establish an improved Medicare for all, with first dollar coverage. We can control costs far better with the other single payer tools that would be at our disposal.

Monday, November 22, 2010

qotd: CBO analysis of the Rivlin/Ryan Medicare voucher and Medicaid block grant proposals

Congressional Budget Office
November 17, 2010
Preliminary Analysis of the Rivlin-Ryan Health Care Proposal
(Analysis transmitted by letter from Douglas Elmendorf, Director of the CBO, to Rep. Paul Ryan)

For purposes of this analysis, CBO assumed that all individuals projected to enroll in Medicare would use the proposed voucher. Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law, for two reasons. First, most of the savings for Medicare under the proposal stem from reducing the amounts that the federal government would pay for enrollees on a per capita basis, relative to the projections under current law. Second, future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.

Similarly, reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program's total costs, than would be the case under current law.

For both Medicare and Medicaid, the budgetary effects would become larger over time because federal payments would tend to grow more slowly under the proposal than projected costs per enrollee under current law. Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees' spending for health care and the uncertainty surrounding that spending would increase.

Comment:  Congressman Paul Ryan and former Clinton budget director Alice Rivlin are both members of the Bowles/Simpson deficit commission. They have asked the Congressional Budget Office to analyze their proposal to reduce future federal health care expenditures by converting Medicare to a voucher program for purchasing private health plans, and by converting Medicaid into a block-grant program for the states. 

If you read the analysis found at the link above, you would see that the deficits related to future spending in the Medicare and Medicaid programs would be reduced by this proposal. If your only goal is to cut the federal deficit, then the analysis would predict success, but at what cost?

Compared to the current Medicare program, the vouchers would purchase less coverage, or the premiums paid by the beneficiaries would be higher, or both. Merely shifting to private plans alone would result in higher premiums if the benefits were to remain the same as in the traditional Medicare program. Many Medicare beneficiaries are already burdened with excess medical debt, and the voucher proposal would increase the burden by both lowering the federal contribution and increasing the administrative waste characteristic of private plans.

Converting Medicaid into a block grant program uses the same principle as converting defined benefit programs into defined contribution programs. The federal government ends its exposure to the risk of ever-increasing costs by fixing its contribution to the states through a defined block grant. The state then bears the risk for increases in health care costs.

Of course, states are already heavily burdened by the costs of their Medicaid programs. Adding more to that burden further strains state budgets. The states are then put into a position of trying to balance reductions in health services with the greater deficit holes punched into the state budgets. Passing the problem from the federal taxpayer to the state taxpayer accomplishes nothing.

As the CBO analysis states, "Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees' spending for health care and the uncertainty surrounding that spending would increase."

What is our goal here? Appeasing anti-government budget hawks? Or removing financial barriers so that people can get the health care that they need?

The budget hawks say that we need to make hard choices. So what about the choice of a single payer monopsony - an improved Medicare for all? That would solve the budget deficit problem while enabling everyone to have the care that they need - not really very hard choices. Maybe it would be a hard choice for the hawks to accept a government program that would actually work, but let's hold them to their demand. If they think an improved Medicare for all is a hard choice, then so be it.

Friday, November 19, 2010

qotd: Will the Wyden/Brown state waiver enable single payer?

November 18, 2010
Senators push bipartisan state healthcare waiver

A Democrat and a Republican teamed up in the Senate on Thursday to offer legislation that would give states the flexibility to implement their own healthcare approaches when the federal overhaul goes into full effect in 2014.

The proposal by Democrat Ron Wyden and Republican Scott Brown moves up the date when states can apply for waivers from the federal law in order to implement their own approaches.

The law, which passed in March, currently allows states to apply for waivers in 2017.

Under the Wyden and Brown proposal, states could apply for an exemption from some requirements of the reform law -- including the mandate that everyone purchase insurance and the employer penalty for not providing coverage -- if they offer an alternative that is considered at least as effective and affordable.


S. 3958 (the entire bill)
To allow an earlier start for State health care coverage innovation waivers
under the Patient Protection and Affordable Care Act.

NOVEMBER 17, 2010

Mr. WYDEN (for himself and Mr. BROWN of Massachusetts) introduced the following bill; which was read twice and referred to the Committee on Finance

To allow an earlier start for State health care coverage innovation waivers under the Patient Protection and Affordable Care Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

This Act may be cited as the "Empowering States to Innovate Act".

Section 1332(a) of the Patient Protection and Affordable Care Act is amended—

  (1) by striking ''January 1, 2017'' in paragraph (1) and inserting ''January 1, 2014'', and
  (2) by inserting ''beginning not later than 180 days after the date of the enactment of the Empowering States to Innovate Act'' after ''application'' in paragraph (4)(B)(ii).


Patient Protection and Affordable Care Act (excerpts):

PART IV--State Flexibility to Establish Alternative Programs

Sec. 1332. Waiver for State innovation.

  (a) Application.
    (3) Pass through of funding.--With respect to a State waiver under paragraph (1), under which, due to the structure of the State plan, individuals and small employers in the State would not qualify for the premium tax credits, cost-sharing reductions, or small business credits under sections 36B of the Internal Revenue Code of 1986 or under part I of subtitle E for which they would otherwise be eligible, the Secretary shall provide for an alternative means by which the aggregate amount of such credits or reductions that would have been paid on behalf of participants in the Exchanges established under this title had the State not received such waiver, shall be paid to the State for purposes of implementing the State plan under the waiver.

  (b) Granting of Waivers.
    (1) In general.--The Secretary may grant a request for a waiver under subsection (a)(1) only if the Secretary determines that the State plan--
      (A) will provide coverage that is at least as comprehensive as the coverage defined in section 1302(b) and offered through Exchanges established under this title as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by this Act and the provisions of this Act that would be waived;
      (B) will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title would provide;
      (C) will provide coverage to at least a comparable number of its residents as the provisions of this title would provide; and
      (D) will not increase the Federal deficit.


The Washington Post
November 18, 2010
Sen. Bernie Sanders: 'Vermont stands a chance to be the first state in the nation to pass single-payer'
By Ezra Klein

Ezra Klein:  So what happens if Scott Brown and Ron Wyden get their way and the waiver moves up to 2014? Will Vermont use it?

Bernie Sanders:  We believe Vermont stands a chance to be the first state in the nation to pass single-payer. The governor-elect campaigned on it, and we have support in the House and Senate. We're not asking for one nickel more than we'd otherwise get. The other thing we think we have an opportunity to do is reach out to our conservative friends and say, hey, Vermont wants to go forward with a single-payer system, and Mississippi and Alabama don't, but maybe they have other ideas. Now, we're conscious of the need to make sure that the health-care reform bill's standards aren't diminished. So everyone needs to provide the same quality of health care as the bill provides and at the same, or lower, price. But if they can do that, then they should be able to go for it.

Ezra Klein:  And then the various models can compete with one another and, presumably, spread to other states if successful?

Bernie Sanders:  Absolutely. And that's what we wanted from it. In my state, it'll be single-payer. In California, I think there's a chance it could be single-payer. In other states, it will be something else. This makes the states laboratories for the system, and then other states can copy them. Now, you need a minimum level for coverage and quality. You can't go lower than health-care reform.

Comment:  The initial reaction to S. 3958, The Empowering States to Innovate Act, sponsored by Sen. Ron Wyden (D-OR) and Sen. Scott Brown (R-MA), is that the bill will enable states to bypass the requirements of the Patient Protection and Affordable Care Act (PPACA) and set up their own state-based programs, even single payer should the states prefer. But what does the bill actually say?

PPACA already authorizes a program for state waivers, but not until 2017. The Wyden/Brown bill does only one thing. It moves the state waiver program forward to 2014, the same year that the individual mandate and insurance exchanges go into effect. It does not change the waiver in any other way.

For those states that wish to establish their own programs, advancing the eligibility date removes the very burdensome task of complying with the insurance exchanges, mandates and other requirements for an interval of only three years, and then facing the additional costs and burdens of transitioning to their own programs. If you agree with the policy that states should be able to set up their own programs, then this is a very wise move.

Massachusetts already has a program similar to PPACA. Sen. Brown would much rather modify what they have by complying with the waiver than to have to comply with all details of PPACA for the first three years. For Sen. Wyden, his preferred model of reform was rejected by Congress, but he would still like to experiment with his model, as much as possible, within the state of Oregon, while protecting what innovative programs they already have.

So just how much leeway does the PPACA state waiver allow? It does allow innovations as long as coverage is at least as comprehensive, cost sharing is at least as affordable, at least as many residents would be covered, and as long as the federal deficit would not be increased. It also passes through to the state the funds that would have been used for premium tax credits, cost-sharing reductions, and small business credits. Is that enough funding to establish a single payer system?

What about the funds for Medicare? Medicaid? CHIP? Taft-Hartley plans? What about ERISA requirements? What about the multitude of other funding requirements such as the VA system, academic institutions, safety-net institutions, community health centers, the Indian Health Service, the U.S. Public Health Service, and the many others?

There is no authorization in the Wyden/Brown bill, PPACA, nor any other existing law or regulation to fold many or all of these programs into one single payer system. Think of trying to run a partial single payer system (an oxymoron) while still having to deal with the massive Medicare and Medicaid programs. The point is, don't let up on your advocacy, thinking that Wyden/Brown is our entry to single payer. We would still have a highly fragmented financing system.

Our best option remains enacting a national single payer bill such as HR 676, which will be re-introduced in the next session of Congress. In lieu of that, we should continue with our efforts to enact single payer systems on the state level. Just don't be fooled into thinking that a bill such as Wyden/Brown is the ticket. The enabling federal legislation that would be required for state programs would be as complicated, if not more so, than a bill establishing a national single payer program - an improved Medicare for everyone.

Vermont is a test. Without enabling comprehensive federal legislation, I'm already apprehensive.

Thursday, November 18, 2010

qotd: International comparisons: It's the insurance, stupid!

Health Affairs Blog
November 18, 2010
Consumers and Insurance: Experiences In Eleven Countries
By Chris Fleming

As the United States begins implementing health reform, how does the U.S. experience compare with that of other high-income countries? To answer that question, The Commonwealth Fund conducted its thirteenth annual health policy survey, this year focusing on access, cost, and care experiences. The survey findings were published today in a Health Affairs Web First article by Commonwealth Fund Senior Vice President Cathy Schoen and coauthors.

Overall, the survey identified significant differences between countries and found that US adults — even when insured — were the most likely to incur high medical expenses, spend more time on paperwork, and have more claims denied.

The countries surveyed were Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States.

Key findings include the following:

*  Twenty percent of US adults surveyed said they had had serious problems paying medical bills in the previous year. Responses to the same question from the other ten countries were in the single digits. US respondents were also significantly more likely than adults in other countries to have gone without care because of cost.

*  Thirty-five percent of US adults had out-of-pocket medical spending of $1,000 during the previous year, a far higher percentage than in any other country.

*  A lower proportion of adults in the United States (70 percent) than in all other countries except Sweden (67 percent) and Norway (70 percent) were confident that they would receive the most effective treatment when needed.

*  When asked about access to prompt medical care, 57 percent of US adults said they had seen a doctor or nurse the same or next day the last time they were sick and needed care. Switzerland had the most rapid access (93 percent). Adults in three other countries (Canada, Norway, and Sweden) reported longer waits than US adults.

*  Nearly one third of US adults (31 percent) reported either denial of payments by insurers or time-consuming interactions with insurers, a higher rate than in all other countries. Twenty-five percent of US respondents reported that their insurance company denied payment or did not pay as much as expected; 17 percent said they spent a lot of time on paperwork or disputes for medical bills or insurance — the highest rates in the survey.

*  The United States had the widest and most pervasive differences in access and affordability by income of the eleven countries. The United Kingdom had the least.


Health Affairs
November 18, 2010
How Health Insurance Design Affects Access To Care And Costs, By Income, In Eleven Countries
By Cathy Schoen, Robin Osborn, David Squires, Michelle M. Doty, Roz Pierson and Sandra Applebaum

US Insurance Reforms: Challenges Ahead
Concerns expressed by US respondents were concentrated in the working-age population that is the target of insurance reforms. In this age group, wide disparities by income for those insured throughout the year underscore the importance of the Affordable Care Act's emphasis on benefits with income-related provisions. The law will expand eligibility for Medicaid to those earning 133 percent of the federal poverty level. It will also provide subsidies for premiums for people up to 400 percent of poverty and for cost sharing for people up to 250 percent of poverty.

However, by international standards, the United States will remain an outlier for cost sharing. The annual limits for the least expensive benefit option will range from $2,000 per person ($4,000 per family) for those with incomes just above 133 percent of poverty, to $6,000 per person above subsidy thresholds. Families can opt for lower cost exposure, but only if they can pay higher premiums.

As US reforms unfold, it will be important to monitor access and affordability. The Affordable Care Act will provide billions of dollars in subsidies for premiums and cost sharing to address affordability for individuals and families with low or modest incomes. Even so, it is still possible that some of the insured will remain at substantial financial risk for care they cannot afford when sick and bills they cannot pay.

Even after the enactment of health reform, the United States will also remain unique among countries in that it covers low-income people in a separate program. This poses the dual challenge of promoting equity across programs and ensuring continuity of insurance. In the other ten countries in our survey, providers were typically paid the same amount regardless of patients' incomes, which is not currently the case in the United States. Nor is it likely to be the case after full implementation of health reform. Avoiding coverage gaps as patients' circumstances change will require creative efforts to enable single portals of entry for people to enroll in publicly sponsored and private insurance, and smooth transitions as families gain or lose eligibility for insurance. To the extent that provider networks also differ for those low-income insurance programs, continuity of care as well as insurance will remain at risk after reforms take effect.

Comment:  Compared to other high-income nations, the health care financing system in the United States does not perform well. We pay more; we have greater problems paying medical bills; we have excessive out-of-pocket spending; we have greater hassles with insurers; and we have the greatest disparities in access and affordability based on income levels.

We clearly needed reform, but will the Patient Protection and Affordable Care Act (PPACA) correct these deficiencies? It looks grim. The law has perpetuated the flawed system that we already have, one based on the U.S. version of dysfunctional private insurance plans plus a welfare program - Medicaid.

PPACA does include some important insurance regulations such as guaranteed issue and removal of annual and life-time spending caps, but it doesn't do much to end the administrative hassles that are designed to protect the insurers from loss (i.e., protect them from having to pay medical bills). In fact, by making plans with low actuarial values the new standard, patients will face even greater out-of-pocket expenses and administrative hassles when they access health care. The government subsidies are not adequate to reduce the problems that patients already have with paying their medical bills.

Although other countries have special provisions for low-income individuals, Medicaid is unique in that beneficiaries are enrolled in an entirely different program that generally pays much lower rates than do private insurers. Thus the Medicaid networks of willing providers can be quite different from the networks for the private insurers, which in themselves also can vary greatly from plan to plan. Care can be very disruptive as individuals move in and out of the Medicaid program because of fluctuations in their eligibility, or move between various private plans based on such factors as employment, place of residence, or premium affordability. Such disruptions can aggravate the access problems noted in this study.

Another important observation in this study is the protection that is afforded by Medicare. Quoting from Schoen et al, "US adults under age sixty-five were significantly more likely to report insurance paperwork, disputes, or insurance surprises than were those sixty-five and older and covered by Medicare (35 percent compared to 16 percent). The high rates of insurance concerns among younger adults may stem from unstable coverage as well as complex benefit designs."

What we needed was a program that includes everyone, funds care equitably, eliminates financial barriers to care, provides automatic life-long enrollment, provides choice of any health care professionals and facilities, and has public funding that would ensure adequate capacity in the system. A single payer, improved Medicare for all would have those goals.

Instead, we'll be pouring even more money into the system we have, and still compare unfavorably to these other high-income nations, that is unless we are willing to do something about it. We need to tell our policy makers, "It's the insurance, stupid!"

Wednesday, November 17, 2010

qotd: Jan Schakowsky and Rivlin/Domenici on the deficit

Congresswoman Jan Schakowsky
November 16, 2010
Schakowsky Alternative to Simpson-Bowles Deficit Reduction Plan

Today Rep. Jan Schakowsky (D-IL), a member of the bipartisan National Commission on Fiscal Responsibility and Reform, offered a comprehensive proposal to reduce the federal deficit without making middle class Americans foot the bill.  Schakowsky's plan is an alternative to the Simpson-Bowles plan and would reduce the deficit by $427.75 billion in 2015, surpassing President Obama's $250 billion target. Critically, the Schakowsky plan accomplishes deficit reduction without making cuts to essential federal expenditures that benefit the middle class.


Bipartisan Policy Center
November 2010
Reviving the Economy, Cutting Spending and Debt, and Creating a Simple, Pro-Growth Tax System
By The Debt Reduction Task Force, Senator Pete Domenici and Dr. Alice Rivlin, Co-Chairs

Strengthen Medicare for the Long Term: Transition to a Premium Support Option

Like today, Medicare enrollees will be in the traditional fee-for-service program unless they choose a private plan. However, if federal spending per enrollee for the benefits specified in legislation rises faster than GDP growth plus one percent, beneficiaries will have to pay an additional premium to cover the difference. They can avoid that additional premium, however, and potentially get higher quality health care, if they choose a private health plan offered on a new Medicare Exchange. The expectation is that increased competition among plans fostered by the Medicare Exchange, and increased beneficiary interest in these plans, will keep costs from rising rapidly and result in higher quality, more cost-effective health care.

This proposal will limit growth in federal support for Medicare per beneficiary to one percentage point per year higher than a five-year moving average of GDP growth. If Medicare spending per enrollee for the benefits specified in legislation rises at a faster rate, enrollees will have the option of paying an additional premium to cover the difference and remaining in the traditional Medicare program, or selecting a private insurance plan from the Medicare Exchange.

While the proposed premium support option resembles the current structure of Medicare Advantage, there are differences. Competition among plans will be enhanced by creating a federal Medicare Exchange, which will facilitate beneficiary choice and enrollment and increase the competitiveness of the market, leading to lower premiums.

This proposal will provide incentives for Medicare Exchange plans to develop products that will save beneficiaries money. Today, if a Medicare Advantage plan has very low costs, it cannot pay a rebate to enrollees; instead, it must increase benefits. Under this proposal, Medicare Exchange plans can offer beneficiaries relief from rising Medicare premiums. The Task Force plan might also increase political support – by Medicare beneficiaries, their children, and those approaching Medicare eligibility – for federal policies that promote cost containment in health care.

Asking beneficiaries to pay more for their Medicare coverage (or shift to a lower-cost plan) mirrors what has happened in private insurance over the past decade, with increases in patient cost-sharing to keep premium growth from exceeding income growth by too large a margin. Employers have generally opted to increase patient cost-sharing rather than increase the percentage of the premium that employees contribute. The former keeps employees enrolled in the plan and encourages more judicious use of health services.

Comment:  The co-chairmen of President Ombama's deficit commission advanced a proposal that disappointed those of us who believe that the government has an important role in promoting a healthy and secure future for all of us. Erskine Bowles and Alan Simpson recommend reducing the deficit by cutting back on important social programs such as Medicare and Social Security, while failing to recommend tapping obvious potential revenue sources in our upside-down economy. Two members of their committee, Jan Schakowsky and Alice Rivlin, have now released alternative proposals.

Alice Rivlin is also co-chair, along with Pete Dominici, of The Debt Reduction Task Force from the Bipartisan Policy Center (BPC), an organization founded by Howard Baker, Tom Daschle, Bob Dole, and George Mitchell. Frankly, their report is also disappointing for basically the same reasons. It is very heavy on program reductions (though some are appropriate) and very light on seeking new revenues.

Discussed here is only one feature of the BPC recommendation: converting Medicare to a premium support program. This had been mentioned only cryptically in the Bowles/Simpson report, but more details are provided in the Rivlin/Domenici report (excepts above).

Premium support was a proposal advanced a dozen years ago by John Breaux, Bill Thomas, Bill Frist, and Bobby Jindal that barely failed to receive a super-majority vote in their Bipartisan Medicare Commission, and is now being trotted out again. It is a proposal to convert Medicare from a defined benefit to a defined contribution.

Premium support places a limit on the amount that the government contributes toward the Medicare beneficiaries' premiums, exposing individuals to the increasing costs of health care. It then uses the leverage of higher individual premiums to encourage "voluntary" purchase of less expensive private plans in the marketplace.

Since private plans have much higher administrative costs, they can achieve lower premiums only by reducing benefits or increasing out-of-pocket costs for the beneficiaries, making coverage worse than under the traditional Medicare program. Instead of overpaying private plans as with the current Medicare Advantage program, the premium support underpays the private plans but allows them to obtain the balance from the Medicare beneficiaries. It is a plan to privatize Medicare that can have only disastrous consequences for Medicare beneficiaries.

In sharp contrast is the proposal of Jan Schakowsky. She would balance revenues and expenditures with the goal of reducing the deficit, as opposed to the unstated goals of Bowles/Simpson and Rivlin/Domenici to reduce government. Her recommended reductions in spending are carefully targeted to programs that many in America believe should be reduced anyway. Her proposed increased revenues not only would help wipe out the deficit, but they also would provide corrections to the current massive income transfer from middle-income workers to the very wealthy - one of the greatest social injustices in modern history.

Other than improving the way we would purchase pharmaceuticals, she has little to say about Medicare. Her position is that of protecting what we do have. We can go her one better on that. We can improve Medicare and then provide it for everyone. That frankly won't reduce the deficit much, but it would provide us with much greater value for our health care taxes.

What more could we ask for out of our government than sustainable budgets that provide us with real value?

ACTION ALERT:  The heavy hitters are out in force, and they intend to dismantle as much of government as they can, in the name of "fiscally responsible hard choices." It is imperative that President Obama and members of the Senate receive our clear and unrelenting message that we must both protect and improve our public programs dedicated to social justice. The House alone cannot take those away from us if we have the President and the Senate on our side.

Tuesday, November 16, 2010

qotd: Physician-Congressman Andy Harris wants his health care, but forget yours

November 16, 2010
GOP frosh: Where's my health care?
By Glenn Thrush

A conservative Maryland physician elected to Congress on an anti-Obamacare platform surprised fellow freshmen at a Monday orientation session by demanding to know why his government-subsidized health care plan takes a month to kick in.

Republican Andy Harris, an anesthesiologist who defeated freshman Democrat Frank Kratovil on Maryland's Eastern Shore, reacted incredulously when informed that federal law mandated that his government-subsidized health care policy would take effect on Feb. 1 – 28 days after his Jan. 3rd swearing-in.

Harris, a Maryland state senator who works at Johns Hopkins in Baltimore and several hospitals on the Eastern Shore, also told the audience, "This is the only employer I've ever worked for where you don't get coverage the first day you are employed," his spokeswoman Anna Nix told Politico.

Harris said in an Oct. 30 statement, "In Washington, I will never vote to raise taxes, I will fight to repeal health-care reform, and I will work to balance the budget."

Comment:  Freshman Congressman Andy Harris, a physician, certainly understands the importance of health insurance. He is incensed that the government would make him wait until the month following the onset of his employment for his insurance benefits to begin, even though that is standard in both the public and private sectors. Actually he does not have to face a lapse in insurance coverage since another government program, COBRA, guarantees that he will be able to extend his previous insurance through the month of January.

But what about our citizens who are uninsured? The 30 million or so who would become insured under the Patient Protection and Affordable Care Act? He says he will "fight to repeal health care reform." And we already know that the proposals that he and his Republican colleagues support instead would insure only about 3 million people.

He, a physician, demands his taxpayer-financed health care at the same time that he fought to become a government steward and will use that position to deny tens of millions of Americans their health care. A physician! 

No. A real politically-empowered physician would use that power to see that financial barriers to health care would be removed for everyone.

Our medical school admissions committees need to set the bar higher. All applicants accepted should meet the standard of possessing common decency. Too bad Andy Harris snuck through.

Monday, November 15, 2010

qotd: Drew Altman on hard choices for Medicare

The Fiscal Times
November 12, 2010
Health Care Takes a Hit in New Commission Plan
By Drew Altman

Three national commissions are hammering out recommendations for reducing the debt and reining in entitlement spending, putting two giant health programs that serve the elderly, disabled and low-income Americans, Medicaid and Medicare, as well as Social Security, in the crosshairs of a new policy debate.

The discussion of these issues is framed almost always in terms of "hard choices" to reduce spending, increase taxes, or both. In general, Democrats will resist cuts in these programs and Republicans will resist any new taxes. 

But these choices are also hard on legitimate policy grounds, especially when it comes to Medicare.  And the most important reason they are hard is that so many seniors and disabled people on Medicare have low incomes and already pay a significant share of those incomes for their health care today.  It will be difficult if not impossible to ask the majority of beneficiaries ––to pay more or make do with less.  That has been the missing element in the entitlement/deficit reduction debate: Warren Buffet is not the typical Medicare beneficiary.  Instead the prototype is an older woman with multiple chronic illnesses living on an income of less than $25,000 who spends more than 15 percent of her income on health care.  It is the people on these programs and the realities of their lives that have been left out of the discussion.

Comment:  Medicare is already an inadequate program for our seniors and for individuals with long term disabilities. The commissioners are making an egregious mistake in framing the problem as a budget deficit that needs "hard choices" to reduce federal spending by shifting more costs to Medicare beneficiaries.

Medicare does need to be improved, not by cutting benefits, but rather by expanding benefits and by eliminating financial barriers to care. Then Medicare would be a much more suitable program, not only for current beneficiaries, but for everyone else as well.

It is true that the federal budget spending would increase, but the federal budget deficit would be reduced by financing Medicare through equitable taxes, and wasn't this supposed to be all about reducing the federal budget deficit in the first place? Further, our entire national health expenditures, public and private, finally would be brought under control. As both patients and taxpayers, we couldn't ask for a better deal.

Friday, November 12, 2010

qotd: Kevin Drum explains the budget deficit

Mother Jones
November 10, 2010
Is the Deficit Commission Serious?
By Kevin Drum

So this report matters (the "chairman's mark" of the deficit commission report), even though it's really nothing more than the opinion of Alan Simpson and Erskine Bowles. So here's what I think of it, all contained in one handy chart from the Congressional Budget Office:

(If the chart is not transmitted by this email, it can be accessed at the link below.)

Here's what the chart means:

*  Discretionary spending (the light blue bottom chunk) isn't a long-term deficit problem. It takes up about 10% of GDP forever. What's more, pretending that it can be capped is just game playing: anything one Congress can do, another can undo. So if you want to recommend a few discretionary cuts, that's fine. Beyond that, though, the discretionary budget should be left to Congress since it can be cut or expanded easily via the ordinary political process. That's why it's called "discretionary."

*  Social Security (the dark blue middle chunk) isn't a long-term deficit problem. It goes up very slightly between now and 2030 and then flattens out forever. If Republicans were willing to get serious and knock off their puerile anti-tax jihad, it could be fixed easily with a combination of tiny tax increases and tiny benefit cuts phased in over 20 years that the public would barely notice. It deserves about a week of deliberation.

*  Medicare, and healthcare in general, is a huge problem. It is, in fact, our only real long-term spending problem.

To put this more succinctly: any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn't maintain approximately that ratio shouldn't be considered serious. The Simpson-Bowles plan, conversely, goes into loving detail about cuts to the discretionary budget and Social Security but turns suddenly vague and cramped when it gets to Medicare. That's not serious.

There are other reasons the Simpson-Bowles plan isn't serious. Capping revenue at 21% of GDP, for example. The plain fact is that over the next few decades Social Security will need a little more money and healthcare will need a lot more. That will be true even if we implement the greatest healthcare cost containment plan in the world. Pretending that we can nonetheless cap revenues at 2000 levels isn't serious.

And their tax proposal? As part of a deficit reduction plan they want to cut taxes on the rich and make the federal tax system more regressive? That's not serious either.

Bottom line: this document isn't really aimed at deficit reduction. It's aimed at keeping government small. There's nothing wrong with that if you're a conservative think tank and that's what you're dedicated to selling. But it should be called by its right name. This document is a paean to cutting the federal government, not cutting the federal deficit.

Comment:  After reading Kevin Drum's explanation of the federal deficit, it becomes even more obvious that all we have to do is improve Medicare, provide it for everyone, and then use its power as a monopsony serving the public good to bring the growth of health care costs to a manageable level. Compared to this, the other budget issues are a piece of cake.  

Thursday, November 11, 2010

qotd: More on the Deficit Commission’s co-chairs’ proposal

Critique of the co-chairs' health care proposals for the National Commission on Fiscal Responsibility and Reform

By Don McCanne, M.D.

The projected increases in Medicare spending are of concern to all of us. Although we need to slow the rate of growth in spending, we should do so not only without impairing the program, but by actually enhancing the benefits. Let me explain.

The co-chairmen have advanced proposals that address federal budget deficits related to Medicare, but unfortunately they have done so to the detriment of the Medicare beneficiaries. I spoke to this briefly in my Quote of the Day yesterday (Nov. 10).

They propose an increase in Medicare cost sharing to promote greater consumer sensitivity to health care costs. Medicare is already a relatively Spartan program, paying roughly only half of health care costs for our seniors and those with long-term disabilities. Medicare beneficiaries face significant financial barriers to care, sometimes preventing them from receiving essential health care services. Some with greater health care needs even face bankruptcy because of the high out-of-pocket costs. Shifting more costs from the federal government to patients might reduce the federal budget, but it plays havoc with personal budgets. Cost sharing is merely a polite term for what it really is — cost shifting onto the backs of patients.

Because of the potential financial burden, many Medicare beneficiaries purchase Medigap plans. They provide one of the lousiest values in health insurance, having very high premiums for very modest benefits. The co-chairmen propose that the benefits be reduced further by requiring deductibles, again to create greater consumer sensitivity to costs. If they were really interested in saving money, they would recommend folding the Medigap benefits into the traditional Medicare program, thereby saving the profound administrative waste that characterizes these private Medigap plans. Although that improves patients' budgets without changing the federal budget, policies should be designed to benefit the patients rather than appease the anti-government ideologues.

In many areas of the country physicians are concerned about their relatively low Medicare payment rates, and the lack of a "doc fix" is a very real threat for patients. Our primary care infrastructure is already crumbling, and imposition of the scheduled fee reductions will cause many more physicians to exit the Medicare program. The recommendation to prevent the fee reductions for physicians by imposing fee reductions on physicians is truly disingenuous. Physicians understand simple math when it comes to their paychecks. Patients also understand what it means when physicians' practices are closed to new Medicare patients.

The co-chairmen propose strengthening the pending Independent Payment Advisory Board (IPAB). The board is being given the task of reducing payments in the traditional fee-for-service Medicare program, and has been provided with considerable leverage to impose those changes. Reducing fees in the Medicare program without changing fees paid by private insurers will surely motivate physicians to drop Medicare patients in favor of those privately insured. Strengthening IPAB will only compound this differential. We do need an IPAB that has a mission not to simply reduce payments, but rather to set payments based on value. We need to pay the right amount, not necessarily the least amount. But, to be effective, an IPAB would have to have influence over the entire health care delivery system. That would be possible only with a single payer system, but not with our current fragmented system of financing health care.

Another disingenuous recommendation is to reward physicians for meeting spending targets by reducing their rates further. Disgruntled physicians lack incentives for high quality performance. A "back-up-sequester" (when IPAB recommendations are not adopted) to increase premiums or reduce provider payments is punitive to both patients and physicians and could further impair patients' access to care.

The proposed premium support system for Medicare (basically vouchers for private plans) is strictly another manifestation of the great risk shift – an assault on individuals and families (Hacker). It defeats the solidarity behind social insurance programs.

Although the deficit commission is fixated on the federal budget, what really matters in health care is that our total spending is brought under control – both private and public. If we are paying a reasonable amount for all health care combined, then it really doesn't matter that most of it would appear in the federal budget. It's still our money whether we pay it directly or pay it as taxpayers.

It would be much more efficient and equitable if our national health expenditures were funded through progressive tax policies. We could do that very easily if we simply improved Medicare and then provided it for everyone, as PNHP's congressional fellow, Dr. Margaret Flowers indicated in her testimony before the commission months ago. At least we would have stabilized the health care component of our federal budget.

Yesterday's Quote of the Day, listing the health care proposals of the Co-Chairmen:


Wednesday, November 10, 2010

qotd: Deficit commission: Co-Chairs' proposal

National Commission on Fiscal Responsibility and Reform
November 10, 2010
Co-Chairs' Proposal (Draft Document)

Reducing Health Care Costs (page 31)

## Medium Term: Fully offset the cost of the "Doc Fix" by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth. Offsets include:
  * Pay doctors and other providers less, improve efficiency, and reward quality by speeding up payment reforms and increasing drug rebates
  * Pay lawyers less and reduce the cost of defensive medicine by adopting comprehensive tort reform 
  * Expand cost-sharing in Medicare to promote informed consumer health  choices and spending
  * Expand successful cost containment demonstrations
  * Strengthen IPAB
  * Recommend additional health savings (illustrative examples to follow)
## Long Term: Contain growth in total federal health spending to GDP+1% after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize

Paying for the "Doc Fix" (page 32)

## Pay doctors, other health providers, and drug companies less and improve efficiency and quality
  * Replace cuts required by SGR through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality.
  * Require rebates for brand-name drugs as a condition of participating in Medicare Part D.
## Increase cost-sharing in Medicare
  * Eliminate first-dollar coverage in Medigap plans.
  * Replace existing cost-sharing rules with universal deductible, single coinsurance rate, and catastrophic cap for Medicare Part A and Part B.
## Pay lawyers less and reduce the cost of defensive medicine
  * Enact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law.

Savings Beyond the Doc Fix (page 34)

## Expand Successful Cost-Containment Demonstration Projects by 2015
## Identify an additional $200 billion savings in federal health spending
## Strengthen the Independent Payment Advisory Board (IPAB)
  * Include all providers (no carve-outs) and recommendations on benefit design and cost-sharing.
  * Improve savings targets to 1.5% starting in 2015.
  * Eliminate the trigger that could turn off IPAB in 2019.
  * Allow cost-savings recommendations even when spending does not exceed the target growth rate.
  * Allow proposals that apply reforms to health plans in the exchange.
  * Require affirmative Congressional approval of recommendations or alternative savings, with a "back-up sequester" increasing premiums and reducing provider payments if IPAB recommendations (or equivalent savings) are not adopted.

Long-Term Health Care Savings (page 36)

## Set global target for total federal health expenditures after 2020 (Medicare, Medicaid, CHIP, exchange subsidies, employer health exclusion), and review costs every 2 years. Keep growth to GDP+1%.
## If costs have grown faster than targets (on average of previous 5 years), require President to submit and Congress to consider reforms to lower spending, such as:
  * Increase premiums (or further increase cost-sharing)
  * Overhaul the fee-for-service system
  * Develop a premium support system for Medicare
  * Add a robust public option and/or all-payer system in the exchange
  * Further expand authority of IPAB

Comment:  Today, behind closed doors, the chairmen of President's Obama's deficit commission, Erskine Bowles and Alan Simpson, presented to the other members of the commission their draft proposal for reform. The selections above, from their report, apply to health care.

The reception by the committee members is expressed well by Lori Montgomery of The Washington Post:

"Commission members, who include a dozen sitting members of Congress, emerged from the morning session in a Capitol Hill hearing room praising the seriousness of the effort but voicing deep reservations about the details."

Obviously, some of these proposals are very deleterious. It is not as if the commission didn't receive suggestions for far better policies to address costs while actually improving our health care system, though they have chosen to ignore them. Following is a quote from the testimony of Margaret Flowers, M.D. of Physicians for a National Health Program:

"The alternative scenario of a national improved Medicare for All will save lives and save money. National improved Medicare for All will place our nation on the path of becoming one of the best health systems in the world – something of which we can all be proud. This commission has the ability to recommend creating a financially sustainable universal health system. I urge the members of this commission to recommend addressing the deficit through adopting this most popular approach: national improved Medicare for All. Don't cut Medicare. Protect it, improve it and expand it to cover everyone."

Video version (in 6 of 7 at 27:30):

Tuesday, November 9, 2010

qotd: Children worse off under Utah's privatized CHIP program

The Salt Lake Tribune
November 8, 2010
Central Utah children on CHIP face doctor shortage
By Kirsten Stewar

Privatizing Utah's Children's Health Insurance Program (CHIP) is supposed to save money and improve services.

But with no proof yet of any savings reaped, the experiment has been tripped up by service breakdowns.

The latest: Complaints from some of the 379 CHIP families in Carbon and Emery counties who say their children no longer have access to pediatric care. That's because Intermountain Healthcare's SelectHealth, which inherited some CHIP patients on July 1, has no primary care doctors in that region.

"Now, after 10 years with our local family doctor, we need to find a new one," said Jason Chambers of Wellington.

Chambers said his doctor applied to become a SelectHealth provider months ago and gave up after receiving no response.

Chambers phoned the toll-free number on his CHIP card and was told his only option was to drive over the mountain to an in-network doctor in Spanish Fork. "That's 65 miles away — four hours round trip," to keep an appointment, said Chambers.

Legislation to privatize the CHIP program was backed by the insurance industry and sponsored in 2008 by Taylorsville Republican and insurance broker Rep. Jim Dunnigan... He said he sponsored his bill not as a favor to the insurance industry but to save taxpayer dollars and improve care through market forces.

Comment:  The drive to divert the administration of publicly-financed health insurance programs to the private sector can be described at best as irrational fanaticism. The claim that private administration of public insurance programs uses market forces to improve quality and reduce costs has been disproven repeatedly. Costs of private administration are always higher, so any reductions in net spending are the result of curtailment of services.

Utah's Children's Health Insurance Program is one of the latest victims of this fanaticism. Requiring a four hour round trip to a primary care physician might save money by decreasing utilization, but it certainly fails on the quality measure of access.

If Utah had a publicly-administered universal health program, this wouldn't even be an issue. Mr. Chambers' children could continue to go to their own family physician.

Imagine with such a system in place - say a single payer national health program - if someone said that we are turning the program over to a private entity that requires you to travel to a distant community for your routine care, what would be your response? After the expletives, then what would you say?

The irrational fanatics are swarming. How long are we going to tolerate being stung?

Monday, November 8, 2010

qotd: President Obama confirms strategy to introduce a Republican reform model

60 Minutes
November 4, 2010
President Barack Obama

President Barack Obama:  ... I think there were some that argued, "Well, you should just stop and let people digest all these changes. And so, you shouldn't take on something as big as health care." And I'll be honest with you, Steve, at the time, we knew that it probably wasn't great politics. 

Steve Kroft:  You were told that by your aides.

President Obama:  Absolutely... So, ultimately, I had to make a decision: do I put all that aside, because it's gonna be bad politics? Or do I go ahead and try to do it because it will ultimately benefit the country? I made the decision to go ahead and do it. And it proved as costly politically as we expected. Probably actually a little more costly than we expected, politically. 

Kroft:  In what ways?

President Obama:  Well, partly because I couldn't get the kind of cooperation from Republicans that I had hoped for. We thought that if we shaped a bill that wasn't that different from bills that had previously been introduced by Republicans -- including a Republican governor in Massachusetts who's now running for President -- that, you know, we would be able to find some common ground there. And we just couldn't. 

Comment:  President Obama now confirms what was obvious all along. A political decision was made to introduce the Republican model of health care reform, with the presumption that the Republicans would cooperate. The tragedy is not that it proved to be so costly politically, but rather that we are locked into a very expensive and quite ineffective model - the version that has now been abandoned by the Republicans.

Those "secret negotiations behind closed doors" were not so secret. Senators Grassley and Enzi were cooperating in their respective committees to try to build reform on what was really the Republican model, drafted by a recruited WellPoint executive. During negotiations the basic model was not modified, and the disputed differences in policy were negligible. Only after it became evident that the health care reform effort could be used to discredit the Democrats did Grassley and Enzi yield to the Republican leadership by agreeing to become opponents of the effort. This has been a tremendous lesson in the pitfalls of placing politics before policy.

Yes, the Democrats did pass a bill, but can you call that a success? The bill will not control spending, it will not insure everyone, and it will establish under-insurance as the norm, exposing individuals and families with health care needs to financial hardship.

Simply stated, this was yet another political failure in our nearly century-long quest for health care for all.

No effective bill can possibly be passed in the next two years because of the current political climate, but that does not mean that we should wait it out until the politics are right. Quite the contrary.

Many in the nation still do not understand that an improved Medicare that would cover everyone is a vastly superior option. It is imperative that we greatly intensify our efforts to be sure that they do understand. If we wait until we like the partisan ratios in the House and Senate, it will be far too late for us to have any real impact.

Get to work.

Wednesday, November 3, 2010

qotd: What does the election say about single payer?

November 3, 2010
Single Payer Ballot Questions Pass in All Fourteen Massachusetts Districts!

Massachusetts voters have, for the second straight election, overwhelmingly affirmed their support for single payer health reform by turning in majority 'Yes' votes in all fourteen districts where local single payer ballot questions appeared on November 2.

Single-payer health insurance

Should the state representative from this district be instructed to support legislation establishing health care as a human right regardless of age, state of health, or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?

222 of 228 precincts reporting

Yes - 63.5%
No - 36.5%

Comment:  The day after the decisive Republican takeover of the U.S. House of Representatives some pundits are claiming that this shift in political power is, in part, due to the rejection of Obamacare - the Patient Protection and Affordable Care Act. This political message is not completely clear in that there was no national expression of what the public might want instead. But look at what the citizens of Massachusetts have to say.

The people of Massachusetts have been living with Romneycare, a model of health care financing that uses the same fundamental policies as are found in Obamacare. They now know what the nation will know after 2014.

What do they say about Romneycare and Obamacare? Almost two-thirds of voters in districts that considered this issue would reject Obamacare and Romneycare in favor of "creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts."

And, oh yes, the citizens of Vermont elected, as governor, Peter Shumlin, an outspoken advocate of single payer.

Some of the people do seem to be getting the message that single payer is for their benefit, but we have much more work to do to educate the others.

Tuesday, November 2, 2010

qotd: Value-based insurance design

Health Affairs
November 2010

Applying Value-Based Insurance Design To High-Cost Health Services
By James C. Robinson

Value-based insurance design programs have focused on reducing consumer cost sharing in health insurance for preventive tests and medications for chronic diseases. But for value-based design principles to have a stronger clinical and economic impact, they should be extended to expensive services and to those for which the evidence is limited or controversial. This paper proposes applying value-based insurance design principles to self-administered and office-administered specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures.


Applying Value-Based Insurance Design To Low-Value Health Services
By A. Mark Fendrick, Dean G. Smith and Michael E. Chernew

Value-based insurance design improves health care quality and efficiency by reducing cost sharing for services that have strong evidence of clinical benefit. The same goals can also be accomplished by increasing cost sharing for low-value services, which would ensure more effective care and achieve net cost savings. However, there are challenges in defining what is meant by "low-value services" and implementing programs to restrict such services' use. This paper argues that investments in processes to define low-value care, comparative effectiveness research to identify services that produce harm or marginal clinical benefit, and information technology to implement findings can facilitate applying value-based insurance design to the low-value realm.


Assessing The Evidence For Value-Based Insurance Design
By Niteesh K. Choudhry1, Meredith B. Rosenthal and Arnold Milstein

High copayments for medical services can cause patients to underuse essential therapies. Value-based health insurance design attempts to address this problem by explicitly linking cost sharing and value. Copayments are set at low levels for high-value services. The Mercer National Survey of Employer-Sponsored Health Plans demonstrates that value-based insurance design use is increasing and that 81 percent of large employers plan to offer it in the near future. Despite this increase, few studies have adequately evaluated its ability to improve quality and reduce health spending. Maximizing the benefits of value-based insurance design will require mechanisms to target appropriate copayment reductions, offset short-run cost outlays, and expand its use to other health services.

Impact Of Health Care Fragmentation 

Payers have the greatest incentive to adopt plans using value-based insurance design when they stand to benefit from reductions in spending on medical care that is averted from the use of highly effective therapies. However, the fragmented nature of the US health care system may reduce the likelihood of this scenario. Payers often carve out certain types of benefits, most notably for prescription drugs. Similarly, pharmacy benefit managers often have little incentive to reduce cost sharing for fully insured people unless such terms are specifically negotiated. In addition, patients frequently switch insurers, such as when they change jobs. Thus, with the exception of very high-risk conditions where improved quality may be achieved quickly, payers face the possibility that they will bear the cost of therapy while other payers reap the savings from averted clinical events.

The implications of insurance "churn" — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.

Comment:  Value-based insurance design generally refers to the drafting of insurance benefits in a way that would improve health care value. Under this concept, financial disincentives such as deductibles, copayments and coinsurance should be reduced or eliminated for health care that has been proven to be beneficial, whereas these cost-sharing measures should be increased for "expensive services and those for which the evidence is limited or controversial." Is this a good idea?

There is already considerable evidence that reducing cost sharing for proven drugs and for preventive services is of benefit for the health of the individual. Patients taking effective maintenance medications are more likely to fill their prescriptions, and patients are more likely to access preventive screening services. However, the evidence that this saves money is quite spotty and weak. Nevertheless, eliminating barriers to beneficial care is desirable, and our health care policies should be designed to encourage such improved access.

What about increasing financial barriers to expensive care, such as specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures? If these expensive services are beneficial, then higher cost sharing explicitly creates rationing based on the ability to pay. Those who can afford the high out-of-pocket expenses receive the care, and those who can't afford the cost sharing don't. Those of us who are passionate advocates of health care justice would find this to be totally unacceptable. We would support more equitable policies to address the cost issues.

What about increasing financial barriers to expensive care for which the evidence of benefit is marginal or controversial? Do we want to have a system in which the wealthy can spend whatever they want for try-it-and-see health care, while those of more modest income are not allowed that option? First of all, there is a lot of high-cost care that falls into this marginal category, much of which should probably be made accessible to everyone. So financial barriers would still be inappropriate from a policy perspective.

But what about the care that crosses the threshold of clearly being too expensive while likely of no value or perhaps even detrimental? Should that care still be available, if only for the wealthy? Should we even care? The problem is that the health care delivery infrastructure is a limited resource; it is expensive; and we all pay for it. Diverting our health care resources, at the whim of the wealthy and those who would profit from them, places stresses on our capacity that can have undesirable consequences such as unnecessarily expanding queues. 

Value-based insurance design is a bad idea for three reasons: 1) we should not have financial barriers to beneficial health care services; 2) we should not use financial barriers that establish two-tiered or multi-tiered systems which favor the wealthy while neglecting our workforce; and 3) we shouldn't continue with the creation of administratively burdensome policies made necessary merely because our Congressional leaders value our private insurers more than they value patients.

One statement pulled out of this special issue of Health Affairs carries a very pregnant message that the authors likely didn't intend:

"The implications of insurance 'churn' — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time."