Fwd: qotd: Wealth redistribution for health care

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-------- Original Message --------
Subject: qotd: Wealth redistribution for health care
Date: Fri, 28 Sep 2012 10:08:02 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The New York Times
September 28, 2012
Redistribution of Wealth in America
By Uwe E. Reinhardt

A recent article in The Washington Post and an audio clip accompanying
it on the Web featured an excerpt from a speech in 1998 by Barack Obama,
then an Illinois state senator, at Loyola University Chicago.

In that speech he remarked, "I actually believe in redistribution, at
least at a certain level, to make sure that everybody's got a shot."

The article then quotes Mitt Romney: "I know there are some who believe
that if you simply take from some and give to others then we'll all be
better off. It's known as redistribution. It's never been a
characteristic of America."

Really?

Aside from hard-core libertarians, who view the sanctity of justly
begotten private property as the overarching social value and any form
of coerced redistribution as unjust, how many Americans on the left and
right of the political spectrum would disagree with Mr. Obama's very
general and cautiously phrased statement?

In fact, I wonder whether even Governor Romney actually disagrees with
that general statement, aside from some dispute over "the certain level"
at which redistribution takes place. After all, he has promised elderly
voters to protect the highly redistributive Medicare program, which
would remain highly redistributive, or become more so, under proposals
by his running mate, Representative Paul D. Ryan, for restructuring
Medicare.

The fact is that redistributive government policy — mainly through
benefits-in-kind programs, agricultural policy and the like — has been
very much a characteristic of American life, just as it has been in
every economically developed nation, albeit at different levels.

At issue between the two political camps in this election season, then,
is not redistribution per se, which is as American as apple pie. Rather,
at issue is the "certain level" to which that redistribution is to be
pushed. An honest and thoughtful debate on that would certainly be
useful at this time. It would be useful at any time.

To be respectful to voters, such a debate should proceed at a level
concrete enough to allow voters — or at least researchers and news
organizations — to estimate fairly precisely how different families
would fare under the different visions of that "certain level."

It is the minimum voters ought to expect from political candidates.


NYT Reader Comments:

Don McCanne
San Juan Capistrano, CA

Even though Mitt Romney derides redistribution, he too actually supports
it. "Romneycare" was prompted by an opportunity to use a larger share of
federal Medicaid funds if they could design a program that would comply
with federal requirements. Although Medicaid is a program with
redistribution to the poor, in this instance it was also a
redistribution to Massachusetts from the taxpayers of all other states,
since Massachusetts would have had to forgo the funds had they not acted.

Romney is now taking pride in that transfer, but at the same time he
rejects "Obamacare," even though it is a program which ensures a similar
redistribution as he supported in Massachusetts, but with a greater
degree of fairness in the redistribution between states.

We could dismiss this as the silliness typical of electoral politics,
except that the politicians carry through with policy once they are in
control. That has consequences. We have the most expensive health care
system of all nations, yet also one of the most inequitable, partly
because of our failure to adopt policies that would ensure the fairest
redistribution through an efficient health care financing system.

The most efficient system that eventually would receive the support of
the majority of U.S. citizens would be an improved Medicare program that
served everyone. That would be the right way to redistribute our wealth
to the benefit of our health, if only we citizens had the political
wisdom to demand it.

http://economix.blogs.nytimes.com/2012/09/28/redistribution-of-wealth-in-america/

Fwd: qotd: Important! Large self-insured employers are bailing out

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-------- Original Message --------
Subject: qotd: Important! Large self-insured employers are bailing out
Date: Thu, 27 Sep 2012 12:18:58 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The Wall Street Journal
September 26, 2012
Big Firms Overhaul Health Coverage
By Anna Wilde Mathews

Two big employers are planning a radical change in the way they provide
health benefits to their workers, giving employees a fixed sum of money
and allowing them to choose their medical coverage and insurer from an
online marketplace.

Sears Holdings Corp. and Darden Restaurants Inc. say the change isn't
designed to make workers pay a higher share of health-coverage costs.
Instead they say it is supposed to put more control over health benefits
in the hands of employees.

The approach will be closely watched by firms around the U.S. If it
eventually takes hold widely, it might parallel the transition from
company-provided pensions to 401(k) retirement-savings plans controlled
by workers and funded partly by employer contributions. For employees,
the concern will be that they could end up more directly exposed to the
upward march of health costs.

"It's a fundamental change…the employer is saying, 'Here's a pot of
money, go shop,' " said Paul Fronstin, director of health research at
the Employee Benefit Research Institute, a nonprofit. The worry for
employees is that "the money may not be sufficient and it may not keep
up with premium inflation."

Darden did say that employees will pay the same contribution out of
their own pockets that they currently do for approximately the same
level of coverage. Employees who pick more expensive coverage will pay
more from their paychecks to make up the gap. Those who opt for cheaper
insurance, which may involve bigger deductibles or more limited networks
of doctors and hospitals, will pay less.

"It puts the choice in the employee's hands to buy up or buy down," said
Danielle Kirgan, a senior vice president at Darden. The owner of chains
including Olive Garden and Red Lobster will let its approximately 45,000
full-time employees choose the new coverage in November, to kick in Jan.
1. Darden says that employees with families to cover will be given more
money to buy insurance than employees covering just themselves.

The hope is that insurers will compete more vigorously to get workers to
sign up, which will lower overall health-care costs. Darden and Sears
are both currently self-insured, meaning that the cost of claims each
year comes out of company coffers.

Several big benefits consultants and health insurers are betting on the
employee-choice model. Major consulting firm Aon Hewitt, a unit of Aon
PLC, is behind the insurance exchange that Sears and Darden will use,
while rival Towers Watson TW & Co. in May bought Extend Health Inc., an
online marketplace used by employers to hook retirees up with Medicare
coverage. It plans to expand the marketplace to include active workers
buying individual plans, starting in 2014.

"Within the next two or three years, it's going to be mainstream," said
Ken Goulet, executive vice president at WellPoint Inc. The insurer will
roll out a product next year called Anthem Health Marketplace that lets
employers offer a variety of its plans to workers, paired with a fixed
contribution. Mr. Goulet said it is close to signing up more than 30
midsize and large employers for early next year, including one with more
than 50,000 workers.

Exchange operators today say they offer employers more predictable
costs, as well as potential savings gleaned from workers' voluntary
choice of skinnier coverage and competition among insurers offering
plans on the exchanges.

http://online.wsj.com/article/SB10000872396390444549204578020640220260374.html


Comment: Many larger employers have said that they do not want to be
the first to initiate major structural reforms in their employee health
benefit programs - reforms that would bring the employers relief but at
a cost to their employees - but that they would quickly follow others
out the door. It looks like the door has opened.

This is a very fundamental change in employee health benefit coverage.
The Affordable Care Act relies heavily on self-insured large employers
maintaining their coverage of a large percentage on America's workforce,
so that the Act can concentrate on lower-income and uninsured
individuals. Under the radical change described in this WSJ article,
employers will discontinue their self-insured programs and switch to a
defined contribution - a specific dollar amount that employees will use
to shop for health plans in these employer insurance exchanges.

There has been considerable discussion recently over converting Medicare
to a defined contribution - premium support or voucher program - in
which the costs to the government would be fixed to some index of
inflation, whereas the greater increases in health care costs would be
borne by the Medicare beneficiary. Thus health care would become less
and less affordable, especially for those with greater health care needs.

With this move by employers, they are putting in place the same perverse
defined contribution approach which we have determined would be so
destructive to our Medicare program. And, oh yes, the benefits
consultants and health insurers are jumping in to draw off even more
health care funds in administrative costs - already one of the greatest
burdens in our health care system. The executive vice president of
WellPoint says, "Within the next two or three years, it's going to be
mainstream."

Further, as was reported in yesterday's Quote of the Day, over 90
percent of individuals do not select the Medicare Part D drug plan that
would be best in their individual circumstances. It shows that health
insurance shoppers really do not know how to shop for health insurance.
Obviously comprehensive health plans are much more complex, and it would
be virtually impossible for individuals to select the best plan, even
with the language of simplified plan descriptions called for in the
Affordable Care Act.

In fact, several studies have shown that most individuals select plans
based primarily on the lowest net premium, with very little attention
paid to plan benefits and cost sharing. The most common strategy for
insurers to keep premiums low is to use large deductibles and
coinsurance, though they also manipulate benefits and provider networks
to reduce costs. Besides the increasing deductibles, coinsurance is
particularly a problem since it is a percentage of the charges rather
than a dollar copayment which is usually much smaller. Low premium plans
tend to set coinsurance rates at very high percentages. As this article
states, the savings will be dependent upon "workers' voluntary choice of
skinnier coverage." It's all the workers' fault!

It is likely that the initial defined contributions will be fairly close
to the amounts that employers are currently paying for the health
benefit programs, so the immediate impact will not be transparent. Only
after many employees face bankrupting medical debt - a phenomenon that
will increase as the employer contribution buys ever less insurance -
will the implications be clear. It is tragic that so many will have to
experience financial hardship before we are ready to get serious about
fixing our system by enacting an improved Medicare for everyone.

Haven't we had enough policy discussions to understand what is
happening? Why aren't we doing anything?

By the way, just in case you didn't get the gist of today's message, OUR
NATION'S LARGE SELF-INSURED EMPLOYERS - THE MAINSTAY OF HEALTH CARE
COVERAGE IN AMERICA - ARE BEGINNING TO ABANDON THEIR HEALTH BENEFIT
PROGRAMS AND SHIFT THE RISKS TO THEIR EMPLOYEES.

Civil disobedience anyone?

Fwd: qotd: Important! Over 90 percent fail choose the right Part D plan

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-------- Original Message --------
Subject: qotd: Important! Over 90 percent fail choose the right Part D plan
Date: Wed, 26 Sep 2012 10:58:55 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The National Bureau of Economic Research
June 2012
Plan Selection in Medicare Part D: Evidence from Administrative Data
By Florian Heiss, Adam Leive, Daniel McFadden, Joachim Winter

From the NBER Digest:

Fewer than 10 percent of individuals enroll in what for them would be
the most cost-effective plans.

In Plan Selection in Medicare Part D: Evidence from Administrative Data
(NBER Working Paper No. 18166), co-authors Florian Heiss, Adam Leive,
Daniel McFadden, and Joachim Winter analyze data on medical claims in
Medicare Part D drug insurance programs. They find that fewer than 10
percent of individuals enroll in what for them would be the most
cost-effective plans. This is apparently because seniors pay more
attention to their out-of-pocket premiums than to the overall benefits
of the dozens of drug plans available to them. Equally significant, the
researchers believe that how seniors decide whether to enroll in
Medicare Part D, and what plans they select, is important not only for
management of the Part D program, but also is indicative of how
consumers behave in real-world decision situations with a complex,
ambiguous structure and high stakes. The researchers add that their
findings may yield predictions for how seniors will handle plan choices
in the new general health insurance exchanges that will implement the
Patient Protection and Affordable Care Act of 2010.

http://www.nber.org/digest/oct12/w18166.html

NBER Working Paper No. 18166 (47 pages):
http://www.nber.org/papers/w18166.pdf


Comment: If over 90 percent of purchasers of the Medicare Part D drug
plans fail to choose the plans that are best for themselves, then how
could we ever expect them to make wise decisions in selecting the best
plans from the much more complex plans of the state health insurance
exchanges, or, for that matter, from the choice of Medicare Advantage
plans or the plan choices to be offered in the proposed premium support
(voucher) markets?

The last sentence from "Conclusions" in their paper: "Our results then
do not support the proposition that consumers can make and benefit from
good choices in private health insurance markets, and direct health care
resources to their best use."

This is really important. Inserting very expensive, profoundly wasteful
insurer administrative intermediaries into the system under the guise of
choice - choices that cannot be made on a rational basis, choices that
are all worse than a single, comprehensive publicly-administered plan
would be - is the ultimate of reckless decisions made by the policy
community and the politicians that they work for.

Let's improve Medicare by eliminating the Part D and Medicare Advantage
intermediaries and folding an improved version of those benefits into
the traditional Medicare program, and then provide it to everyone. It
would be cheaper overall and would open up our choices to the choices we
really want - that of our health care professionals and institutions.
That would be far better than this nonsense of choosing from all the
wrong choices.

Fwd: qotd: The Democrats' market-friendly health care alternative

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-------- Original Message --------
Subject: qotd: The Democrats' market-friendly health care alternative
Date: Tue, 25 Sep 2012 10:44:45 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The Wall Street Journal
September 24, 2012
The Democrats' Market-Friendly Health-Care Alternative
By Ezekiel J. Emanuel, Neera Tanden and Donald Berwick

Conservative and liberal health-policy experts agree that the key to
sustainable cost control lies in encouraging physicians and hospitals to
focus on quality rather than quantity, and value rather than volume.

According to a study published in August in the New England Journal of
Medicine, over the past decade per-person costs in Medicare have
increased less than those of private insurance, and are projected to be
1.2 percentage points lower than those of private insurance per year
over the next decade.

Why should anyone believe that the Affordable Care Act and our new
proposals will actually control costs? After all, skeptics argue,
Medicare costs have increased inexorably despite myriad policies
designed to control them. But we propose a break from the past, which
has largely relied on the government's setting of payments. Our
alternative is to allow the market to set many prices for medical goods
and then to change payment and reimbursement methods so that physicians
and hospitals have the incentive to keep patients healthy. This is
neither government nor insurer rationing. It is a market-friendly
approach that empowers health providers to re-engineer how they care for
patients.

http://online.wsj.com/article/SB10000872396390444017504577645193107383610.html?mod=googlenews_wsj

And...

Health Care Cost Institute (HCCI)
September 2012
Health Care Cost and Utilization Report: 2011

For 2011, HCCI found increases in prices were the primary cause of
increased health care spending for the privately insured younger than 65
and covered by ESI (employer-sponsored insurance).

The rate of price growth for all major services outpaced changes in
utilization. The primary cause of increased prices was growth in unit
prices.

http://www.healthcostinstitute.org/files/HCCI_HCCUR2011.pdf


Comment: The authors of this Wall Street Journal opinion article have
participated in the development and implementation of the Democrats'
Affordable Care Act. Increases in prices continue to be a primary cause
of increases in health care spending, so what do these authors
recommend? "Our alternative is to allow the market to set many prices
for medical goods and then to change payment and reimbursement methods
so that physicians and hospitals have the incentive to keep patients
healthy."

Health care prices remain a problem. The health care market, such as it
is, always has set prices high and will continue to do so. Utilization
is not excessive. It is comparable to other nations with far lower total
spending. Incentives designed to reduce utilization risk impairing
access to appropriate care, thereby impairing quality.

It is futile to continue to pretend that market approaches within our
highly dysfunctional financing system - that perpetuated by the
Affordable Care Act - will ever bring us quality health care at a
reasonable cost. Allowing the market to set prices is utter nonsense.
Our own public stewards, working with the health care delivery system,
can price our health care services and products properly, providing that
they are allowed to function as a single payer monopsony (not to mention
all of the other benefits of single payer financing).

We don't need more market-friendly Democrats. We need patient-friendly
politicians, though they are a rare sighting these days.

Fwd: qotd: So you want coverage as good as that of members of Congress?

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-------- Original Message --------
Subject: qotd: So you want coverage as good as that of members of Congress?
Date: Mon, 24 Sep 2012 10:56:38 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Your Black World
September 20, 2012
Rep. Jesse Jackson, Jr. Forced To Sell Luxury Townhouse To Pay Medical Bills

In a statement released by Rep. Jesse Jackson, Jr.'s chief of staff,
Rick Bryant, Rep. Jackson and his wife have made the decision to sell
their townhouse in Washington D.C. to defray medical expenses Jackson
has acquired for his depression and bipolar disorders. "Like millions of
Americans, Congressman Jackson and Mrs. Jackson are grappling with
soaring health care costs and are selling their residence to help defray
costs of their obligations," the statement read. "The congressman would
like to personally thank everyone who has offered prayers on behalf of
his family." Jackson aides could not say how much, if any, of the
expenses are covered under his health insurance plan.

http://www.yourblackworld.net/2012/09/black-news/rep-jesse-jackson-jr-forced-to-sell-luxury-townhouse-to-pay-medical-bills/


Comment: Those who say repeatedly that everyone should have the same
health care coverage as members of Congress should check with Rep. Jesse
Jackson, Jr. He is losing his Washington, D.C. townhouse because of
medical bills.

Other than the statement released by his chief of staff, we don't know
any of the details, and we shouldn't since common decency dictates that
we respect his privacy.

We could speculate on the great many potential factors that might be
involved as to why a member of Congress faces a financial hardship due
to medical bills, but we won't, even though many come to mind. We'll
merely state that we need a health care financing system that removes
financial barriers to care - for everyone. A properly designed single
payer national health program would do that.

Fwd: qotd: Anthem Blue Cross learns how to control costs

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-------- Original Message --------
Subject: qotd: Anthem Blue Cross learns how to control costs
Date: Fri, 21 Sep 2012 12:10:19 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Los Angeles Times
September 21, 2012
Cedars-Sinai and UCLA cut from Los Angeles health plan
By Chad Terhune

Two of the most prestigious names in Southern California healthcare —
Cedars-Sinai and UCLA — are getting shut out of a major insurance plan
for being too expensive.

In a bold cost-cutting move, Anthem Blue Cross has eliminated doctors
affiliated with the hospitals from a health plan offered to about 60,000
employees and dependents at the cash-strapped city of Los Angeles.

The city opted for Anthem's plan because it will save $7.6 million in
annual premiums next year by excluding physicians from the two
institutions known for tending to the Southland's rich and famous.

"Purchasers are sending a signal that certain prices are just
unaffordable," said David Lansky, chief executive of the Pacific
Business Group on Health, which represents large companies such as Walt
Disney Co. "We want great teaching and medical research institutions to
survive. Whether that should happen by charging everyone in society a
higher rate for routine services is more debatable."

"Implementation of the narrow network was a difficult choice, but one
made necessary by the city's fiscal constraints," a city spokesman said.
Los Angeles is expected to be the biggest employer to offer Anthem's
Select plan.

Officials at Cedars-Sinai and UCLA criticized the rationale for the
move, saying the increased costs are tied to their world-class medical
research and cutting-edge treatments in areas such as cancer or organ
transplants that benefit the entire community.

Thomas Priselac, chief executive of Cedars-Sinai Medical Center, said
these exclusions offer a "false economy" because they don't reduce costs
in the healthcare system overall.

"It just pushes the cost onto those who continue getting care at those
facilities," Priselac said. "Secondly, it doesn't recognize the reason
why places like Cedars and UCLA are more expensive than the typical
community hospital."

For its part, UCLA said its hospitals treat a large number of patients
in Medi-Cal, the government program for the poor and disabled.

"Other providers don't have to deal with the expenses UCLA has to deal
with," said Santiago Muñoz, chief strategy officer for the UCLA Health
System.

Anthem isn't alone in pursuing this strategy. Many insurers are
aggressively pitching these sharply limited networks, which offer fewer
choices and lower-priced doctors and hospitals, as a cost-cutting tool
at a time when U.S. health insurance premiums have climbed three times
as fast as inflation and wages over the last decade.

Industry giant WellPoint Inc., which owns Anthem Blue Cross in
California, offers plans that include as few as 30% of the company's
full list of providers.

http://www.latimes.com/business/la-fi-hospital-costs-20120921,0,4069159,full.story


Comment: The explosion in limited-network private insurance plans is
taking choice away from more and more patients. The business tools that
private insurers use to control costs are very different from the
patient-service tools of a single payer national health program. Not
only do the private insurers' tools restrict patients' care, but they
are also quite ineffective in controlling overall spending, as is
demonstrated by the fact that our health care costs are about twice the
average of other nations.

Under a single payer system, all legitimate costs are paid by the
government and are not linked to specific health plans assigned to
different individuals - a very inefficient and fragmented method of
financing health care. Using the example of UCLA, there would be no
tiers of private coverage and no problem with an underfunded Medicaid
program. The hospital costs would be globally budgeted, just as are
police and fire departments. Separate, extraordinary costs of research
functions would be funded through our National Institutes of Health.
Education grants can be provided through the global budgeting process
since house staff members are, from a financing perspective, really just
low-paid hospital employees.

We need to get WellPoint/Anthem Blue Cross and their ilk out of our
health care and out of our lives. Let's improve our own Medicare program
and then provide it for everyone.

Fwd: qotd: Six million will face penalties under the Affordable Care Act

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-------- Original Message --------
Subject: qotd: Six million will face penalties under the Affordable
Care Act
Date: Thu, 20 Sep 2012 10:53:27 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Congressional Budget Office
September 19, 2012
Payments of Penalties for Being Uninsured Under the Affordable Care Act

Beginning in 2014, the Affordable Care Act (comprising Public Law
111-148 and the health care provisions of P.L. 111-152) requires most
legal residents of the United States to either obtain health insurance
or pay a penalty tax. That penalty will be the greater of: a flat dollar
amount per person that rises to $695 in 2016 and is indexed by inflation
thereafter (the penalty for children will be half that amount and an
overall cap will apply to family payments); or a percentage of the
household's income that rises to 2.5 percent for 2016 and subsequent
years (also subject to a cap).

The Congressional Budget Office (CBO) and the staff of the Joint
Committee on Taxation (JCT) have estimated that about 30 million
nonelderly residents will be uninsured in 2016, but the majority of them
will not be subject to the penalty tax. Unauthorized immigrants, for
example, who are prohibited from receiving almost all Medicaid benefits
and all subsidies through the insurance exchanges, are exempted from the
mandate to obtain health insurance. Others will be subject to the
mandate but exempted from the penalty tax—for example, because they will
have income low enough that they are not required to file an income tax
return, because they are members of Indian tribes, or because the
premium they would have to pay would exceed a specified share of their
income (initially 8 percent in 2014 and indexed over time). CBO and JCT
estimate that between 18 million and 19 million uninsured people in 2016
will qualify for one or more of those exemptions. Of the remaining 11
million to 12 million uninsured people, some individuals will be granted
exemptions from the penalty because of hardship, and others will be
exempted from the requirement on the basis of their religious beliefs.

After accounting for those who will not be subject to the penalty tax,
CBO and JCT now estimate that about 6 million people will pay a penalty
because they are uninsured in 2016 (a figure that includes uninsured
dependents who have the penalty paid on their behalf) and that total
collections will be about $7 billion in 2016 and average about $8
billion per year over the 2017–2022 period. Those estimates differ from
projections that CBO and JCT made in April 2010: About two million more
uninsured people are now projected to pay the penalty each year, and
collections are now expected to be about $3 billion more per year.

Most of the increase—about 85 percent—in the number of people who are
expected to pay the penalty tax stems from changes in CBO and JCT's
baseline projections since April 2010, including the effects of
legislation enacted since that time, changes in the economic outlook
(primarily a higher unemployment rate and lower wages and salaries), and
other technical updates. A small share—about 15 percent—of the increase
in the number of uninsured people expected to pay the penalty results
from the recent Supreme Court decision. As a result of that decision,
CBO and JCT now anticipate that some states will not expand their
Medicaid programs at all or will not expand coverage to the full extent
authorized by the ACA. Such state decisions are projected to increase
the number of uninsured, a small percentage of whom will be subject to
the penalty tax.

Among the uninsured individuals subject to the penalty tax, many are
expected to voluntarily report on their tax returns that they are
uninsured and pay the amount owed. However, other individuals will try
to avoid payments. Therefore, the estimates presented here account for
likely compliance rates, as well as the ability of the Internal Revenue
Service (IRS) to administer and collect the penalty.

CBO and JCT have also updated their estimates of the distribution of
those penalty tax payments by income category. Table 1 (in PDF available
at link) shows how much of those payments are projected to be made by or
on behalf of people who are uninsured in 2016 (which the IRS will
collect in 2017) in each of several income categories, measured as
percentages of the federal poverty level (FPL). In general, households
with lower income will be subject to the flat dollar penalty (with
adjustments to account for the lower penalty for children and an overall
cap on family payments), and households with higher income will owe a
percentage of their income. In 2016, households with income that exceeds
400 percent of the FPL are estimated to constitute about one-third of
people paying penalties and to account for about two-thirds of the
receipts from those penalties.

http://www.cbo.gov/publication/43628


Comment: When it was decided to use the purchase of private plans as
the model for insuring everyone, it was clear that the law must include
a requirement to purchase plans and that the threat of assessing a
penalty would have to be included to ensure compliance, otherwise
adverse selection would have driven insurance premiums up even higher
than their current intolerable levels. It was also clear that this still
wouldn't ensure universality because of various exceptions and
non-compliance.

We now have a reasonably reliable estimate from the Congressional Budget
Office that tells us that 30 million people will remain uninsured and
that 6 million of them will be assessed penalties. That is a terrible
outcome when considering that a single payer system would have covered
everyone automatically, obviating the need for penalties.

Some will note that the penalty is not as onerous as it might have been
since two-thirds of the total amount will be paid by households with
incomes over 400 percent of the federal poverty level. The fact that
more lower income households will be exempt from the penalty is hardly a
reason to celebrate when considering that the price they do pay is
remaining uninsured.

Fwd: qotd: Medicare's failure to protect personal finances

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-------- Original Message --------
Subject: qotd: Medicare's failure to protect personal finances
Date: Wed, 19 Sep 2012 12:33:55 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Journal of General Internal Medicine
September 5, 2012
Out-of-Pocket Spending in the Last Five Years of Life
By Amy S. Kelley, Kathleen McGarry, Sean Fahle, Samuel M. Marshall,
Qingling Du and Jonathan S. Skinner

Abstract

Background
A key objective of the Medicare program is to reduce risk of financial
catastrophe due to out-of-pocket healthcare expenditures. Yet little is
known about cumulative financial risks arising from out-of-pocket
healthcare expenditures faced by older adults, particularly near the end
of life.

Design

Using the nationally representative Health and Retirement Study (HRS)
cohort, we conducted retrospective analyses of Medicare beneficiaries'
total out-of-pocket healthcare expenditures over the last 5 years of life.

Participants
We identified HRS decedents between 2002 and 2008; defined a 5 year
study period using each subject's date of death; and excluded those
without Medicare coverage at the beginning of this period (n = 3,209).

Main Measures

We examined total out-of-pocket healthcare expenditures in the last 5
years of life and expenditures as a percentage of baseline household
assets. We then stratified results by marital status and cause of death.
All measurements were adjusted for inflation to 2008 US dollars.

Results

Average out-of-pocket expenditures in the 5 years prior to death were
$38,688 for individuals and $51,030 for couples in which one spouse
dies. Spending was highly skewed, with the median and 90th percentile
equal to $22,885 and $89,106, respectively, for individuals, and $39,759
and $94,823, respectively, for couples. Overall, 25% of subjects'
expenditures exceeded baseline total household assets, and 43% of
subjects' spending surpassed their non-housing assets. Among those
survived by a spouse, 10% exceeded total baseline assets and 24%
exceeded non-housing assets. By cause of death, average spending ranged
from $31,069 for gastrointestinal disease and $66,155 for Alzheimer's
disease.

Conclusion
Despite Medicare coverage, elderly households face considerable
financial risk from out-of-pocket healthcare expenses at the end of
life. Disease-related differences in this risk complicate efforts to
anticipate or plan for health-related expenditures in the last 5 years
of life.

http://www.springerlink.com/content/427m88565153p76k/

And...

The New York Times
September 17, 2012
Grappling With Details of Medicare Proposals
By Roni Caryn Rabin

The (Medicare reform) proposals keep changing, and some are short on
details. No one is certain what health care costs will be in the coming
years.

Still, it's clear the proposed changes would shift costs from the
federal government to retirees. "All scenarios will require seniors to
pay more," said Robert Moffit, senior fellow at the Heritage Foundation,
a conservative research organization in Washington. To think otherwise,
he said, "is a fantasy."

http://well.blogs.nytimes.com/2012/09/17/grappling-with-details-of-medicare-proposals/?hpw


Comment: In spite of having Medicare coverage, out-of-pocket health
care expenditures can be devastating for seniors. Current proposals to
reduce government entitlement spending on Medicare would shift even more
costs to our seniors.

Premium support voucher proposals for Medicare would create a defined
contribution which would shift more costs to all Medicare beneficiaries,
when only the wealthier could afford the increase. That won't work.

Since many already can't pay their current out-of-pocket costs,
proposals have been advanced to index costs to income by charging higher
premiums, higher cost sharing and/or reducing benefits for the
wealthier. That process has already begun with Part B and Part D
premiums now based on income. That risks reducing support by the
politically connected affluent, which could clear the way for enactment
of destructive government policies, especially if the conservatives
gained control. The threat from the liberals is bad enough.

On the other hand, lower income individuals could be given support
beyond that of Medicare. Again, that is already happening through the
dual-eligible program for both Medicare and Medicaid. The risk is that
the dual-eligible program would be considered a welfare program for the
poor, and would be budgeted accordingly. That is already happening as
the federal and state governments are well along in the process of
herding these victims into underfunded, low quality, private Medicaid
managed care programs (see
http://www.pnhp.org/news/2012/september/herding-dual-eligibles-into-low-quality-plans).

Obviously Medicare needs a lot of improvement before we convert it into
a single payer national health program. We need to go in the opposite
direction from where the politicians currently are headed. Instead of
slashing it under the budget hawks' call for cutting back on
entitlements, we need to expand its coverage so that it doesn't leave
anyone with the devastating out-of-pocket expenses associated with
complex and prolonged medical care.

Even though more would be spent through the Medicare program (i.e.,
through the tax system), the efficiencies of single payer would not
increase our total health care costs, and, more importantly, would slow
future health care cost increases to sustainable levels. It's not that
we can't afford to expand Medicare; it's that we can't afford not to.

Fwd: qotd: IT savings are little more than hype

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-------- Original Message --------
Subject: qotd: IT savings are little more than hype
Date: Tue, 18 Sep 2012 10:31:31 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The Wall Street Journal
September 17, 2012
A Major Glitch for Digitized Health-Care Records
By Stephen Soumerai and Ross Koppel

In two years, hundreds of thousands of American physicians and thousands
of hospitals that fail to buy and install costly health-care information
technologies—such as digital records for prescriptions and patient
histories—will face penalties through reduced Medicare and Medicaid
payments. At the same time, the government expects to pay out tens of
billions of dollars in subsidies and incentives to providers who install
these technology programs.

The mandate, part of the 2009 stimulus legislation, was a major goal of
health-care information technology lobbyists and their allies in
Congress and the White House. The lobbyists promised that these
technologies would make medical administration more efficient and lower
medical costs by up to $100 billion annually. Many doctors and
health-care administrators are wary of such claims—a wariness based on
their own experience. An extensive new study indicates that the caution
is justified: The savings turn out to be chimerical.

Since 2009, almost a third of health providers, a group that ranges from
small private practices to huge hospitals—have installed at least some
"health IT" technology. It wasn't cheap. For a major hospital, a full
suite of technology products can cost $150 million to $200 million.
Implementation—linking and integrating systems, training, data entry and
the like—can raise the total bill to $1 billion.

But the software—sold by hundreds of health IT firms—is generally
clunky, frustrating, user-unfriendly and inefficient.

Now, a comprehensive evaluation of the scientific literature has
confirmed what many researchers suspected: The savings claimed by
government agencies and vendors of health IT are little more than hype.

To conduct the study, faculty at McMaster University in Hamilton,
Ontario, and its programs for assessment of technology in health—and
other research centers, including in the U.S.—sifted through almost
36,000 studies of health IT. The studies included information about
highly valued computerized alerts—when drugs are prescribed, for
instance—to prevent drug interactions and dosage errors. From among
those studies the researchers identified 31 that specifically examined
the outcomes in light of the technology's cost-savings claims.

With a few isolated exceptions, the preponderance of evidence shows that
the systems had not improved health or saved money.

It is already common knowledge in the health-care industry that a
central component of the proposed health IT system—the ability to share
patients' health records among doctors, hospitals and labs—has largely
failed. The industry could not agree on data standards.

Instead of demanding unified standards, the government has largely left
it to the vendors, who declined to cooperate, thereby ensuring years of
noncommunication and noncoordination. This likely means billions of
dollars for unnecessarily repeated tests and procedures, double-dosing
patients and avoidable suffering.

http://online.wsj.com/article/SB10000872396390443847404577627041964831020.html?mod=googlenews_wsj


Comment: This article reinforces two points that we have made
repeatedly about the application of information technology to health
care: 1) The government needs to lead the process, and 2) We need to
look elsewhere for means of controlling spending in health care.

Entrepreneurial approaches to health information technology are designed
to make money - a lot of it. Competitors design their products to be
incompatible with each other in hopes that one can dominate the market
and crowd out the competitors. Public service approaches, such as the
interoperable VistA system of the VA, are designed to help health care
professionals give better and more coordinated care to their patients,
but are not designed for profit. We already own the VistA system, and it
could easily be adapted to become the national standard, at a small
fraction of the costs of the private fragmented systems that are being
forced on providers by the 2009 stimulus legislation.

Particularly annoying is the repeated claim that information technology
and electronic records will save money. Not true. Yet the pursuit of
these savings and the alleged savings from the various experiments in
payment innovations found in the Affordable Care Act - which all
experience to date has suggested have been and will be phantom savings -
have distracted us from proceeding with reform that everyone knows would
recover tremendous waste and ensure health care affordability for
everyone forever - a single payer national health program, aka an
improved Medicare for all.

Fwd: qotd: Lower wage employees have greater out-of-pocket expenses

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-------- Original Message --------
Subject: qotd: Lower wage employees have greater out-of-pocket expenses
Date: Mon, 17 Sep 2012 11:32:15 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Health Affairs
September 2012 (online)
Health Benefits In 2012: Moderate Premium Increases For
Employer-Sponsored Plans; Young Adults Gained Coverage Under ACA
By Gary Claxton, Matthew Rae, Nirmita Panchal, Anthony Damico, Heidi
Whitmore, Kevin Kenward and Awo Osei-Anto

Health care premiums rose moderately for single and family
employer-sponsored coverage this year, the 2012 annual Kaiser Family
Foundation/Health Research and Educational Trust (HRET) Survey of
Employer Health Benefits found.

In 2012 the average annual premium cost was $5,615 for single health
coverage and $15,745 for family coverage. The average premiums were
about 3 percent higher for single coverage and 4 percent higher for
family coverage than in 2011. During the same period, general inflation
was 2.3 percent, and wages rose by 1.7 percent.

There continue to be important differences between the health benefits
offered by small and large firms. Workers at small firms (those with
3–199 workers) face higher cost sharing, including higher copayments for
office visits and higher general annual deductibles for single coverage.
These workers are also responsible for a larger premium contribution for
family coverage than are workers at large firms (those with 200 or more
workers).

Compared to workers in large firms, workers in small firms have a
slightly lower average percentage contribution for single coverage but a
far higher average percentage contribution for family coverage.

Workers in firms with a large share of lower-wage workers face higher
contributions for family coverage than workers in firms with a small
share of lower-wage workers.

The enrollment distribution varies by employer size, with preferred
provider organizations being relatively more popular among large firms,
and point-of-service plans and high-deductible plans with a savings
option being relatively more popular among small firms.

Looking across all plan types, 49 percent of workers in small firms and
26 percent of workers in large firms are in a plan with a general annual
deductible of at least $1,000.

The largest firms are much more likely than the smallest firms to offer
health benefits: Virtually all firms with more than 5,000 workers offer
benefits to at least some of their employees, whereas only half of firms
with 3–9 workers do so. Firms with a smaller percentage of lower-income
workers are more likely to offer coverage than firms with a larger
percentage of those workers.

An employer-sponsored health plan can be grandfathered if it provided
coverage to a worker when the act became law and if the plan does not
make major changes that reduce benefits or increase employee costs.

From the Conclusion

There are important differences between the health plans being offered
at small firms and those offered at large firms. Although the average
family premium is lower at small firms than at large firms, workers at
small firms are often responsible for paying a larger share of the
premium than workers in large firms. Also, workers at small firms
typically face higher cost sharing and out-of-pocket maximums—which
means that in addition to higher premium contributions, they are also
left with a higher financial burden when using services.

http://content.healthaffairs.org/content/early/2012/09/07/hlthaff.2012.0708.abstract


Comment: The Affordable Care Act was designed to perpetuate as much as
possible enrollment in employer-sponsored plans. This study demonstrates
that lower-income workers face greater out-of-pocket costs through a
higher share of premiums and through greater deductibles and other cost
sharing, especially if they are employed by a small firm. Private
employer-sponsored plans do not serve well the needs of workers with
lower incomes.

An improved Medicare for everyone would resolve these differences.

Fwd: qotd: AHIP asks for further reduction of minimum benefits

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-------- Original Message --------
Subject: qotd: AHIP asks for further reduction of minimum benefits
Date: Fri, 14 Sep 2012 11:56:09 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



House Ways and Means Committee
- Subcommittee on Health
September 12, 2012
Hearing: Implementation of Health Insurance Exchanges and Related Provisions
Testimony by Daniel T. Durham, Executive Vice President, Policy and
Regulatory Affairs, America's Health Insurance Plans (AHIP)

Minimum Coverage Requirements
Beginning in 2014, the ACA will require health plans to provide coverage
for an essential health benefits (EHB) package covering a broad range of
mandated benefits, some of which are not typically included in
individual and small group policies today. The ACA further requires that
coverage sold through the exchanges must be at one of four actuarial
value levels: 60% (bronze); 70% (silver); 80% (gold); and 90%
(platinum). As a result of these provisions, millions of people may be
forced to purchase health insurance that is more comprehensive – and
more expensive – than they currently have.
We believe that the EHB package must be affordable for families and
small businesses and that affordability should be the cornerstone of
consideration in defining the EHB package. The nonpartisan Institute of
Medicine – in its recommendations to HHS – underscored the need to
ensure affordability in defining the EHB standard and cautioned that "if
cost is not taken into account, the EHB package becomes increasingly
expensive and, individuals and small businesses will find it
increasingly unaffordable. If this occurs, the principal reason for the
ACA – enabling people to purchase health insurance, and covering more of
the population, will not be met."

The imposition of broader benefit packages than what consumers and small
businesses are purchasing today will force consumers to "buy up"
coverage that they may not want or need. In recent months, many state
departments of insurance and state exchange boards have requested formal
actuarial and economic forecasts of the impact of the new insurance
reforms on their state. These independent studies have found that
several provisions, including the EHB and actuarial value requirements,
will result in higher premiums.

Recognizing that these ACA provisions will have a major impact on the
cost of coverage, we believe that the important goals of the EHB package
can be met if HHS and the states place a high priority on offering
affordable coverage options to consumers. In addition, consideration
should be given to lowering the minimum actuarial value for coverage
sold in the exchanges to ensure the availability of affordable coverage
options and to allow smoother transitions to the new benefits packages.

http://waysandmeans.house.gov/uploadedfiles/durham_testimony_final_hl912.pdf


Comment: As the Affordable Care Act was being drafted, many of us in
the policy community were very disappointed with the decision to include
in the state insurance exchanges low actuarial value plans, as low as 60
percent (the plan pays 60 percent of covered costs and the patient pays
the other 40 percent plus 100 percent of all services and products not
covered). Even with the subsidies, the financial barriers to care will
be too great for many patients. Now AHIP - the all-powerful health
insurance lobby organization - is asking Congress to lower even further
the minimum required benefits and the actuarial values of the plans.

The reason is obvious. They explicitly state that "affordability should
be the cornerstone of consideration," but they are not referring to
affordability of health care, rather they are referring to the
affordability of their own private health insurance plans. They want
their premiums to be low enough for middle-income Americans to be able
to purchase their plans. They remain silent on the fact that reducing
minimum benefits and reducing actuarial values of the plans will shift
large portions of the costs to those who need care. (Again, the cost
sharing subsidies are not adequate for covered benefits, and the patient
is responsible for 100 percent of the costs of excluded benefits which
would increase with this proposal.)

The private insurance industry got virtually everything that they asked
for when the bill was written. Now they are coming along with a pitch
that appeals to members of both sides of the aisle - we should make
insurance affordable by allowing individuals to "buy only the insurance
you need." For people who are healthy on December 31, 2013, can they
really feel secure with a low actuarial value, minimal benefit plan that
begins on January 1, 2014, when they have absolutely no idea what health
problems they may face throughout 2014 and into the future? Of course
not, though the high premiums of plans with adequate coverage may serve
as enough of a deterrent that they would want to or may even have to
take the risk that they will remain healthy throughout the year - a safe
bet for the insurers but a big gamble for the patient. With time, it
becomes even more treacherous for individuals to bet that they will
remain healthy forever.

It is particularly appalling when they say that the principle reason for
the Affordable Care act was to enable people to purchase health
insurance. Some of us thought that the principle reason should have been
to remove financial barriers to essential health care for everyone.

Really, haven't we had enough of Congress and the Obama administration
supporting the private insurance industry? How about demanding support
for America's patients instead? Throw out the insurers and enact an
improved Medicare for all. We just might have to throw out the
politicians to get there.

Fwd: qotd: How many "bundles" do we need in health care?

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-------- Original Message --------
Subject: qotd: How many "bundles" do we need in health care?
Date: Thu, 13 Sep 2012 12:52:44 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The New York Times
September 5, 2012
The Arkansas Innovation
By Ezekiel J. Emanuel

(Arkansas) is moving toward ending "fee-for-service" payments, in which
each procedure a patient undergoes for a single medical condition is
billed separately. Instead, the costs of all the hospitalizations,
office visits, tests and treatments will be rolled into one
"episode-based" or "bundled" payment.

This is how it will work: Medicaid and private insurers will identify
the doctor or hospital who is primarily responsible for the patient's
care — the "quarterback," as Andrew Allison, the state's Medicaid
director, put it. The quarterback will be reimbursed for the total cost
of an episode of care — a hip or knee replacement; treatment for an
upper respiratory infection or congestive heart failure; or perinatal
care (the baby's delivery, as well as some care before and after).

The quarterbacks will also be responsible for the cost and quality of
the services provided to their patients, and will receive quarterly
reports on those metrics from the state (for Medicaid patients) or
private insurers. If they have delivered good care based on agreed-upon
standards, and if their billings come in lower than the agreed-upon
level, they can keep a portion of the difference. If their billings come
in above an acceptable level — usually because they have ordered too
many unnecessary tests, office visits or inappropriate treatments — they
will have to pay money back to the state or insurer.

Still, it will be a challenge. Bundled payments for hip and knee
replacements, which have similar costs for all patients, have been
previously tested. But for other conditions, not every patient's needs
are the same. Some pregnant women are healthy while others have
diabetes. The state and insurers will have to provide "risk adjustment"
payments — in which providers are reimbursed more for treating sicker
patients — and some patients with especially complicated illnesses may
need to be excluded from the bundling system.

Even some low-cost conditions, like upper respiratory infections, are
treated at widely varying costs, mainly because physicians prescribe
different tests, numbers of office visits and medications.

But this is exactly what the new program will work to change, by
providing standards for appropriate care linked to the costs of
treatment and the quality of the doctor's performance compared with that
of other doctors.

http://opinionator.blogs.nytimes.com/2012/09/05/the-arkansas-innovation/

And...

The New York Times
September 12, 2012
Letters
Is 'Bundled' Medical Care a Good Idea?

Despite Ezekiel J. Emanuel's implication, Arkansas isn't the only state
to plan to substitute "bundled" medical payments for fee-for-service.
Vermont, Massachusetts and Oregon have similar intentions. But without
basic changes in the organization and delivery of care, it is doubtful
that "bundled" payments can be successfully distributed among all the
providers of care.

A stifling supervisory bureaucracy interfering with medical care and
endless disputes among providers and between providers and payers are
almost certain to develop. Physicians are unlikely to accept such an
arrangement, and nothing can succeed without their agreement.

Eventually, they will accept a different health system in which a single
public payer guarantees comprehensive care for all, and pays accountable
multispecialty physician groups not by reimbursement for specific
services but through prepaid budgets on a per capita basis.

Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012

The writer, professor emeritus of medicine and social medicine at
Harvard Medical School, is a former editor in chief of The New England
Journal of Medicine.

http://www.nytimes.com/2012/09/13/opinion/is-bundled-medical-care-a-good-idea.html?ref=opinion


Comment: What a simple idea. Instead of paying a fee for each itemized
service - a payment model that supposedly encourages the delivery of
excess services - a lump (bundled) fee would be paid for each episode of
care. That episode might be as simple as a common cold, or as complex as
extensive, prolonged care of a major trauma victim. But because of the
single fee no excessive services would be provided, so the theory goes.

This does bring up a few questions. How many distinct episodes of care
are there? How is each one defined? How is an appropriate bundled fee
determined for each of these episodes? Which individuals and entities
would share in each fee? Would the various providers be bundled together
just as the fee for each episode of care is bundled? How many variations
of bundled providers would you have? How many bundled groups would each
individual provider belong to? How complex would the administrative task
be to distribute the bundled fee within the bundled group of providers?
Could an accountable care organization (ACO) serve as a single bundled
group of providers that could care for each and every episode of care?
Would each ACO include providers of tertiary services such as advanced
cardiac or oncological surgeries? Would each ACO want to contract for
bundled payments for common colds and other brief, single contact
services? Would one ACO be the only bundled entity in a community, or
could the community support multiple competing ACOs? Could the community
support providers outside of the ACO and how would they be bundled?
Would each payer - Medicare, Medicaid, and a multitude of private
insurers - contract separately with each bundled group of providers for
each separate episode of care? If instead the bundled payments were
standardized, then why would you want the inefficiency of multiple
payers when a single payer would simplify at least that part of the
process? But then, why make it this complicated in the first place?

Arnold Relman is right. The bundling concept adds much more
administrative complexity to a health care system that already has the
world's worst administrative excesses. Instead of playing more games
with a dysfunctional, fragmented financing system, we should convert to
a single payer national health program. Under such a system costs can be
budgeted - whether it's through global budgets for hospitals, capitation
payments for integrated multispecialty physician groups,
physician-hospital organizations, community health centers, or through
fee-for-service when appropriate such as for solo, rural practices.

Our own public administrators of an improved Medicare for all would be
free to cooperate with the health care professionals and institutions to
establish the best payment arrangements to see that everyone receives
the highest quality of care under a system that would provide the nation
with greatest health care value attainable. One giant bundle for all of us.

Fwd: qotd: New Census Bureau numbers on the uninsured

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-------- Original Message --------
Subject: qotd: New Census Bureau numbers on the uninsured
Date: Wed, 12 Sep 2012 12:09:03 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



United States Census Bureau
September 2012
Income, Poverty, and Health Insurance Coverage in the United States: 2011
By Carmen DeNavas-Walt, Bernadette D. Proctor, Jessica C. Smith

Health Insurance Coverage - 2011

48.6 million or 15.7% - people without health insurance
7.0 million - children under 18 uninsured

193.7 million or 63.9% - people covered by private health insurance
170.1 million or 55.1% - people covered by employment-based insurance

99.5 million or 32.2% - people covered by government health insurance
50.8 million or 16.5% - people covered by Medicaid
46.9 million or 15.2% - people covered by Medicare

Poverty

9.5 million or 11.8% - families living in poverty
31.2% - families with a female householder living in poverty

Income Inequality

Income inequality also increased between 2010 and 2011 when measured by
shares of aggregate household income received by quintiles. The
aggregate share of income declined for the middle and fourth quintiles.
The share of aggregate income increased 1.6 percent for the highest
quintile and within the highest quintile, the share of aggregate income
for the top 5 percent increased 4.9 percent. The changes in the shares
of aggregate income for the lowest two quintiles were not statistically
significant.

http://www.census.gov/prod/2012pubs/p60-243.pdf


Comment: The numbers of uninsured decreased from 50.0 million in 2010
to 48.6 million in 2011. That might be good news for the net 1.4 million
newly insured, but it is terrible news for the 48.6 million who remain
without health insurance.

These numbers, of course, are transitional since new private coverage
through the state insurance exchanges and the greater expansion of
coverage under Medicaid will not take place until 2014. Even then, the
new coverage will be either with private underinsurance plans (low
actuarial value and inadequate subsidies) or with the chronically
underfunded Medicaid program, with even greater impairment of health
care access likely. Worse, 30 million will still have no coverage at all
(CBO).

Perhaps even more shocking is that 31.2% of families with a female
householder live in poverty - right here in the United States!

And income inequality? The aggregate share of household income has
decreased for the middle and fourth quintiles. The middle class is being
wiped out!

Of course we knew all this. So why aren't we doing something about it?
Howling in the wind doesn't seem to be getting us very far.

Fwd: qotd: Jonathan Gruber gives qualified endorsement to premium support

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-------- Original Message --------
Subject: qotd: Jonathan Gruber gives qualified endorsement to premium
support
Date: Tue, 11 Sep 2012 12:30:36 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



NationalJournal
September 10, 2012
Mixed Message From Obama Advisers on Medicare
By Meghan McCarthy

President Obama has seized on Republican proposals to overhaul Medicare
as a top campaign issue, saying that the GOP plan to add a private
insurance option would end seniors' guarantee of government health care.
But behind the election-season politics, influential experts who have
advised Obama on health care are open to a future for Medicare that
includes competition among private insurance plans.

In e-mail exchanges with the staff of the White House-appointed fiscal
commission that were obtained by National Journal, David Cutler and
Jonathan Gruber, who have both advised Obama, gave qualified support to
a Medicare voucher plan offered by Ryan and former Clinton budget
director Alice Rivlin in talks to reduce the deficit.

Cutler and Gruber are both hot shots of the health economics world.
Cutler is a professor at Harvard, Gruber at MIT. Both advised Obama on
health care in the 2008 campaign, and both had major roles in helping
develop Democrats' 2010 health care law. When they offer counsel, the
White House is listening.

Cutler now says he was only proposing an idea for Medicare if insurance
exchanges are "shown to work well for the non-elderly population," by
getting people into good plans and lowering costs.

Gruber also said he approved of the Ryan-Rivlin plan in 2010 e-mails to
fiscal-commission staff, as long as the insurance market reforms of the
Democrats' health care law are kept in place.

Gruber now says that economists don't know enough yet to move the
majority of Medicare enrollees into private-insurance plans. As part of
the effort to expand coverage to the uninsured, President Obama's health
care law would establish insurance exchanges for people younger than 65
to buy private health care. Gruber said that this is a better way of
testing out new approaches, adding that it would be "stupid" to
experiment first on the older and sicker Medicare population.

"We are getting better, but we are not quite there yet," Gruber said in
an interview. "But premium support is ultimately where we need to be."

There are three key problems that still must be worked out, Gruber said.
First, policymakers have to figure out how to keep insurance companies
from cherry-picking healthy people and essentially forcing the sickest
patients on to traditional Medicare, which would drain the program of
money. Second, policymakers must find a way to make sure insurance
companies design benefits so they are easy-to-understand for
beneficiaries, and don't trick seniors into buying more expensive plans
that aren't suitable for them. Third, they have to figure out just how
quickly government checks for seniors to buy coverage could grow.

Still, Gruber said he could see Medicare becoming a
premium-support-style plan within a five-year timetable, after the
Affordable Care Act's health insurance exchanges start enrolling an
estimated 30 million people into insurance plans in 2014.

http://www.nationaljournal.com/healthcare/mixed-obama-message-on-medicare--20120910


Comment: So Obama advisor, MIT Professor Jonathan Gruber, says,
"premium support is ultimately where we need to be." In other words, we
should replace the traditional Medicare program with vouchers that would
be used to purchase private plans. Let's look at the three problems
which he says must first be addressed.

He says that policymakers must figure out how to keep insurance
companies from insuring the healthy and sending the sick to the
traditional government program. Actually that is only one behavior that
private insurers engage in to enhance their success as private
businesses. They are always going to do everything that they can to
maximize revenues and minimize spending, as any reasonable business
would do. The drive for profits for passive investors is not in itself
inherently evil, except when it is applied to our health care system.
Manipulating sick patients for the prime purpose of generating profits
is immoral. Investor-owned insurance companies need to be removed from
our health care system.

Gruber also says that we have to figure out "just how quickly government
checks for seniors to buy coverage could grow" under premium support.
This is a problem inherent with government vouchers that cover only a
part of the costs. Instead of directing efforts to control total health
care costs, government stewards tend to control just the government
spending, passively shifting the costs of health care inflation onto the
patients. The financial burden on individuals is already too great, and
this would make it even worse.

More subtle, but perhaps even more important, Gruber says that the
design of insurance products should be easy to understand so that
seniors are not tricked into buying "more expensive plans that aren't
suitable for them." This statement represents one of the great fallacies
of private health insurance markets, that somehow there is an insurance
product that is just right for you wherein you will not have to pay for
benefits that you'll never use.

There are two problems with this. The obvious one is that future health
care needs cannot be predicted. Major acute disorders or the future
onset of chronic disease are unknowns. Plans need to be comprehensive to
insure against these potential losses, even if you hope that you won't
ever need to use the coverage that is providing you security, though you
probably will someday.

The other problem is that an ideal insurance system pools all risks and
funds the risk pool equitably. It is less expensive because of the much
greater administrative efficiency of a universal risk pool. It also
eliminates financial barriers to appropriate health care. Maybe males
don't want maternity benefits. Maybe females don't want coverage for
prostate cancer. Maybe young adults don't want coverage for cataracts.
Maybe the elderly don't want coverage for organ transplants. Maybe
children don't want coverage for vaccines, even of their parents want
them to have it.

The point is that when you start designing plans for different
populations - "only the coverage you need" - you break up the universal
risk pool and introduce many of the inequities and inefficiencies that
characterize our current dysfunctional financing system. The
administrative inefficiencies of buying "only what you need" increases
costs over the entire system and redistributes those costs inequitably.

There is no substitute for establishing a single universal risk pool,
funding the pool equitably based on ability to pay, and using the pool
to fund health care based on medical need. And that, in a nutshell, is
what a single payer national health program does.

Fwd: qotd: Herding dual eligibles into low quality plans

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-------- Original Message --------
Subject: qotd: Herding dual eligibles into low quality plans
Date: Mon, 10 Sep 2012 10:51:44 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



NationalJournal
September 8, 2012
Obama More Flexible on Medicare Than Rhetoric Suggests
By Margot Sanger-Katz

In his convention speech in Charlotte, President Obama vowed to block
the Republican Medicare reform plan because "no American should ever
have to spend their golden years at the mercy of insurance companies."

But back in Washington, his Health and Human Services Department is
launching a pilot program that would shift up to 2 million of the
poorest and most-vulnerable seniors out of the federal Medicare program
and into private health insurance plans overseen by the states.

The administration has accepted applications from 18 states to
participate in the program, which would give states money to purchase
managed-care plans for people who are either disabled or poor enough to
qualify for both Medicare and Medicaid.

Obama's 2010 health reform law allows experimentation in delivering
health care at lower cost through demonstration projects. Many states
would like permission to shift their entire population of so-called
dual-eligible beneficiaries into the new plans. HHS has indicated that
it will enroll about 2 million beneficiaries, out of about 7 million who
qualify for full benefits from both government health programs.

California is already counting on more than $500 million in budget
savings from its own program this year.

Potential cost savings are a big incentive for states. Patients who
qualify for both federal health programs are a costly population and
include many who need nursing-home care or other expensive services.
About 40 percent of Medicaid's costs go toward patients who are also
eligible for Medicare. Advocates of the pilot program also say it could
lead to better coordination of care for patients who often struggle to
navigate the two different programs.

To get approval, states must guarantee that both Medicare and Medicaid
would save money. They must also agree to accept a fixed payment to
cover all care for each patient. While rules say the private plans must
cover all standard Medicare benefits, they also waive many Medicare
rules and leave insurer selection to the states.

Still, there is powerful opposition to the pilots among doctors,
hospitals, nursing homes, patient groups, and key lawmakers, including
Sen. Jay Rockefeller, D-W.Va., who wrote the provision in the health law
that created the office in charge of the pilot program.

"I urge you to take immediate steps to halt this initiative as currently
structured and to take the time necessary to develop a well-designed and
thoroughly evaluated care coordination model for dual eligibles that
meets the standards outlined in the law," Rockefeller wrote in a letter
to HHS.

The Medicare Payment Advisory Commission, a group of experts who advise
Congress on Medicare policy, has also weighed in with an 11-page letter
to HHS, warning that the speed and scope of the program raised questions
about whether patients would receive the care they need.

The managed-care industry is gearing up for the expansion. Three large
insurers have purchased companies that insure Medicaid beneficiaries.
For years, states have been moving Medicaid patients into managed-care
plans, with mixed results. But this pilot represents a new market: It is
the first large program that would pool Medicare and Medicaid benefits
in a single, state-administered plan.

"The problem with this population is that all the strategies that the
health plans have been used to using historically are going to
backfire," said Chris Duff, executive director of the Disability
Practice Institute, an umbrella organization for small programs that
provide coordinated care to dual-eligibles. He warned that slashing
provider rates, limiting visits, and using other conventional
cost-control measures could lead to expensive hospitalizations for frail
dual-eligible patients.

But the states are enthusiastic about the pilot programs and believe
they will be able to provide better care at lower cost.

http://www.nationaljournal.com/healthcare/obama-more-flexible-on-medicare-than-rhetoric-suggests-20120908

And...

National Senior Citizens Law Center
May 2012
Assessing the Quality of California Dual Eligible Demonstration Health Plans

California has proposed a three-year demonstration project to enroll
individuals dually eligible for Medicare and Medi-Cal (dual eligibles)
into managed care. An analysis of both Medicare and Medi-Cal quality
ratings for the eight health plans selected by the California Department
of Health Care Services (DHCS) for the first phase of the project raises
cause for concern.

Approved health plans in participating counties would be responsible for
providing enrolled dual eligibles with all Medicare and Medi-Cal
benefits and services, including all needed medical care, long-term
services and supports, and behavioral health care, beginning in January
2013.

According to a DHCS report assessing the quality of health plans in the
Medi-Cal Managed Care (MCMC) Program, seven of the eight plans received
a global health plan rating of 1 out of 5 stars.

Looking at Medicare evaluations, two of the plans selected have received
a notice of non-compliance from the Medicare program. One of those has
been marked as a low-performing plan for three consecutive years and is
at risk for termination of its Medicare contract. Another plan was
recently sanctioned by Medicare as a result of beneficiary access
problems. Medicare continues to restrict enrollment of dual eligibles
into that plan. All eight proposed demonstration plans were found to be
low-performing on a least one composite Medicare quality measure.

http://dualsdemoadvocacy.org/wp-content/uploads/2012/02/Plan-Ratings-Report-May-2012.pdf


Comment: President Obama is currently campaigning against the
Republican proposal to privatize Medicare through a voucher program that
would move Medicare patients into private plans. Yet, based on
provisions in the Affordable Care Act, the administration is moving
Medicare patients whose coverage also is supplemented with Medicaid
(dual eligibles) into private managed care plans.

California has been a leader in health care financing innovations. Look
at the head start that they have on this program. Seven of the eight
plans they have selected to initiate the program have a global health
plan rating of only 1 star out of 5!

These plans greatly limit patients' choices of their providers and will
undoubtedly impair access by eliminating choices of most other health
care providers within the state. Having to transfer buses three times
when you are very ill can make you question whether you have the access
that the state has promised to you. And quality ratings? Forget it.

These low-income patients, under the law, have more coverage than do
traditional Medicare patients... more, but worse. We can do far better.
We can improve Medicare so that it includes the additional benefits
provided by Medicaid. Then you wouldn't need a special "dual eligible"
program.

If the improved Medicare program included everyone, then you wouldn't
have to herd patients into inferior managed care programs just to save
money (precisely what this new dual eligible program is designed to do).
As a beneficent public monopsony, the improved Medicare program would
save us all money while being in a position to demand quality throughout
the health care delivery system. We couldn't ask for more - for all of us!

Fwd: qotd: Institute of Medicine's "Best Care at Lower Cost"

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-------- Original Message --------
Subject: qotd: Institute of Medicine's "Best Care at Lower Cost"
Date: Fri, 7 Sep 2012 13:43:08 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The National Academies
Institute of Medicine
September 6, 2012
Transformation of Health System Needed to Improve Care and Reduce Costs

America's health care system has become too complex and costly to
continue business as usual, says a new report from the Institute of
Medicine (Best Care at Lower Cost: The Path to Continuously Learning
Health Care in America).

The costs of the system's current inefficiency underscore the urgent
need for a systemwide transformation. The committee calculated that
about 30 percent of health spending in 2009 -- roughly $750 billion --
was wasted on unnecessary services, excessive administrative costs,
fraud, and other problems. Moreover, inefficiencies cause needless
suffering. By one estimate, roughly 75,000 deaths might have been
averted in 2005 if every state had delivered care at the quality level
of the best performing state.

"The threats to Americans' health and economic security are clear and
compelling, and it's time to get all hands on deck," said committee
chair Mark D. Smith, president and CEO, California HealthCare
Foundation, Oakland. "Our health care system lags in its ability to
adapt, affordably meet patients' needs, and consistently achieve better
outcomes. But we have the know-how and technology to make substantial
improvement on costs and quality. Our report offers the vision and road
map to create a learning health care system that will provide higher
quality and greater value."

http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=13444

And...

Institute of Medicine
Best Care at Lower Cost: The Path to Continuously Learning Health Care
in America

Recommendations

Recommendation 1: The Digital Infrastructure
Improve the capacity to capture clinical, care delivery process, and
financial data for better care, system improvement, and the generation
of new knowledge.
Recommendation 2: The Data Utility
Streamline and revise research regulations to improve care, promote the
capture of clinical data, and generate knowledge.

Recommendation 3: Clinical Decision Support
Accelerate integration of the best clinical knowledge into care decisions.

Recommendation 4: Patient-Centered Care
Involve patients and families in decisions regarding health and health
care, tailored to fit their preferences.

Recommendation 5: Community Links
Promote community-clinical partnerships and services aimed at managing
and improving health at the community level.
Recommendation 6: Care Continuity
Improve coordination and communication within and across organizations.

Recommendation 7: Optimized Operations
Continuously improve health care operations to reduce waste, streamline
care delivery, and focus on activities that improve patient health.

Recommendation 8: Financial Incentives
Structure payment to reward continuous learning and improvement in the
provision of best care at lower cost.
Recommendation 9: Performance Transparency
Increase transparency on health care system performance.

Recommendation 10: Broad Leadership
Expand commitment to the goals of a continuously learning health care
system.

http://www.iom.edu/~/media/Files/Report%20Files/2012/Best-Care/Best%20Care%20at%20Lower%20Cost_Recs.pdf

Best Care at Lower Cost: The Path to Continuously Learning Health Care
in America (Full report - 360 pages):
http://books.nap.edu/openbook.php?record_id=13444


Comment: On release yesterday of the Institute of Medicine's new
report, "Best Care at Lower Cost: The Path to Continuously Learning
Health Care in America," headlines throughout the nation proclaimed that
the U.S. health system wastes about $765 billion a year. The articles
reported that the Institute of Medicine has recommended an overhaul to
recover this waste. So what is it that they recommend?

When you read their ten recommendations listed above, it is difficult to
come to any other conclusion than that the efforts to produce this 360
page report have resulted in not much more than, well... platitudes.

The report does list strategies for each of the ten recommendations,
but, perhaps oversimplified, much of it depends on information
technology and really offers little hope that most of this waste could
be recovered.

Instead of stumbling along towards trying to achieve a "learning health
care system," we should first adopt a single payer national health
program. We would then have an efficient infrastructure to which the
recommended strategies that are potentially beneficial could be applied.

Fwd: qotd: McCanne on free markets in health care

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-------- Original Message --------
Subject: qotd: McCanne on free markets in health care
Date: Thu, 6 Sep 2012 08:02:30 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The Orange County Register
August 19, 2012
First, do no harm; second, nationalize
By Teryl Zarnow

(Dr. Don) McCanne, now 74, volunteers as a policy fellow for Physicians
for a National Health Program, where he was a past president. His group
favors a single-payer national health program often called "Improved
Medicare for All."

It's not socialized medicine, just socialized insurance.

I can't decide if the doctor is out of touch with reality or a prophet
in blue jeans.

Link for full article:
http://www.ocregister.com/news/-183873-ocprint--.html

And...

The Orange County Register
August 25, 2012
Health care cure is an Rx for economic ruin

NEWPORT COAST, Anita Boyd:

Columnist Teryl Zarnow failed to do her homework. "First, do no harm;
second, nationalize" [Aug. 19] would be better titled, "No choice for
patients." What was presented as a "news" article was a one-sided
promotional piece for socialized medicine.

Perusing the online mission statement of "Physicians for a National
Health Care Program," one notes that "the program should be financed by
truly progressive taxation," and "views this campaign as part of the
campaign for social justice in the United States." Among its allied
groups are All Unions Committee for Single Payer Healthcare, Progressive
Democrats of America, and Healthcare-NOW!

The leadership, membership and network are particularly illustrative of
those wishing to "change" America, including Kim Gandy and Terry
O'Neill, past and present presidents of NOW, respectively; Medea
Benjamin of Code Pink San Francisco. The California Nurses Association
participates to "provide leadership in winning organized labor support
for HR676," which is the single-payer bill sponsored by John Conyers,
D-Mich., in the House of Representatives.

The smiling Dr. Don McCanne and his cadre of liberal progressives
speciously suggest that the "cure" for health care in America is another
entitlement to be paid for through the income tax system, as if this
country is not already $16 trillion in debt (not counting unfunded
liabilities.) The state of our entitlement system is completely ignored:
Social Security is operating in the red with more funds flowing out than
in for the first time in our nation's history, propped up by a "trust
fund" consisting of IOU's from the Treasury. Medicare will follow that
scenario sooner, rather than later, now that Obamacare has siphoned $716
billion in funding from Medicare over the next 10 years. All of this
while Dr. McCanne proposes to place yet another burden on the barely 50
percent of Americans who pay taxes, mostly to be borne on the backs of
the middle class, for that is where one finds the real wealth of this
country. McCanne's "cure" for health care is a prescription for the
financial collapse of this country.

Using Nobel Laureate Milton Friedman's logic, a medical system that
provides the best quality to the most must necessarily embrace
free-market principles, but the free market is absent in our health care
industry today. In 1945 Congress passed the McCarran-Ferguson Act, which
exempted the business of medical insurance from federal antitrust laws.

Thus insurance companies may freely conspire to price-fix without legal
repercussion, and consumers cannot readily compare prices for products
and services. Coupled with expensive and unnecessary tests defensively
prescribed to ward off meritless malpractice suits, our system is
certainly sick, but it is not incurable. Just as the computer evolved
from a slow, clunky but pricey desktop to a sleek, fast laptop at less
than one-fourth the price of the original 30 years ago, competition and
innovation can bring down the cost of health care, improve quality and
enhance affordability. A free-market prescription begins with the
embrace of free-market principles: repealing McCarran-Ferguson, posting
prices for services and products, competition across state lines, tort
reform and empowering the consumer.

The inevitable result of McCanne's alternative is all too evident in the
United Kingdom's single-payer system, where months-long waits for simple
surgeries are commonplace, and breast cancer patients were denied the
use of life-saving Tamoxifen until public outrage became so loud that
the government caved. How many lives were lost before this concession?
There was no choice for patients under this plan. There will be none
under Dr. McCanne's.

http://letters.ocregister.com/2012/08/25/health-care-cure-is-an-rx-for-economic-ruin/

And...

The Orange County Register
September 5, 2012
How the U.S. should fix health care

SAN JUAN CAPISTRANO, Don McCanne, M.D., Senior Health Policy Fellow,
Physicians for a National Health Program:

Letter-writer Anita Boyd ["Health care cure is an Rx for economic ruin,"
Aug, 23], in responding to Teryl Zarnow's column on me and my advocacy
for single-payer reform ["First, do no harm; second, nationalize," Aug.
19], stated, "Using Nobel Laureate Milton Friedman's logic, a medical
system that provides the best quality to the most must necessarily
embrace free-market principles, but the free market is absent in our
health-care industry today."

She then proposes a "free-market prescription." In doing so, she ignores
Nobel Laureate Kenneth Arrow's seminal work of a half century ago
demonstrating that health care fails competitive market preconditions,
and "when the market fails to achieve an optimal state, society will, to
some extent at least, recognize the gap and nonmarket social
institutions will arise attempting to bridge it."

In 2004, I was on a panel debate with Milton Friedman discussing
prescription drugs. In that debate he said, regarding the government's
defense of patents, "My initial reaction was to say, of course we want
to let the market completely work, and instead of having the government
defend the patent, let the patent owner defend it. But the more you look
at it, the more you see that's inconsistent." He also acknowledged the
importance of government in drug research. Even in Friedman's view, pure
free markets are an illusion.

Further, the oracle of free markets, Noble Laureate Friedrich A. Hayek,
in "The Road to Serfdom," wrote, "There is no reason why, in a society
which has reached the general level of wealth ours has, (the certainty
of a given minimum of sustenance) should not be guaranteed to all
without endangering general freedom; that is: some minimum of food,
shelter and clothing, sufficient to preserve health. 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."

Every other wealthy nation provides comprehensive health care to
virtually everyone, and they do it at a per person cost that averages
close to half of what we spend. The secret is that they all use some
form of social insurance, acknowledging the fact that health care
markets inevitably fail for far too many with significant health care needs.

The Affordable Care Act of President Barack Obama supposedly relies on
market principles by expanding competition of private health plans.
Under the act, 30 million people will remain uninsured, inadequate
health plans with low actuarial values will become the new standard and
costs will continue to increase out of control. This is the most
expensive of all possible models of health care reform, and yet falls
miserably short of achieving a high-performance system. It is a mistake
to pretend that markets will work since free markets do not and cannot
possibly ever exist in health care, as the current reform effort once
again demonstrates.

As Herbert Stein would say, the current status cannot continue. It is
absolutely inevitable that eventually we will enact some form of social
insurance. Although there are several possible models, the most likely
for the United States will be our popular Medicare program, in an
improved version. It would cover everyone. It would rely on progressive
taxes to make it affordable based on ability to pay. It would improve
efficiency, especially by eliminating the profound administrative waste
that characterizes our current, fragmented, dysfunctional financing
system. It would remove private insurer intrusions, returning choice in
actual health care to the patient. Though a public social insurance
program, it would perpetuate our private health care delivery system
(i.e., it is not socialized medicine). Especially important is that it
would exercise its purchasing power as a public monopsony, finally
bending the cost curve to sustainable levels.

Much of the debate today includes distortions and exaggerations, driven
by ideology. In this information age, the true facts are readily
available. Instead of chasing after the ever-elusive fantasy of free
markets in health care, we should join together in supporting the
crafting of a bona fide social insurance program that works for all of
us, based on solid health policy science.

http://letters.ocregister.com/2012/09/05/how-the-u-s-should-fix-health-care/