Thursday, January 31, 2013

Fwd: qotd: Preexisting conditions, reinsurance, and risk adjustment

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-------- Original Message --------
Subject: qotd: Preexisting conditions, reinsurance, and risk adjustment
Date: Thu, 31 Jan 2013 14:01:29 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

January 29, 2013
States rethink high-risk-pool plans
By Brett Norman

When the health exchanges open next year, they will cover some of the
sickest and costliest patients, people who cannot easily get insurance
precisely because they are so likely to run up bills that no insurer
would want to be on the hook for.

The federal health law contains several measures designed to spread the
risk and tamp down some of the expected turbulence in the market. But a
recent change in how the Department of Health and Human Services plans
to run a three-year, $20 billion fund — known as reinsurance — to
cushion health plans that end up with lots of high-cost customers is
forcing states to rethink their own timetable for shifting some of their
highest-risk people into the exchanges.

The fear, of course, is that if all the sick people flood the exchanges
and younger, healthier ones hold back, premiums could surge. The health
law has a bunch of mechanisms to try to avert rate shock — but questions
remain about how well they will work.

More than 300,000 people are now covered through special plans for
people with pre-existing conditions — about 100,000 in pools created by
the health law and more than 200,000 in older, state-run pools.

The federal plan was designed from the start to be temporary and to shut
down as soon as the exchanges open.

But many states had planned on moving their high-risk pool populations
into the exchanges slowly to mitigate the shock to the individual
market. But now, the state high-risk pools may offload as many people as
they can onto the exchanges as soon as they open in 2014 or risk losing
a piece of that $20 billion pie.

The Affordable Care Act program requires all insurers to pay into the
reinsurance fund — and to be paid out of it if they have a big share of
really expensive customers in the individual market. State officials had
anticipated having a voice in distributing those payments to hard-hit
plans in their states, but HHS in December proposed that it would give
the money to plans with enrollees that cost more than $60,000 per year.
And state high-risk pools wouldn't be eligible for the cash.

The reinsurance program is front-loaded, with $10 billion in the first
year, $6 billion in the second and $4 billion in the third and final
year. By year three, the hope is that a broad range of people will be in
the state exchanges, balancing out the really high-cost patients.

"I don't think it's going to be enough — it will offset some but not all
of the effect of the high-risk pools on the individual market," said
Jonathan Gruber, an MIT economist who has studied the issue in several


Centers for Medicare and Medicaid Services
The Center for Consumer Information & Insurance Oversight
HHS Risk Adjustment Model Algorithm Instructions

Section 1343 of the Affordable Care Act provides for a permanent risk
adjustment program. To protect against potential effects of adverse
selection, the risk adjustment program transfers funds from plans with
relatively lower-risk enrollees to plans with relatively higher-risk
enrollees. It generally applies to non-grandfathered individual and
small group plans inside and outside Exchanges.

The methodology that HHS proposes to use when operating a risk
adjustment program on behalf of a State would calculate a plan average
risk score for each covered plan based upon the relative risk of the
plan's enrollees, and apply a payment transfer formula in order to
determine risk adjustment payments and charges between plans within a
risk pool within a market within a State. The proposed risk adjustment
methodology addresses three considerations: (1) the newly insured
population; (2) plan metal level differences and permissible rating
variation; and (3) the need for risk adjustment transfers that net to zero.

The proposed risk adjustment methodology developed by HHS:

• Is developed on commercial claims data for a population similar to the
expected population to be risk adjusted;
• Employs the hierarchical condition category ("HCC") grouping logic
used in the Medicare risk adjustment program, with HCCs refined and
selected to reflect the expected risk adjustment population;
• Establishes concurrent risk adjustment models, one for each
combination of metal level (platinum, gold, silver, bronze,
catastrophic) and age group (adult, child, infant);
• Results in payment transfers that net to zero within a risk pool
within a market within a State;
• Adjusts payment transfers for plan metal level, geographic rating
area, induced demand, and age rating, so that transfers reflect health
risk and not other cost differences; and
• Transfers funds between plans within a risk pool within a market
within a State.

This document provides the detailed information needed to calculate risk
scores given individual diagnoses. (The report then goes into 14 pages
describing the algorithm for the HHS-Hierarchical Condition Categories
risk adjustment model.)

Comment: In a single payer financing system, health care is simply paid
for out of a publicly-financed, single risk pool that covers everyone,
regardless of how much appropriate health care is provided to each

In our current fragmented financing system, risk pools are segregated
and thus are each vulnerable to an influx of high-cost patients (adverse
selection). The spending on an excess of high-cost patients drives
premiums up ever higher until they are no longer affordable, patients
drop out, and the insurer must then shut down (death spiral).

To protect against excessive costs being borne by any single risk pool,
policies have been established to cover patients who have preexisting
disorders, to provide reinsurance for costs exceeding defined limits,
and to transfer funds from risk pools that enrolled healthier patients
to risk pools that cover more high-cost patients.

When the Affordable Care Act (ACA) was written, it was recognized that
many people with preexisting conditions could not purchase insurance
because the insurers wanted to keep their premiums competitive, so they
refused to accept these patients. For that reason, a temporary
three-year program was established to provide subsidies to new risk
pools that concentrated patients with preexisting disorders. Only about
100,000 people were enrolled since the premiums were still unaffordable
for many who would otherwise qualify, plus there were restrictions such
as a requirement to be uninsured for at least 6 months.

Although these pools for those with preexisting disorders didn't work
very well, at least these individuals would be able to participate in
the state insurance exchanges once they become operative next January 1,
since ACA requires that every qualified person be accepted regardless of
prior conditions (guaranteed issue).

A problem is that adding high-cost patients will drive premiums up,
perhaps to a level that could precipitate a death spiral. It was thought
that this would be a problem only initially, since later on the pools
would be filled with younger, healthier patients who could absorb the
higher costs of the sicker patients (a very dubious assumption which we
will not address here).

Since this was thought to be a temporary problem, the authors of ACA
added another special three-year program - a reinsurance scheme. For any
enrollee whose costs exceed $60,000 per year, the government would pick
up the balance. Many believe that the $20 billion to be authorized over
the three years of the program is not enough to cover the anticipated need.

Well, by the time that plan is terminated, there will have been
established a permanent plan to address this problem of unequal
distribution of risk between these segregated risk pools - a risk
adjustment scheme. This is to be done through the HHS-Hierarchical
Condition Categories risk adjustment model mentioned above.

It should be pointed out that a fairly recent study of the Hierarchical
Condition model used for Medicare Advantage plans has demonstrated that
the private insurers have already learned how to game the system, making
patients appear much more ill than they really are (NBER Working Paper
No. 16977, April 2011).

It's too bad since, by enacting a single payer system, Congress could
have eliminated the need for temporary high-risk pools, the need for
temporary reinsurance, and, especially, the need for risk adjustment
schemes which the private insurers will always manipulate to their own

You might want to click on the link to the HHS Risk Adjustment Model
Algorithm (above) and skim through the pages just to get a feeling of
the complexity of the risk adjustment process. Better yet, click on the
following link and in one picture you'll understand how the process
really works:

Wednesday, January 30, 2013

Fwd: qotd: "Shared responsibility payment" buys you nothing

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-------- Original Message --------
Subject: qotd: "Shared responsibility payment" buys you nothing
Date: Wed, 30 Jan 2013 15:03:34 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Centers for Medicare and Medicaid Services
January 30, 2013
Fact Sheet: Individual Shared Responsibility for Health Insurance
Coverage and Minimum Essential Coverage Proposed Rules

Under the Affordable Care Act, the Federal government, State
governments, insurers, employers, and individuals are given shared
responsibility to reform and improve the availability, quality, and
affordability of health insurance coverage in the United States.
Starting in 2014, the individual shared responsibility provision calls
for each individual to have basic health insurance coverage (known as
minimum essential coverage), qualify for an exemption, or make a shared
responsibility payment when filing a federal income tax return.

Highlights of the Proposed Regulations

A principle in implementing the individual shared responsibility
provision is that the shared responsibility payment should not apply to
any taxpayer for whom coverage is unaffordable, who has other good cause
for going without coverage, or who goes without coverage for only a
short time. The proposed regulations include several rules to implement
this principle.

For example:

Hardship Exemption Clarified to Protect Taxpayers, Address Key Concerns.

The statute gives HHS authority to exempt individuals determined to
"have suffered a hardship with respect to the capability to obtain
coverage." In developing these proposed regulations, HHS considered
several particular circumstances that provide good cause to go without
coverage. To provide clarity for taxpayers facing these circumstances,
the HHS proposed regulations enumerate several situations that will
always be treated as constituting a hardship and therefore allow for an
exemption. Hardship exemptions include:

* Individuals whom an Exchange projects will have no offer of affordable
coverage (even if, due to a change in circumstance during the year, it
turns out that the coverage would have been affordable). This rule will
protect individuals who turn down coverage because the Exchange projects
it will be unaffordable but whose actual income for the year turns out
to be higher so they are not eligible for the affordability exemption;

* Certain individuals who are not required to file an income tax return
but who technically fall outside the statutory exemption for those with
household income below the filing threshold; and

* Individuals who would be eligible for Medicaid but for a state's
choice not to expand Medicaid eligibility. This rule will protect
individuals in states that, pursuant to the Supreme Court decision,
choose not to expand Medicaid eligibility.
The HHS regulations also provide that the hardship exemption will be
available on a case-by-case basis for individuals who face other
unexpected personal or financial circumstances that prevent them from
obtaining coverage.
Specific Rules and Process for Receiving an Exemption

The proposed regulations also codify the statute's nine categories of
individuals who are exempt from the shared responsibility payment. These
categories are as follows:

Individuals who cannot afford coverage;
Taxpayers with income below the filing threshold;
Members of Indian tribes;
Individuals who experience short coverage gaps.
Religious conscience;
Members of a health care sharing ministry;
Incarcerated individuals; and
Individuals who are not lawfully present. (Select the Fact Sheet on
"Individual Shared Responsibility..." dated January 30, 2013.)

Comment: Today CMS and the IRS released two sets of proposed rules
which included the exemptions that will be allowed to avoid having to
pay a penalty for not being insured.

Basically, the exempt individuals will be those for whom there are no
affordable plans, those whose income falls below the threshold for
filing tax returns, or those who would qualify for Medicaid under
federal law but their state elected not to expand eligibility. A few
other exemptions are listed in the excerpts above.

One concern in the actual rule (though not listed in the CMS Fact Sheet)
is that the exemption for individuals who would otherwise have to pay
more than 9.5% of their income for their share of the premium of an
employer-sponsored plan applies only to the employee's coverage, but not
to coverage of the family members as well. At today's premiums, this
means that an employee could pay much more than 9.5% of income if the
family were to be included under the employer-sponsored plan, and that
would be just for the premiums. The deductibles and other cost sharing
would be in addition.

It is interesting that, instead of calling the penalty for being
uninsured a tax or a fine, CMS now calls it a "shared responsibility
payment," a payment to be made when filing a federal income tax return.
It is ironic that this shared responsibility payment buys you... nothing!

With all of the administrative waste that characterizes our health care
system, this rule adds even more administration complexity by providing
opportunities to allow individuals to remain uninsured. And the reward
is, if they qualify, they don't have to make a shared responsibility
payment. Hurray!

What happened to the reform advocates who were trying to advance
policies that would ensure that everyone was covered? Didn't they have a
say in this process? Oh, that's right. Sen. Baucus had them arrested.

Tuesday, January 29, 2013

Fwd: qotd: Senate HELP hearing on primary care

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Senate HELP hearing on primary care
Date: Tue, 29 Jan 2013 10:59:27 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

United States Senate
Committee on Health, Education, Labor and Pensions
January 29, 2013
Subcommittee Hearing
30 Million New Patients and 11 Months to Go: Who Will Provide Their
Primary Care?

Primary Care Access
A Report from Chairman Bernard Sanders

The primary health care system in America and its workforce is in
significant need of a checkup. As the population grows and ages, as more
doctors retire, and as the primary care pipeline dries up, we face a
severe shortage of providers. The result is that millions of Americans
are not getting the care that they need now and the situation may only
get worse. Although the ACA took important steps towards expanding
access points by increasing funding for community health centers and the
National Health Service Corps, for example, the tremendous scope of the
problem requires further attention and action. Just like an illness from
which it will be more difficult and costly to recover from the longer we
wait, we must take steps now to address the primary care access crisis
in America.

Video of the hearing (2 hours):

Written testimonies of the witnesses:

Fitzhugh Mullan, MD , Murdock Head Professor of Medicine and Health
Policy at the George Washington University School of Public Health and
Professor of Pediatrics at the George Washington University School of
Medicine, Washington, DC:

Tess Stack Kuenning, CNS, MS, RN , Executive Director, Bi-State Primary
Care Association, Montpelier, VT:

Toni Decklever, MA, RN , Government Affairs, Wyoming Nurses Association,
Cheyenne, WY:

Andrew Wilper, MD, MPH , Acting Chief of Medicine, VA Medical Center,
Boise, ID:

Uwe Reinhardt, PhD , James Madison Professor of Political Economy and
Professor of Economics and Public Affairs, Princeton University,
Princeton, NJ:

Claudia Fegan, MD , Chief Medical Officer, John H. Stroger Jr. Hospital
of Cook County, Chicago, IL:

Comment: We have a crisis in primary care. Unless we improve and expand
our primary care infrastructure, we will become more dependent on the
alternatives: overuse of emergency departments, fragmented care in
walk-in clinics, traveling large distances from rural communities devoid
of primary care, excessive use of direct access to specialized services
limited to those who can afford it, and, worst of all, limited or no
health care access for those who are uninsured and cannot afford it.

Today's hearing of the Senate HELP Committee is important because it
brings attention to the seriousness of this problem, demonstrating that
action is an imperative. Although, as you read this, you do not have
time to watch a 2 hour video nor read a half dozen testimonies, links
are provided so that you can access these resources later - perhaps
during the weekend when many of you have more time. If not, these links
can be saved for later reference.

Although this session was focused on primary care, a couple of comments
from the testimony of Claudia Fegan are apropos because of the larger
needs in health care. Claudia is not only Chief Medical Officer of Cook
County Hospital, she is also a former President of Physicians for a
National Health Program. She understands that primary care would
function much better if we had comprehensive health care reform.

As she states, "If we would enact a single-payer national health
program, where everyone was entitled to health care as a right, we could
focus on delivering to our patients the best care in the world and
relieve our physicians of the administrative hassles..."

And her plea to the members of the Senate HELP Committee, "I urge you to
work to make a difference, not for me or you, but for the patients I
have the privilege of serving, who desperately need their elected
officials to care about what happens to them."

And isn't her advocacy truly representative of the essence of primary care?

Monday, January 28, 2013

Fwd: qotd: Bill Keller on P4P and single payer

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-------- Original Message --------
Subject: qotd: Bill Keller on P4P and single payer
Date: Mon, 28 Jan 2013 11:28:03 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
January 27, 2013
Carrots for Doctors
By Bill Keller

With its ambitious proposal to pay doctors in public hospitals based on
the quality of their work — not the number of tests they order, pills
they prescribe or procedures they perform — New York City has hopped
aboard the biggest bandwagon in health care. Pay for performance, or P4P
in the jargon, is embraced by right and left. It has long been the
favorite egghead prescription for our absurdly overpriced,
underperforming health care system. The logic seems unassailable: Reward
quality, and you will get quality. Stop rewarding waste, and you will
get less waste. QED! P4P!

If only it worked.

For if you spend a little time with the P4P skeptics — a data-bearing
minority among physicians and health economists — you will come away
full of doubts. In practice, pay for performance does little to improve
outcomes or to control costs.

The first problem with P4P is that it does not address the biggest
problem. Americans spend more than twice as much per capita as other
developed countries on health care — a crippling 18 percent of the
country's economic output, and growing.

But the main reason everything costs less in other countries is that
other countries tend to have one big payer — usually the government —
with the clout to bargain down prices. A single-payer system has, so
far, proven politically unpalatable in this country.

Comment: Bill Keller, the former executive editor of The New York
Times, explains why pay-for-performance (P4P) is a false solution to the
problems of high health care costs and mediocre quality. Although he
recognizes the correct solution - a single payer system - he follows the
lead of other journalists and politicians in immediately dismissing it
as being "politically unpalatable."

Was Medicare politically unpalatable?

Consider the following oft-expressed concept. "Single payer is the
solution that would bring health care to everyone at a cost that we can
afford; therefore we shouldn't adopt it because of concerns about
political feasibility." Phrased this way, obviously this is a non sequitur.

Let's jam single payer into its proper place in government. The we'll
see how politically unpalatable it is, or rather is not.

Friday, January 25, 2013

Fwd: qotd: HCA hasn't changed

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: HCA hasn't changed
Date: Fri, 25 Jan 2013 13:54:11 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The Kansas City Star
January 24, 2013
Judge says HCA broke spending promises
By Diane Stafford

The Health Care Foundation of Greater Kansas City has won a $162 million
judgment against Hospital Corp. of America, owner of the largest
hospital system in the Kansas City area.

The lawsuit contended that HCA hadn't spent what it promised on capital
improvements to the former Health Midwest hospitals that HCA bought for
$1.13 billion in 2003. The lawsuit further claimed that HCA had not met
its charitable health care commitments to help pay for treating indigent

The amounts that HCA agreed to spend within certain deadlines were part
of the deal transferring the nonprofit Health Midwest hospitals to the
for-profit HCA.

As agreed to by parties to the 2003 sale, the for-profit HCA was to make
$450 million in capital improvements to the existing Health Midwest
hospitals, which had been nonprofit institutions and needed significant

HCA had agreed under terms of the sale to spend more than $650 million
on charity health care in the Kansas City area, the judge noted in his
decision. How far HCA has gone toward meeting that obligation will be
scrutinized in the court-ordered audit.

But in his decision Thursday, (Judge John) Torrence said HCA's financial
accounting made it impossible to tell whether the company had met its
charitable health care commitments.

Comment: Physicians for a National Health Program supports not only a
much more efficient and equitable single payer financing system, we also
support elimination of passive investors from the health care system.
Corporate executives and boards that must place priorities of
shareholders over patients should have no place in our health care system.

Hospital Corporation of America (HCA) is not only the largest private
operator of health care facilities in the United States, it also holds
the record for the largest fraud settlement, over $1.7 billion. This
current judgement against HCA suggests that they continue to place a
priority on profits over patients.

When HCA took over the largest hospital group in the Kansas City area,
they agreed to upgrade the hospitals with much needed improvements, plus
they agreed to continue to provide charity care as safety net
institutions. This was in exchange for allowing them to convert these
non-profit hospitals into for-profit facilities under their ownership.

Once gaining ownership, they reverted to business as usual - make money
while ignoring the commitments made for charitable care and for
improving the facilities. The $162 million judgment that they may have
to pay (they are appealing it) to them is not much more than an expense
of doing business, especially considering that their 2011 net income was
$2.47 billion (adding considerably to Bain's profits from their
investment in HCA).

Although PNHP certainly objects to the diversion of profits to investors
- profits that should go for patient care or to help lower costs - the
primary reason that we believe that for-profit entities should be
expelled from the health care system is the egregious behavior on the
part of their corporate executives and board members in using patients
as instruments in their quest for profits. In this instance it can be
measured by the care that they avoided providing to indigent patients,
and by the less than optimal care received by patients in their
substandard facilities.

The next time you see a placard stating, "PATIENTS, NOT PROFITS," keep
in mind that it is not just profits, but it is the deeper significance
of what corporate greed does to patient care.

Thursday, January 24, 2013

Fwd: qotd: The second managed care revolution

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: The second managed care revolution
Date: Thu, 24 Jan 2013 14:26:18 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Kaiser Health News
January 22, 2013
HMO-Like Plans May Be Poised To Make Comeback In Online Insurance Markets
By Julie Appleby

It's back to the future for insurers, which plan to sharply limit the
choice of doctors and hospitals in some policies marketed to consumers
under the health law, starting next fall.

Such plans, similar to the HMOs of old, fell into disfavor with
consumers in the 1980s and 1990s, when they rebelled against a lack of

But limited network plans -- which have begun a comeback among employers
looking to slow rising premiums -- are expected to play a prominent role
in new online markets, called exchanges, where individuals and small
businesses will shop for coverage starting Oct. 1. That trend worries
consumer advocates, who fear skimpy networks could translate into
inadequate care or big bills for those who develop complicated health

Because such policies can offer lower premiums, insurers are betting
they will appeal to some consumers, especially younger and healthier
people who might see little need for more expensive policies.

Insurers, who are currently designing their plans for next fall, "will
start with as tight a network control as they can," says Ana Gupte, a
managed care analyst with Sanford Bernstein.

Plans may also benefit from offering such policies because they are less
attractive to those with medical problems, who can no longer be turned
away beginning in January 2014.

Driven by consumer and employer demand for lower-cost plans, insurers
are already rolling out narrow network policies that have shaved
premiums 10 percent or more. A recent survey by benefit firm Mercer
found that 23 percent of large employers offered such plans this year,
usually among a choice of plans, up from 14 percent in 2011.

Many policies that currently offer a limited network of doctors and
hospitals generally allow patients to go to out-of-network providers,
with whom they do not have negotiated prices. But patients who seek such
care face significant co-payments, which often start at 30 percent of
the bill and can go as high as 50 percent.

It is often hard for consumers to figure out how much they might be
charged if they go out of network, says Lynn Quincy, senior policy
analyst at Consumers Union, publisher of Consumer Reports magazine. In
addition to meeting separate annual deductibles for out-of-network care,
patients can be "balance-billed" by doctors or hospitals for the
difference between what the insurer pays them and their total charges.

That doesn't change under the federal health law, so consumers could be
left on the hook for tens of thousands of dollars.

Comment: So we didn't get single payer, but at least we got a bill that
brought us an end to insurance company abuses, so they say. But did we

Most people purchasing plans through the insurance exchanges will select
plans with lower premiums which means the bronze and silver plans that
have actuarial values of 60 or 70 percent. To achieve these low values,
the plans will require large deductibles and other cost sharing -
expenses that may not be affordable for many who actually need health care.

This article and others have reported on the strategy of insurers to
rely more heavily on "narrow network" plans - plans that greatly limit
your choice of health care professionals and institutions. Obtaining
care outside of the network can result in greater cost sharing plus
balance-billing for charges that normally would be disallowed. Current
networks are already restrictive enough, but these new super skimpy
networks will leave patients even more dissatisfied than they were at
the peak of the managed care revolution. And we thought we got away from

Although insurers would be prohibited from deliberately excluding more
costly, sicker patients, the very design of these plans motivates the
healthy to buy them and the sick to shun them. Thus cherry picking and
lemon dropping will still be with us, even if not overt.

Can you imagine the celebrations in the board rooms of the insurance and
pharmaceutical firms? Officers and directors dancing around the table
Don McNeill-style, singing, "Happy days are here again!"

Wednesday, January 23, 2013

Fwd: qotd: Proposed Rule on Medicaid Premiums and Cost Sharing

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Proposed Rule on Medicaid Premiums and Cost Sharing
Date: Wed, 23 Jan 2013 13:08:47 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Federal Register
January 22, 2013
A Proposed Rule by the Centers for Medicare & Medicaid Services

Medicaid, Children's Health Insurance Programs, and Exchanges: Essential
Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair
Hearing and Appeal Processes for Medicaid and Exchange Eligibility
Appeals and Other Provisions Related to Eligibility and Enrollment for
Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing

This proposed rule would implement provisions of the Patient Protection
and Affordable Care Act of 2010 and the Health Care and Education
Reconciliation Act of 2010 (collectively referred to as the Affordable
Care Act), and the Children's Health Insurance Program Reauthorization
Act of 2009 (CHIPRA).

IV. Medicaid Premiums and Cost Sharing

A. Background

Section 1916 of the Act describes long-standing requirements for cost
sharing, which apply broadly to all individuals who are not specifically
exempted. Such cost sharing is limited to "nominal" amounts. Section
1916 of the Act also establishes authority for states to impose premiums
on specific groups of beneficiaries with family income above 150 percent
of the federal poverty level (FPL). The Deficit Reduction Act of 2005
(DRA) established a new section 1916A of the Act, which gives states
additional flexibility, allowing for alternative premiums and cost
sharing, beyond what is allowed under section 1916 of the Act, for
somewhat higher income beneficiaries. Such alternative cost sharing may
be targeted to specific groups of beneficiaries and payment may be
required as a condition of providing services. Alternative premiums and
cost sharing imposed under section 1916A of the Act, cannot exceed five
percent of family income.

B. Provisions of Proposed Rule

2. Update to Maximum Nominal Cost Sharing (§ 447.52)

Under the authority granted under sections 1916(a)(3) and (b)(3) of the
Act for the Secretary to define nominal cost sharing, at § 447.52(b) we
propose to revise the maximum amount of nominal cost sharing for
outpatient services, which may be imposed on beneficiaries with incomes
below 100 percent of the FPL.

To simplify the rules, we propose to remove the state payment as the
basis for the cost sharing charge and replace it with a flat $4 maximum
allowable charge for outpatient services.

Current rules permit cost sharing for institutional care, up to 50
percent of the cost for the first day of care, for individuals with
incomes below 100 percent of the FPL. We are not proposing a change but
are considering alternatives for the maximum allowable cost sharing
related to an inpatient stay because this is a relatively high cost for
very low income people and not a service that consumers have the ability
to avoid or prevent. Options under consideration include the $4 maximum
applied to outpatient services, $50, or $100, which would encompass the
majority of hospital cost sharing currently in effect

3. Higher Cost Sharing Permitted for Individuals With Incomes Above 100
Percent of the FPL (§ 447.52)

Proposed § 447.52 consolidates the requirements for cost sharing
established under sections 1916 and 1916A of the Act. Under the statute,
states may impose cost sharing at higher than nominal levels for
nonexempt individuals with incomes at or above 100 percent of the FPL.
Section 1916A provides that states may establish cost sharing for
nonexempt services, other than drugs and ED services, up to 10 percent
of the cost paid by the state for such services, for individuals with
incomes between 100 and 150 percent of the FPL.

4. Cost Sharing for Drugs (§ 447.53)

To provide additional flexibility to states, and to further encourage
the use of preferred drugs, we are proposing to define nominal for this
purpose so as to allow cost sharing of up to $8 for non-preferred drugs
for individuals with income equal to or less than 150 percent of the FPL
or who are otherwise exempt from cost sharing. States will have the
flexibility to apply differential cost sharing for preferred and
non-preferred drugs in whatever manner they consider most effective. For
example, a state may charge $2 for preferred and $6 for non-preferred
drugs or $0 for preferred and $8 for non-preferred drugs.

For individuals with family income above 150 percent of the FPL, per
section 1916A(c) of the Act, cost sharing for non-preferred drugs may
not exceed 20 percent of the cost the agency pays for the drug.

5. Cost Sharing for Emergency Department Services (§ 447.54)

In order to make it easier for states to utilize existing flexibilities
to reduce non-emergency use of the ED, at § 447.54(a) we propose to
allow cost sharing of up to $8 for non-emergency use of the ED no waiver
will be required.

For individuals with family income above 150 percent of the FPL, per
section 1916A(e) of the Act, there is no limit on the cost sharing that
may be imposed for non-emergency use of the ED.

If an emergency condition does not exist, § 447.54(d) includes the
requirements for hospital screening and referral currently codified at §
447.80(b)(2), to ensure that beneficiaries have appropriate access to
other sources of care, before cost sharing is imposed. Hospitals must
assess the individual clinically, identify an accessible and available
alternative provider with lesser cost sharing, and establish a referral
to coordinate scheduling. Examples of accessible alternative providers
are those that are located within close proximity, accessible via public
transportation, open extended hours, and able to serve individuals with
LEP and disabilities.

5. Premiums (§ 447.55)

At proposed § 447.55, we consolidate and simplify the requirements for
premiums established under sections 1916 and 1916A of the Act. Proposed
§ 447.56(a) describes the option to impose premiums on individuals with
family income above 150 percent of the FPL, as established under section
1916A of the Act, while paragraphs (a)(1) through (a)(5) describe the
options to impose premiums for specific populations as established under
section 1916 of the Act. Except for the minor revisions described below,
we are not seeking to change current policy related to premiums.

At § 447.55(a)(5), we propose to revise requirements related to premiums
imposed on medically needy individuals whose income is under 150 percent
of the FPL. We removed the current income-related scale currently at §
447.52(b) and instead would provide states with the flexibility to
determine their own sliding scale for establishing premiums for the
medically needy up to maximum of $20 instead of the $19 in current

VII. Regulatory Impact Analysis

C. Estimated Impact of the Medicaid Premiums and Cost Sharing Provisions

1. Overall Impact

Based on our policy analysis, we do not anticipate significant costs or
savings from these proposed changes at the program level given the
targeted nature of the cost sharing. We believe these proposed policies
would encourage less costly care and decreased use of unnecessary
services, which may reduce state and federal costs for the specified

2. Anticipated Effects

As states better understand their options for imposing premiums and cost
sharing, more states may take advantage of existing flexibilities, such
as cost sharing of up to 20 percent of the cost of the service, and the
option of allowing providers to deny services for unpaid cost sharing,
both of which are targeted to somewhat higher income beneficiaries.
Research has shown that higher-than-nominal cost sharing on very
low-income individuals can have an adverse impact on access to services
by discouraging or preventing such individuals from seeking needed care.
However, such impacts are not likely to result from the changes proposed
here as they are largely focused on services where there are more
appropriate and less costly alternatives. Increased cost sharing may
have a negative impact on providers, as uncollected cost sharing reduces
provider reimbursement, to the extent that the beneficiary cannot or
does not pay the cost sharing and services are nonetheless provided.
Under the DRA provisions and this proposed rule, however, states may
minimize this impact by allowing providers to deny services for failure
to pay the required cost sharing in certain circumstances.

Comment: Why do patients go on the Medicaid program? Because they're
dirt poor, that's why. To even bring up a discussion of premiums and
cost sharing on these down-and-out people represents the ultimate of
bureaucratic insensitivity.

Admittedly, there was some effort to target the cost sharing to
encourage more appropriate and less costly alternatives, but permitting
states to require up to five percent of family income for out-of-pocket
costs is truly unaffordable for most of these families.

This shows how much traction the make-them-shop-with-their-own-money
crowd has gained - the moral hazard freaks who are hazardous to our
health care morals. There are more effective and humane means of
controlling health care costs, single payer being the most obvious. We
do not need to erect financial barriers that can impair access to
beneficial services, for the poor or for anyone else.

Perhaps the most disturbing statement in this Proposed Rule is the
following: States may allow providers "to deny services for failure to
pay the required cost sharing in certain circumstances." Deny services
for failure to pay "nominal" cost sharing?! What does that say about
health care justice in America?

Tuesday, January 22, 2013

Fwd: qotd: Baucus/Hatch taxpayer gift to Amgen

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Baucus/Hatch taxpayer gift to Amgen
Date: Tue, 22 Jan 2013 11:53:22 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
January 19, 2013
Fiscal Footnote: Big Senate Gift to Drug Maker
By Eric Lipton and Kevin Sack

Just two weeks after pleading guilty in a major federal fraud case,
Amgen, the world's largest biotechnology firm, scored a largely
unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the
"fiscal cliff" bill that did not mention the company by name but
strongly favored one of its drugs.

The language buried in Section 632 of the law delays a set of Medicare
price restraints on a class of drugs that includes Sensipar, a lucrative
Amgen pill used by kidney dialysis patients.

The provision gives Amgen an additional two years to sell Sensipar
without government controls. The news was so welcome that the company's
chief executive quickly relayed it to investment analysts. But it is
projected to cost Medicare up to $500 million over that period.

Supporters of the delay, primarily leaders of the Senate Finance
Committee who have long benefited from Amgen's political largess, said
it was necessary to allow regulators to prepare properly for the pricing

But critics, including several Congressional aides who were stunned to
find the measure in the final bill, pointed out that Amgen had already
won a previous two-year delay, and they depicted a second one as an
unnecessary giveaway.

Amgen has deep financial and political ties to lawmakers like Senate
Minority Leader Mitch McConnell, Republican of Kentucky, and Senators
Max Baucus, Democrat of Montana, and Orrin G. Hatch, Republican of Utah,
who hold heavy sway over Medicare payment policy as the leaders of the
Finance Committee.

Amgen's success also shows that even a significant federal criminal
investigation may pose little threat to a company's influence on Capitol
Hill. On Dec. 19, as Congressional negotiations over the fiscal bill
reached a frenzy, Amgen pleaded guilty to marketing one of its
anti-anemia drugs, Aranesp, illegally. It agreed to pay criminal and
civil penalties totaling $762 million, a record settlement for a
biotechnology company, according to the Justice Department.

Amgen, whose headquarters is near Los Angeles and which had $15.6
billion in revenue in 2011, has a deep bench of Washington lobbyists
that includes Jeff Forbes, the former chief of staff to Mr. Baucus;
Hunter Bates, the former chief of staff for Mr. McConnell; and Tony
Podesta, whose fast-growing lobbying firm has unusually close ties to
the White House.

In some cases, the company's former employees have found important posts
inside the Capitol. They include Dan Todd, one of Mr. Hatch's top
Finance Committee staff members on health and Medicare policy, who
worked as a health policy analyst for Amgen's government affairs office
from 2005 to 2009. Mr. Todd, who joined Mr. Hatch's staff in 2011, was
directly involved in negotiating the dialysis components of the fiscal
bill, and he met with "all the stakeholders," Mr. Hatch's spokeswoman
said, not disputing when asked that this included Amgen lobbyists.

Aides to the senators said some heavy donors had won and others had lost
in the Medicare negotiations — proof that the legislative outcome was
based on the merits. "What is the best policy for Montanans and people
across the country lies at the heart of every decision Chairman Baucus
makes," said Meaghan Smith, a spokeswoman for Mr. Baucus. "It's as
simple as that."

Comment: With appropriate anger, we can point our fingers toward Sen.
Baucus and his colleagues for their involvement in this corrupt half
billion dollar taxpayer gift to Amgen, a biotechnology company that has
already paid over three-quarters of a billion dollars in penalties for
prior criminal acts to which they pled guilty. Sen. Baucus especially
deserves our ire since he led the process in bringing us the Affordable
Care Act - an act that was designed specifically to serve the financial
interests of the private insurance and pharmaceutical industries, at a
consequential cost to patients and taxpayers.

Of course, Sen. Baucus is not alone in accepting payment in exchange for
favorable legislation. All members of Congress have fundraising
challenges. If you check, you will find that most
members of Congress are tainted, though they vary in their egregiousness.

Who is ultimately to blame? We elect these people. Health care justice
doesn't stand a chance when displaced by the power of greed and
corruption, and we simply turn our backs on it.

Monday, January 21, 2013

Fwd: qotd: Second Inaugural of President Barack Obama

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Second Inaugural of President Barack Obama
Date: Mon, 21 Jan 2013 09:48:57 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

January 21, 2013
Second Inaugural Speech
President Barack H. Obama

We, the people, still believe that every citizen deserves a basic
measure of security and dignity. We must make the hard choices to reduce
the cost of health care and the size of our deficit. But we reject the
belief that America must choose between caring for the generation that
built this country and investing in the generation that will build its
future. For we remember the lessons of our past, when twilight years
were spent in poverty, and parents of a child with a disability had
nowhere to turn. We do not believe that in this country, freedom is
reserved for the lucky, or happiness for the few. We recognize that no
matter how responsibly we live our lives, any one of us, at any time,
may face a job loss, or a sudden illness, or a home swept away in a
terrible storm. The commitments we make to each other – through
Medicare, and Medicaid, and Social Security – these things do not sap
our initiative; they strengthen us. They do not make us a nation of
takers; they free us to take the risks that make this country great.

Friday, January 18, 2013

Fwd: qotd: ACA administrative costs escalating

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: ACA administrative costs escalating
Date: Fri, 18 Jan 2013 10:39:18 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Los Angeles Times
January 18, 2013
State's health insurance exchange gets $674-million federal grant
By Chad Terhune

Federal officials awarded California's new health insurance exchange a
$674-million grant, providing money for a crucial marketing campaign
aimed at millions of uninsured consumers.

The state-run insurance exchange, Covered California, is seeking to
fundamentally reshape the health insurance market by negotiating with
insurers for the best rates and helping consumers choose a plan.

In addition to "top down" advertising, Lee said, the exchange will be
giving grants to religious groups and other community organizations for
education at the grass-roots level.

The exchange also has the task of helping millions of Californians
determine whether they qualify for an expansion of Medi-Cal, the state's
Medicaid program for the poor, or federally subsidized private coverage.

In addition to marketing, Covered California will use the federal grant
money to help fund operations through January 2015, when the online
marketplace will rely on fees assessed on health policies sold through
the exchange.

Separately Thursday, the California Endowment said it would spend $225
million over the next four years to help implement the federal
healthcare law in the state.,0,5154422.story

Comment: The administrative waste in our health care system far exceeds
that of any other nation. During the political process of crafting the
Affordable Care Act, we warned that this model would greatly add to this
administrative waste. We are now beginning to see the extent of that
expanded waste.

On just California's insurance exchange alone, taxpayers are having to
foot additional costs of two-thirds of a billion dollars just for
administration and marketing of the exchange plans. In the future, these
additional administrative costs will be downloaded to us through new
fees assessed on the health policies sold through the exchange. Just
think of all of the other administrative expenses for the multitude of
other features of the Affordable Care Act, not just in California but
throughout the nation. And not one cent of this additional
administrative spending goes to health care. Sick!

Although taxpayers have already invested way too much in this wasteful
program, we can still cut our losses and move on with an
administratively efficient single payer system - an improved Medicare
for all.

Thursday, January 17, 2013

Fwd: qotd: Business Roundtable attacks Medicare and Social Security

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Business Roundtable attacks Medicare and Social Security
Date: Thu, 17 Jan 2013 11:42:42 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Business Roundtable
January 2013
Social Security Reform and Medicare Modernization Proposals

Business Roundtable (BRT) is an association of chief executive officers
of leading U.S. companies with more than $7.3 trillion in annual
revenues and nearly 16 million employees. BRT member companies
comprise nearly a third of the total value of the U.S. stock market.

"Medicare and Social Security were not designed to cope with America's
new demographic realities. CEOs are calling for gradual changes that
will modernize these programs and preserve the safety net for future
generations of retirees."
- Gary W. Loveman, Ph.D., Chairman, CEO & President, Caesars
Entertainment Corporation, and Chair of BRT's Health and Retirement

Essential Elements of a Medicare Modernization Proposal

• Protect Medicare for Those Approaching Retirement: Medicare's age of
eligibility should be moved to age 70. However, this will not affect
those age 55 or older today.

• Expand Competitive Models of Care: By 2015, Medicare should offer
seniors the opportunity to choose among competing and comprehensive
private plans and traditional Medicare. The private plans would offer a
benefit similar to the existing Medicare program with the flexibility to
innovate, sell across state lines, and create greater value strategies.
Plans would be required to accept all applicants and would risk adjust
the premium to take into account age and health status. The traditional
fee-for-service program would compete for enrollment with private plans
on cost, quality and a more innovative benefit structure. We believe
that competition in the provision of health care to America's seniors
will bring substantial benefits, as it has to most all other categories
of personal expenditure. The recent experience of competition in the
Medicare Part D program serves as a persuasive indication of the
potential savings and improvement in care available through the
provision of choice to well-informed seniors.

• Reduce Taxpayer Costs for Upper-Income Beneficiaries: Today, the Part
B premium (physician services) and the Part D premium are means-tested
and other types of means testing should be explored. By 2015, additional
means testing for Medicare services should be considered.

• Protect the Safety Net for Low-Income Americans: Low-income
beneficiaries should retain the existing financial support received
today. Improvements should be made in care-coordination and a focus on
wellness and chronic care management.

(Social Security recommendations available at this link.)


The American Prospect
December 17, 2006
Doctoring Health Care, I
By Barbara Dreyfuss

In early 2006, Glen Barton, the retired CEO of Caterpillar and former
head of the Business Roundtable's health-care task force, said the
solution to the health-care crisis is a single-payer system, citing
Medicare as a model.

Comment: Although the slick brochure from these wizards of industry at
the Business Roundtable might make it look like these gentlemen are
doing us a great favor by showing us how to save Medicare and Social
Security from bankruptcy, their recommendations are, in fact, taking a
supercilious approach to diminishing the effectiveness of America's
highly regarded social insurance programs.

This cavalier attitude is expressed in a comment by Caesars' Gary
Loveman, chairman of Business Roundtable's Health and Retirement
Committee that released this report. "Those of us who are in the BRT are
paid to try to solve very difficult problems effectively. I would tell
you that most of them are a lot harder than this, frankly" (Politico
Pulse, Jan. 17).

What do they have in mind for Medicare? They would increase eligibility
age to 70 - a disaster for future retirees. They would privatize the
traditional Medicare program by throwing it into a market of private
plans - a devious scheme to shift health care costs onto the backs of
those with greater health care needs. They would also means-test
benefits, losing the support of the wealthier individuals who have the
strongest political voice, threatening to convert Medicare into a
welfare program.

And Social Security? They would also increase Social Security retirement
age to 70. And in a stroke of genius, they recommend that Americans
simply save more for their retirement. Why didn't we think of that before?

A word needs to be said about their recommendation to reduce future
Social Security cost of living adjustments by converting to the
chained-CPI. When individuals are forced into a frugal existence they
learn to cut back and do without just so that they will have enough
money for basic food and housing at the end of the month, if that. Under
chained-CPI, the government assumes that this frugality represents the
new, lower consumer price index for this sector, and so they adjust out
the savings that the Social Security beneficiaries have accrued merely
for the purpose of getting them all of the way through to the end of the
month. Pretty cruel.

A decade ago, Glen Barton, Chairman and President of Caterpillar, led
the BRT Health and Retirement Committee, currently headed by Gary
Loveman. What a contrast. Glen Barton's experience motivated him to
become an advocate of "a single-payer system, citing Medicare as a
model." Lovemen? Well, you read it above. What a difference a decade made.

Class warfare? Ugly label, but...

Wednesday, January 16, 2013

Fwd: qotd: Can we control costs through checkups and wellness programs for the healthy?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Can we control costs through checkups and wellness
programs for the healthy?
Date: Wed, 16 Jan 2013 12:17:49 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

JAMA Internal Medicine
January 14, 2013
General Health Checks in Adults for Reducing Morbidity and Mortality
From Disease
By Allan V. Prochazka, MD, MSc; Tanner Caverly, MD

The concept of general health checkups to identify disease at a stage at
which early intervention could be effective has been promoted for nearly
100 years. Both patients and primary care physicians are interested in
such examinations, which can include detailed history taking, physical
examination, extensive laboratory testing, and imaging.

General health checks do not improve important outcomes and are unlikely
to ever do so based on the pooled results of this meta-analysis spanning
decades of experience. We should be clear about what a general health
check is. A general health check is a visit dedicated solely to
preventive counseling and screening tests. Other names, such as annual
physical, preventive health examination, or periodic health evaluation,
are often used. These terms exclude preventive care that occurs during
visits for other reasons, such as during chronic care or acute care
visits. In other words, we are talking about screening and counseling in
addition to the prevention measures that occur during routine medical care.

General health checks are one of the most common reasons adults seek
medical care, with an estimated 44 million seeing a physician for this
reason each year from 2002 through 2004. During these health checks, an
estimated $322 million is spent annually on laboratory tests that no
guideline groups recommend. The costs of downstream testing and
overtreatment are likely to be much larger. For example, the costs of
mammography might be $4 billion a year assuming biennial screening. The
cost of follow-up biopsies of normal breasts triggered by false-positive
mammogram results alone is probably in the range of $14 to $70 billion
annually. It is likely that follow-up testing from general health checks
substantially contributes to the estimated $210 billion in annual
spending on unnecessary medical services.


Health Affairs Blog
January 16, 2013
Is It Time To Re-Examine Workplace Wellness 'Get Well Quick' Schemes?
By Al Lewis and Vik Khanna

Virtually unheard of thirty years ago, workplace wellness is now
embedded in large self-insured companies. These firms pay their workers
an average of $460/year to participate in worksite wellness programs.
Further, wellness is deeply enough engrained in the public policy
consciousness to have earned a prominent place in the Affordable Care
Act, which allows large employers to tie a significant percentage of
health spending to employee health behavior and provides direct
subsidies for small businesses to undertake these workplace wellness

Yet the implausible, disproven, and often mathematically impossible
claims of success underlying the "get well quick" programs promoted by
the wellness industry raise many questions about the wisdom of these
decisions and policies. In this post, we lay out the evidence
demonstrating that the industry consistently mis-measures and overstates
the direct healthcare cost savings. We suggest several strategies to
prevent this and to re-allocate wellness dollars from "get well quick"
schemes to the much more challenging, but ultimately more rewarding,
task of truly creating a culture of wellness, a workplace that can
attract and retain healthier, presumably more productive, people than
competitors do. There is no guarantee that strategy would work and no
easy way to implement it, but clearly the easy approach isn't working.

While we do not believe that employers need to adopt military-style
standards, we do propose that it is illogical to expect sustainable
reductions in medical care spending if corporate leaders treat their
environments, personnel policies, practices, and procedures with the
insouciance of people who believe that they can just wish something into

HR departments need to reconfigure their benefits consulting
relationships, since with few exceptions the latter have not provided
critical thinking about wellness (and other "value-added" programs) on a
par with that of insurers, who have universally shunned these programs
for their fully insured members. (Most insurers will happily sell them
to self-insured employers even so, because they clearly understand that
"invalid" is not the same as "unprofitable," especially when you do not
bear risk for the outcomes and the customer's consultants are demanding
the service.)

Comment: In discussions of our exorbitant health care spending, we
frequently hear that we need to change from a system that treats disease
to a system that promotes prevention and wellness, as if prevention and
wellness programs would displace disease and injury.

First, let's be clear that the benefits of effective prevention programs
are undeniable. But much of prevention is out in the community at large
and not so much within the health care delivery system. Examples are
public health services, community planning for safety and to promote
physical activity, the promotion of healthy food choices, industry
design of safer products such as automobiles, public policies to reduce
hazards such as the ubiquitous accessibility of firearms, and
innumerable other measures that are or should be promoted through both
public and private efforts.

So what about routine preventive health checkups? The comprehensive
meta-analysis published in the current JAMA Internal Medicine reveals
that "general health checks do not improve important outcomes and are
unlikely to ever do so," but "it is likely that follow-up testing from
general health checks substantially contributes to the estimated $210
billion in annual spending on unnecessary medical services."

However, specific examples of preventive care that are a part of and
integrated within the provision of care for acute and chronic disorders
have been shown to be of some benefit and should not be abandoned until
new evidence demonstrates that there are compelling reasons to do so.
Nevertheless, we cannot look to the medical practice environment to find
the health care paradise that will displace sick care with well care.

Which brings us to employer-sponsored wellness programs. Simply stated,
they fall into the spectrum between naivete and outright fraud. As
stated in the Health Affairs Blog article briefly excerpted above, "Even
the iconic Safeway story of achieving a zero medical cost trend through
wellness - the inspiration for the wellness provisions in the Affordable
Care Act - turns out to be made up."

If you wish to know the shocking truth on wellness programs (yes,
shocking), you should read the entire article available at the link
above. The fact that insurers promote these programs, but only for their
non-risk bearing contracts with self-insured employers, certainly is

Pretending that we can control health care spending with checkups and
wellness programs no longer cuts it. We need to tackle costs with proven
methods that would ensure quality care for everyone. We should begin by
enacting an improved Medicare for all.

Tuesday, January 15, 2013

Fwd: qotd: Life disruptions from high out-of-pocket health expenditures

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Life disruptions from high out-of-pocket health expenditures
Date: Tue, 15 Jan 2013 10:15:14 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Annals of Family Medicine
January/February 2013
Life Disruptions for Midlife and Older Adults With High Out-of-Pocket
Health Expenditures
By David Grande, MD, MPA, Frances K. Barg, PhD, Sarah Johnson, BA and
Carolyn C. Cannuscio, ScD


PURPOSE Out-of-pocket cost sharing for health care expenses is a
growing burden. Prior research has emphasized the medical consequences
of cost sharing. This study investigates the range of social, medical,
financial, and sometimes legal disruptions from high out-of-pocket
health expenses.

METHODS We conducted open-ended, semistructured interviews with 33
insured patients (two-thirds covered by Medicare). All had chronic
illnesses and sought philanthropic financial assistance.

RESULTS We found that high levels of cost sharing precipitated
considerable anxiety and substantial debt problems, as well as
disruptions of medical care. Participants described various borrowing
strategies (eg, credit cards), legal problems (eg, debt collections),
and threats to their nonmedical household budgets (eg, food, housing).
Participants described explicit and rank-ordered strategies for coping
with new medical expenses. Participants understood their health benefits
with exceptional detail but described considerable anxiety about changes
to those benefits that could easily disrupt carefully managed household
budgets. Benefit designs that resulted in large variations in financial
liability from month to month (eg, large deductibles or coverage gaps)
imposed considerable financial challenges.

CONCLUSIONS As health care cost sharing grows, policy makers will need
to consider the consequences of high cost sharing for families facing
strained household budgets. Although the generosity of health insurance
is important, continuity of benefits and month-to-month stability of
financial liability are also important and may be undervalued in policy


From the Results:

Four issues figured prominently. First, the structure of health
insurance—especially gaps in coverage, such as the Medicare Part D
"doughnut hole" — powerfully affected financial well-being. Second,
financial stress and debt from medical expenditures had a strong
influence on day-to-day personal, financial, and medical decision
making. Third, participants turned to family and other sources to help
manage the costs of their illnesses, which resulted in financial,
emotional, and social challenges for all family members. Fourth,
participants managed high out-of-pocket health care costs using a range
of strategies that were potentially disruptive to their medical care.

Comment: We have plenty of studies which demonstrate that out-of-pocket
cost sharing for health care can expose patients to significant
financial burdens and impair their access to care. This study provides a
valuable addition to our knowledge base because it demonstrates just how
disruptive these expanding innovations in cost sharing can be.

This study does not quantify the problem, nor was it intended to. Rather
it provides us with a qualitative assessment of those who do face
insurance-induced financial barriers to care, including, significantly,
cost sharing in the Medicare program (part of the reason we want an
improved Medicare).

Read the last paragraph in the excerpts above, under "From the Results."
These insurance innovations that supposedly are designed to make
patients better shoppers of health care are causing severe financial
stresses, unwise but unavoidable choices in forging health care, while
fostering "financial, emotional, and social challenges for all family

How well will the Affordable Care Act address these problems? First, the
design of the essential health benefits required of the plans, although
fairly broad, allows important benefits to be excluded as long as there
is token representation of each general category of benefits. Also most
exchange plans will penalize patients for obtaining care outside of
their networks - again impairing affordability and access to important
services that may be available only outside of the networks.

Probably the most significant disruptive element in the exchange plans
is that most people will be enrolled in plans with either 60 or 70
percent actuarial value. Most of the plans will achieve these low
actuarial values by requiring high deductibles and perhaps co-payments
or coinsurance - some of the very tools that result in the disruptions
described in today's article. Although the Affordable Care Act does
provide subsidies for both premiums and out-of-pocket expenses, for many
individuals these subsidies will not be adequate to prevent the
disruptions described.

Many nations with far lower total health care costs than ours are able
to provide comprehensive health care for everyone - with first dollar
coverage! They do not need to use disruptive out-of-pocket cost sharing
to keep their level of spending sustainable. It is no secret how they do
it. So why do our policy makers seem to want to keep it a secret here in
the Unites States?

Monday, January 14, 2013

Fwd: qotd: For patients or profits?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: For patients or profits?
Date: Mon, 14 Jan 2013 13:40:47 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
January 8, 2013
Health Care and Profits, a Poor Mix
By Eduardo Porter

Our reliance on private enterprise to provide the most essential
services stems, in part, from a more narrow understanding of our
collective responsibility to provide social goods. Private American
health care has stood out for decades among industrial nations, where
public universal coverage has long been considered a right of
citizenship. But our faith in private solutions also draws on an
ingrained belief that big government serves too many disparate
objectives and must cater to too many conflicting interests to deliver
services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that
handing over responsibility for social goals to private enterprise is
providing us with social goods of lower quality, distributed more
inequitably and at a higher cost than if government delivered or paid
for them directly.

From the high administrative costs incurred by health insurers to
screen out sick patients to the array of expensive treatments prescribed
by doctors who earn more money for every treatment they provide, our
private health care industry provides perhaps the clearest illustration
of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers
worse value for money than every other in the developed world. We spend
nearly 18 percent of the nation's economic output on health care and
still manage to leave tens of millions of Americans without adequate
access to care.

Today, again, entitlements are at the center of the national debate. Our
elected officials are consumed by slashing a budget deficit that is
expected to balloon over coming decades. With both Democrats and
Republicans unwilling to raise taxes on the middle class, the discussion
is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we
can serve our social needs at the lowest possible cost. One answer is
that we have a lot of room to do better. Improving the delivery of
social services like health care and pensions may be possible without
increasing the burden on American families, simply by removing the
profit motive from the equation.

Comment: Eduardo Porter's NYT article on the poor mix of health care
and profits resonated with PNHP members, and appropriately so. It
reminds us that our mission is not only to provide an efficient health
care financing system that would cover everyone equitably, but also to
ensure that health care be provided as "a public service rather than
bought and sold as a commodity" (from PNHP Mission Statement). Including
passive investors in health care has moved the bottom line up as the top
priority while relegating patient service to a footnote.

Friday, January 11, 2013

Fwd: qotd: Policy consequences of low growth in Medicare spending

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Policy consequences of low growth in Medicare spending
Date: Fri, 11 Jan 2013 11:18:13 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

U.S. Department of Health and Human Services
January 7, 2013
Growth In Medicare Spending Per Beneficiary Continues To Hit Historic Lows
By Richard Kronick and Rosa Po

Medicare spending per beneficiary grew just 0.4% per capita in fiscal
year 2012, continuing a pattern of very low growth in 2010 and 2011.
Together with historically low projections of per capita growth from
both the Congressional Budget Office and the Centers for Medicare and
Medicaid Services (CMS) Office of the Actuary, these statistics show
that the Affordable Care Act has helped to set Medicare on a more
sustainable path to keep its commitment to seniors and persons with
disabilities today and well into the future. The success in reducing the
rate of spending growth has been achieved without any reduction in
benefits for beneficiaries. To the contrary, Medicare beneficiaries have
gained access to additional benefits, such as increased coverage of
preventive services and lower cost-sharing for prescription drugs.

Comment: At a time when politicians are ready to attack Medicare
spending, this report on the projected slow growth in Medicare spending
per beneficiary might seem to be useful in helping to keep the wolves
away. But there are some very serious concerns behind these projections.

There has been some debate about whether the slowing is due to the
recession and slow recovery, or if it is due to the implementation of
some of the features of the Affordable Care Act, or if it simply due to
changes in practice patterns related to evolving efforts of health care
professionals to improve the practice of medicine. It is likely that all
play some role.

Beyond dispute, however, is the fact that Medicare has been very
effective in slowing the growth in spending though various forms of
administered pricing, such as DRGs. The S&P Healthcare Economic Indices
have shown that Medicare has been far more effective than the private
commercial insurers in slowing the rate of growth in health care spending.

As this and other reports have shown, spending controls have not been at
the cost of a reduction in benefits to Medicare beneficiaries; in fact
benefits have expanded, though only modestly. Spending controls have
been limited to slower payment growth for health care professionals and
institutions. Although the Affordable Care Act has introduced measures
to allegedly improve quality while controlling spending, the current
efforts at implementation indicate that the emphasis is on spending
restraint, with only token attention to quality measures - measures
which are of dubious effectiveness anyway.

Thus there are two major fronts of attack over which we should be
acutely concerned:

1) The government, under the banner of the Affordable Care Act, will
continue to selectively ratchet down growth in Medicare spending while
largely leaving the private sector plans alone. The expanding
differential between lower public payment through the Medicare and
Medicaid programs and higher private payments through the private
insurance plans will cause more health care providers to abandon the
public programs, with a consequent threat of impaired access for the
beneficiaries of the public programs. As long as private insurers are
there to provide a relief valve, there is a very real risk that the
public programs will be underfunded. If private plans were eliminated,
as a single payer the government would be obligated to ensure the
solvency of the health care delivery system.

2) The current political push for austerity measures has made these
public programs vulnerable to the
"we-have-a-spending-problem-not-revenue-problem" cranks that populate
our nation's capitol. There is a genuine fear that some of the critical
thinkers negotiating with the cranks will plea pragmatism as they trade
away important features of our social programs.

We need the opposite approach. We need to reinforce Medicare and then
expand it to cover everyone. Complacency with the current
politically-expedient implementation of Affordable Care Act will lead us
further down the path of no return, that is unless we're ready for a

Fwd: qotd: Full NRC/IOM report is free

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Full NRC/IOM report is free
Date: Thu, 10 Jan 2013 21:03:02 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Today I wrote, "U.S. Health in International Perspective: Shorter Lives,
Poorer Health" - Full 405 page report can be downloaded for fee at this

That contained a typo. The full NRC/IOM report can be downloaded for free.

Thursday, January 10, 2013

Fwd: qotd: U.S. Health in International Perspective: Shorter Lives, Poorer Health

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: U.S. Health in International Perspective: Shorter Lives,
Poorer Health
Date: Thu, 10 Jan 2013 16:01:07 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

National Research Council
Institute of Medicine
January 2013
U.S. Health in International Perspective: Shorter Lives, Poorer Health

The United States is among the wealthiest nations in the world, but it
is far from the healthiest. Although Americans' life expectancy and
health have improved over the past century, these gains have lagged
behind those of other high-income countries. This health disadvantage
prevails even though the United states spends far more per person on
health care than any other nation.

To gain a better understanding of this problem, the National Institutes
of Health (NIH) asked the National Research Council and the Institute of
Medicine to convene a panel of experts to investigate potential reasons
for the U.S. health disadvantage and to assess larger implications. The
panel's findings are detailed in its report, U.S. Health in
International Perspective: Shorter Lives, Poorer Health.

The panel was struck by the gravity of its findings. For many years,
Americans have been dying at younger ages than people in almost all
other high-income countries. This disadvantage has been getting worse
for three decades, especially among women.

When compared with the average of peer countries, Americans as a group
fare worse in at least nine health areas:

* infant mortality and low birth weight

* injuries and homicides

* adolescent pregnancy and sexually transmitted infections

* HIV and AIDS

* drug-related deaths

* obesity and diabetes

* heart disease

* chronic lung disease

* disability

Many of these conditions have a particularly profound effect on young
people, reducing the odds that Americans will live to age 50. And for
those who reach age 50, these conditions contribute to poorer health and
greater illness later in life.

The United States does enjoy a few health advantages when compared with
peer countries, including lower cancer death rates and greater control
of blood pressure and cholesterol levels. Americans who reach age 75 can
expect to live longer than people in the peer countries. With these
exceptions, however, other high-income countries outrank the United
States on most measures.

Why are Americans so unhealthy?

The panel's inquiry found multiple likely explanations for the U.S.
health disadvantage:

* Health systems. Unlike its peer countries, the United States has a
relatively large uninsured population and more limited access to primary
care. Americans are more likely to find their health care inaccessible
or unaffordable and to report lapses in the quality and safety of care
outside of hospitals.

* Health behaviors. Although Americans are currently less likely to
smoke and may drink alcohol less heavily than people in peer countries,
they consume the most calories per person, have higher rates of drug
abuse, are less likely to use seat belts, are involved in more traffic
accidents that involve alcohol, and are more likely to use firearms in
acts of violence.

* Social and economic conditions. Although the income of Americans is
higher on average than in other countries, the United States also has
higher levels of poverty (especially child poverty) and income
inequality and lower rates of social mobility. Other countries are
outpacing the United States in the education of young people, which also
affects health. And Americans benefit less from safety net programs that
can buffer the negative health effects of poverty and other social

* Physical environments. U.S. communities and the built environment are
more likely than those in peer countries to be designed around
automobiles, and this may discourage physical activity and contribute to

The tragedy is not that the United States is losing a contest with other
countries, but that Americans are dying and suffering from illness and
injury at rates that are demonstrably unnecessary. Superior health
outcomes in other nations show that Americans can also enjoy better health.

"U.S. Health in International Perspective: Shorter Lives, Poorer Health"
- Full 405 page report can be downloaded for fee at this link:

Comment: The United States is sick, literally and figuratively. We have
the most expensive health care system, yet the worst health outcomes of
the wealthier nations. The failures are not only with our health system
but with much broader sociopolitical institutions.

In response to these glaring deficiencies, this NRC/IOM report places an
emphasis on further research to better define the problem and identify
interventions that would help. Research is fine, but we do not need to
wait any longer when so many of the deficiencies our already in our face.

The brief paragraph above on health systems confirms the pressing need
for an effective universal insurance system, along with an expansion of
our primary care infrastructure. Enacting the PNHP single payer model
would finally set us in the right direction toward a high-performance
health care system.

The social and economic conditions, physical environments, and health
behaviors demonstrate a crying need for much more effective
sociopolitical public policies. Not only do we need a reinforcement of
our public health system, we also need greater public action in
education, community planning, and especially responsible government
policies to correct the gut-wrenching social and economic injustices
that permeate our society.

From the opponents of reform we continue to hear that we have the
greatest health care system in the world and that we have the very best
health outcomes. Download this highly credible report so that you will
have it readily available to expose these liars for what they are. Also
use it to educate politicians on the broad spectrum of urgent public
policies that we so desperately need.

And while we're at it, we need to fire the politicians who are
promulgating these cruel lies.