Monday, June 30, 2014

qotd: Supreme Court decision: Whose religious freedom?


June 30, 2014

Opinion of the Court


Justice Alito delivered the opinion of the Court.

We must decide in these cases whether the Religious Freedom Restoration
Act of 1993 (RFRA), 107 Stat. 1488, 42 U. S. C. §2000bb et seq., permits
the United States Department of Health and Human Services (HHS) to
demand that three closely held corporations provide health-insurance
coverage for methods of contraception that violate the sincerely held
religious beliefs of the companies' owners.

In holding that the HHS mandate is unlawful, we reject HHS's argument
that the owners of the companies forfeited all RFRA protection when they
decided to organize their businesses as corporations rather than sole
proprietorships or general partnerships. The plain terms of RFRA make it
perfectly clear that Congress did not discriminate in this way against
men and women who wish to run their businesses as for-profit
corporations in the manner required by their religious beliefs.

Since RFRA applies in these cases, we must decide whether the challenged
HHS regulations substantially burden the exercise of religion, and we
hold that they do.


Ginsburg, J., dissenting

Importantly, the decisions whether to claim benefits under the plans are
made not by Hobby Lobby or Conestoga, but by the covered employees and
dependents, in consultation with their health care providers. Should an
employee of Hobby Lobby or Conestoga share the religious beliefs of the
Greens and Hahns, she is of course under no compulsion to use the
contraceptives in question. But "[n]o individual decision by an employee
and her physician — be it to use contraception, treat an infection, or
have a hip replaced — is in any meaningful sense [her employer's]
decision or action." Grote v. Sebelius, 708 F. 3d 850, 865 (CA7 2013)
(Rovner, J., dissenting). It is doubtful that Congress, when it
specified that burdens must be "substantia[l]," had in mind a linkage
thus interrupted by independent decisionmakers (the woman and her health
counselor) standing between the challenged government action and the
religious exercise claimed to be infringed. Any decision to use
contraceptives made by a woman covered under Hobby Lobby's or
Conestoga's plan will not be propelled by the Government, it will be the
woman's autonomous choice, informed by the physician she consults.


Comment by Don McCanne

Allowing an employer to deny coverage of family planning services for
employees, strictly on the basis of the employer's own religion, is yet
one more flaw in our highly dysfunctional system of health care
financing - a system that is being perpetuated by the Affordable Care
Act. If we had a single payer national health program, the employer
would not be involved.

As Justice Ginsburg stated in her dissent, a woman's use of family
planning services should be "the woman's autonomous choice, informed by
the physician she consults." If religious beliefs enter into that
decision, it should be the religious beliefs of the individual and not
anyone else.

Friday, June 27, 2014

qotd: Problem with defaulting to automatic plan renewal in exchanges

Department of Health and Human Services
June 19, 2014
Proposed rule

This proposed rule would specify additional options for annual
eligibility redeterminations and renewal and re-enrollment notice
requirements for qualified health plans offered through the Exchange,
beginning with annual redeterminations for coverage for plan year 2015.

In paragraph (j)(1), we propose that if an enrollee remains eligible for
enrollment in a QHP through the Exchange upon annual redetermination,
and the product under which the QHP in which he or she was enrolled
remains available for renewal, consistent with 45 CFR §147.106, such
enrollee will have his or her enrollment in a QHP under the product
renewed unless he or she terminates coverage, including termination of
coverage in connection with voluntarily selecting a different QHP, in
accordance with §155.430. In this situation, we propose that the QHP in
which the enrollee will be renewed will be selected according to the
following order of priority: first, in the same plan as the enrollee's
current QHP, unless the current QHP is not available; second, if the
enrollee's current QHP is not available, the enrollee's coverage will be
renewed in a plan at the same metal level as the enrollee's current QHP;
third, if the enrollee's current QHP is not available and the enrollee's
product no longer includes a plan at the same metal level as the
enrollee's current QHP, the enrollee's coverage will be renewed in a
plan that is one metal level higher or lower than the enrollee's current
QHP; and fourth, if the enrollee's current QHP is not available and the
enrollee's product no longer includes a plan that is at the same metal
level as, or one metal level higher or lower than the enrollee's current
QHP, the enrollee's coverage will be renewed in any other plan offered
under the product in which the enrollee's current QHP is offered in
which the enrollee is eligible to enroll.


June 26, 2014
Exchange Plan Renewals: Many Consumers Face Sizeable Premium Increases
in 2015 Unless They Switch Plans
By Elizabeth Carpenter

Under the Affordable Care Act, federal premium assistance is tied to the
second lowest cost silver plan ("benchmark plan") in a given region.
Subsidized exchange enrollees who select a more expensive plan must
pay the difference—dollar for dollar—between the benchmark plan premium
and their selection. In six of nine states analyzed by Avalere, the
2014 benchmark silver plan will lose benchmark status in 2015. Further,
in seven of the nine states, the lowest cost silver plan will also
change in 2015.

"Most enrollees in 2014 chose a plan based on the monthly premium.
However, the lowest cost plans in 2014 may no longer be low cost in
2015," said Elizabeth Carpenter, director at Avalere Health. "Before
consumers renew their 2014 plan, they should consider the tradeoff
between continuity of care and lower monthly premiums."

"Two-thirds of people enrolling in silver plans are choosing one of the
two lowest cost silver options," said Caroline Pearson, vice president
at Avalere. "The competitive landscape for plans is changing in 2015.
However, the premium subsidies are tied to the benchmark plan and a
percentage of income. Consumers have to pay the difference if they
enroll in a plan more expensive than the benchmark. Those receiving
federal premium subsidies may need to switch plans in 2015 to avoid
paying more than the limits established by the ACA, and the impact will
be more profound for lower-income consumers."


Comment by Don McCanne

Acknowledging the complexity of the administration of the exchanges
under the Affordable Care Act, HHS has decided to simplify the process
by making renewal of plan enrollment automatic unless the enrollee
decides on a different option. It is estimated that about 95 percent of
enrollees will qualify for automatic renewal, and undoubtedly many will
passively accept this hassle-free option. That may not be a wise choice.

The Avalere report indicates that the benchmark silver tier plan - the
plan with the second lowest premium in the silver tier - will change in
many of the exchanges since premium bids are changing for most plans.
Since the enrollee is responsible for the full balance of the premium
above the benchmark plan, net premiums for the enrollees could increase
significantly unless the person opted to change to next year's benchmark
plan or a plan close to it.

As Avalere director Elizabeth Carpenter states, "(consumers) should
consider the tradeoff between continuity of care and lower monthly
premiums." This means that those current enrollees who do not passively
accept higher premiums will be forced to choose between higher premiums
or a change in their narrow provider networks, the latter likely
resulting in disruption of continuity of care.

Further, according to the HHS rule, the individual could be transferred
to a different metal tier, thereby losing eligibility for the subsidies
for cost sharing, though that would likely occur only in exchanges that
have few choices.

Even something as simple as "automatic renewal" becomes complex when you
try to rely on market dynamics to satisfy private insurers. Imagine if
at renewal time you didn't have to make a decision on what premiums you
could afford, or on what provider networks you would choose when none of
them quite fit, or where you might fall based on subsidy eligibility

Imagine instead if the concept of renewal did not even exist - you were
simply automatically enrolled for life. We really do need to replace
this boondoggle with a single payer national health program - quality
health care for everyone at a price we can afford.

Wednesday, June 25, 2014

qotd: Disturbing PwC report on employer medical cost trends

PwC Health Research Institute
June 2014
Medical Cost Trend: Behind the Numbers 2015

PwC's Health Research Institute (HRI) projects 2015's medical cost trend
to be 6.8% — a modest increase over our 2014 projection of 6.5%. This
projection is based on HRI's analysis of medical costs in the large
employer insurance market, which covers about 150 million Americans. By
comparison, Medicare serves 52 million beneficiaries and a little over 8
million Americans enrolled in the public exchanges this year.

The net growth rate in 2015, after accounting for benefit design changes
such as higher deductibles and narrow provider networks, is expected to
be 4.8%. Benefit design changes typically hold down spending growth by
shifting costs to consumers, who often choose less expensive healthcare

Although total US health spending will likely increase as more people
gain insurance under the Affordable Care Act (ACA), it may have little
effect on employer health spending. The increase in utilization under
the ACA will likely drive up total national health expenditures without
changing prices for those with employer coverage.

High-deductible plans will continue to tamp down use of services

The popularity of high-deductible health plans continues to rise as
employers attempt to manage their benefit costs. According to PwC's 2014
Touchstone Survey, 44% of employers across all industries are
considering high-deductible plans as the only insurance option for their
employees during the next three years. In addition, according to the
same survey, 33% of employers are considering moving their active
employees to a private exchange in the next three years, and this
strategy tends to accelerate employee adoption of higher deductible plans.

Now more than ever, consumers are experiencing increased financial
responsibility and are evaluating and rethinking how and when to spend.

Consumers become cost-conscious healthcare shoppers

The ongoing growth in high-deductible plans ultimately influences
consumer behavior on the number and type of health services purchased.
Eighty-five percent of employers in PwC's 2014 Touchstone Survey have
already implemented or are considering an increase in employee
cost-sharing through plan design changes over the next three years, and
44% of employers are considering offering high-deductible plans as the
only insurance option for their employees over the next three years.

While increased cost sharing and high-deductibles do not affect medical
inflation directly, consumer behavior does. Cost remains a top concern
for consumers and affects the health choices they make. According to a
December 2013 HRI survey, 40% of consumers said that healthcare expenses
put a strain on their budget. And a recent study in the journal Health
Affairs about families with high-deductible health plans observed
deliberate changes in those families' use of health services. Families
enrolled in high-deductible plans used fewer brand name drugs, had fewer
doctor visits, and spent less per visit.

Risk-based contracts are beginning to reduce costs

Insurers and employers are increasingly using risk-based payments in
their physician and hospital contracts to reduce costs. Risk-based
contracts can include quality bonuses and penalties, shared savings
programs that encourage physicians to cut costs, and patient-centered
medical homes (PCMH), which pay physicians to manage and coordinate
care. Most health plan actuaries interviewed by HRI reported that these
strategies are starting to reap cost savings.

Employers: What are they doing now?

Employers continue to pursue a range of cost-cutting strategies with a
fresh emphasis on shifting more responsibility onto workers. According
to PwC's 2014 Touchstone survey, 26% of employers have a high-deductible
health plan as their highest enrolled medical plan in 2014—the highest
percentage ever. Controlling costs through high-deductible plans is not
the only strategy employers are trying. Offering plans with narrow
provider networks, investing in wellness programs, contracting directly
with centers of excellence, or even
participating in private exchanges, may save employers money. Consumer
behavior is also beginning to impact the spending growth rate.


Comment by Don McCanne

This PwC medical cost trend applies to the large employer health
insurance market, covering about 150 million Americans. The increase in
costs for 2015 is anticipated to be 6.8%, again well in excess of the
rate of inflation. Perhaps most alarming is the estimate of net growth -
4.8% - a reduction accomplished by "benefit design changes such as
higher deductibles and narrow provider networks."

We have discussed repeatedly the perversities of higher deductibles and
narrower provider networks - reducing spending by impairing access and
making health care less affordable for patients in need - yet that is
the direction where the mainstay of health care coverage -
employer-sponsored plans - is headed.

We need to remove employers and private insurers from the health care
equation. A single payer national health program would eliminate the
need for deductibles and would provide unlimited choice of health care
professionals and institutions, while actually controlling health care
spending. Its time is now.

Tuesday, June 24, 2014

qotd: ACA not adequate to offset insurance loss from divorce

National Bureau of Economic Research
NBER Working Paper No. 20233
June 2014
Marital Disruption and Health Insurance
By H. Elizabeth Peters, Kosali Simon, and Jamie Rubenstein Taber

Despite the high levels of marital disruption in the United States, and
substantial reliance on family-based health insurance, little research
is available on the consequences of marital disruption for insurance
coverage among men, women, and children. We address this shortfall by
examining patterns of coverage surrounding marital disruption. We find
large differences in coverage across marital status groups in the
cross-section. In longitudinal analyses that focus on within-person
change, we find small overall coverage changes but large changes in type
of coverage following marital disruption. Both men and women show
increases in private coverage in their own names, but offsetting
decreases in dependent coverage tend to be larger. Dependent coverage
for children also declines after marital dissolution, even though
children are still likely to be eligible for that coverage. Children
and, to a lesser extent, women show increases in public coverage around
the time of divorce or separation. The most vulnerable group appears to
be lower-educated women with children because the increases in private,
own-name, and public insurance are not large enough to offset the large
decrease in dependent coverage.

New provisions in the Affordable Care Act (ACA) will increase
availability of health insurance, especially through Medicaid expansions
and subsidized exchange-based private coverage, and may mitigate some of
the detrimental impacts of marital disruption. However, because
employers are expected to remain the main source of coverage for the
nonelderly population (Congressional Budget Office 2012) and because of
lingering uncertainty regarding state compliance with expansions (Kaiser
Family Foundation 2013), marital disruption is likely to remain a cause
of instability in insurance coverage.


Comment by Don McCanne

To no surprise, this study confirms that divorce is disruptive to health
insurance coverage, especially for spouses and dependent children. That
disruption is worse for more vulnerable lower-educated women with
children. Since employer-sponsored coverage is expected to remain the
most dominant form of insurance and most susceptible to changes due to
divorce, and since many states are avoiding compliance with the
intentions of improving coverage through the expansions authorized in
the Affordable Care Act, and since many divorced individuals and their
dependents will qualify for hardship exemptions allowing them to remain
uninsured, marital disruption will remain a significant cause of being

We are now inundated with reports about how well the Affordable Care Act
is working - the glass half-full argument. What about those who will be
left out because their share is in the empty half of the glass? We need
a full glass - a single payer national health program - but we didn't
get it. Many divorcees and their children will be victims of our
mediocre, half-assed effort (excuse me, half-glass). Well, it was
half-assed and it's time we said it.

Monday, June 23, 2014

qotd: Arnold “Bud” Relman

The New York Times
June 21, 2014
Dr. Arnold Relman, Outspoken Medical Editor, Dies at 91
By Douglas Martin

In a provocative essay in the New England journal on Oct. 23, 1980, Dr.
Relman, the editor in chief, issued the clarion call that would resound
through his career, assailing the American health care system as caring
more about making money than curing the sick. He called it a "new
medical-industrial complex."

His targets were not the old-line drug companies and medical-equipment
suppliers, but rather a new generation of health care and medical
services — profit-driven hospitals and nursing homes, diagnostic
laboratories, home-care services, kidney dialysis centers and other
businesses that made up a multibillion-dollar industry.

"The private health care industry is primarily interested in selling
services that are profitable, but patients are interested only in
services that they need," he wrote. In an editorial, The Times said he
had "raised a timely warning."

In 2012, asked how his prediction had turned out, Dr. Relman said
medical profiteering had become even worse than he could have imagined.

His prescription was a single taxpayer-supported insurance system, like
Medicare, to replace hundreds of private, high-overhead insurance
companies, which he called "parasites." To control costs, he advocated
that doctors be paid a salary rather than a fee for each service performed.

Dr. Relman recognized that his recommendations for repairing the health
care system might be politically impossible, but he insisted that it was
imperative to keep trying. Though he said he was glad that the health
care law signed by President Obama in 2010 enabled more people to get
insurance, he saw the legislation as a partial reform at best.

The health care system, he said, was in need of a more aggressive
solution to fundamental problems, which he had discussed, somewhat
philosophically, in an interview with Technology Review in 1989.

"Many people think that doctors make their recommendations from a basis
of scientific certainty, that the facts are very clear and there's only
one way to diagnose or treat an illness," he told the review. "In
reality, that's not always the case. Many things are a matter of
conjecture, tradition, convenience, habit. In this gray area, where the
facts are not clear and one has to make certain assumptions, it is
unfortunately very easy to do things primarily because they are
economically attractive."


Physicians for a National Health Program (PNHP)
The Arnold Relman Memorial Fund

From "Physicians and Politics" by Arnold S. Relman, M.D., in JAMA
Internal Medicine, June 2, 2014:

"A new health care system that provides universal access and is
affordable and efficient will be difficult to achieve. The private
insurers and all the other businesses that profit from the current
commercial system will resist it. Major reform will need wide public
support, which in turn will rely on advocacy by the medical profession.
But I believe that reform will nevertheless be eventually enacted
because it meets a widely shared and growing public desire for more
fairness in an American society pervaded by inequality in access to good
health care and many other social benefits.

"Physicians have a unique power to reshape the medical care system. They
are what makes it work and are best qualified to use and evaluate its
resources. But if they never unite to press for major reform, the future
of health care in the United States will indeed be bleak. We will end up
either with a system controlled by blind market forces or with a system
entangled in complicated and intrusive government regulations. In either
case it would be impossible to practice good patient-centered medicine,
and the quality and effectiveness of our health care system would sink
even lower among the ranks of developed countries. It is up to the
medical profession to see that this does not happen."

Dr. Arnold S. Relman, professor emeritus of medicine and social medicine
at Harvard Medical School, and past editor-in-chief of The New England
Journal of Medicine, died on June 17, 2014. He was 91.

Dr. Relman was one of the most distinguished figures in U.S. medicine,
and he leaves a rich legacy of research and writing on the economic,
ethical, legal and social dimensions of health care.

An important part of this legacy is embodied in his influential book, "A
Second Opinion: A Plan for Universal Coverage Serving Patients Over
Profit," in which he makes an impassioned case for establishing "a
single-payer system sponsored by the federal government" coupled with "a
reorganized medical care system based on independent multispecialty
group practice with salaried physicians."

Among Dr. Relman's many achievements during his tenure as
editor-in-chief at the NEJM, he oversaw the journal's publication of "A
National Health Program for the United States: A Physicians' Proposal,"
by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. At
the time, in 1989, the article's appearance in the NEJM represented a
major breakthrough for the mainstream discussion of single payer in the
medical profession. It also served as a seminal article in the
establishment of Physicians for a National Health Program.

In addition to Dr. Relman's numerous awards and honors from professional
societies, scientific academies, and universities, in November 2013 he
was presented with PNHP's Dr. Quentin D. Young Health Activist Award for
his unswerving advocacy for a more just and equitable health care system
in the United States.

Dr. Relman leaves his wife, Dr. Marcia Angell; two sons, Dr. David
Relman and John Relman; a daughter, Margaret Batten; six granddaughters;
and two stepdaughters, Lara and Eliza Goitein.

Shortly before his death, Dr. Relman asked that in lieu of flowers,
donations in his memory be directed to PNHP.

Physicians for a National Health Program is honoring Dr. Relman's legacy
by establishing The Arnold Relman Memorial Fund, dedicated to expanding
PNHP's special outreach programs to the medical profession, including to
medical residents and fellows, to advance the understanding and
realization of Dr. Relman's vision.

The Arnold Relman Memorial Fund


Comment by Don McCanne

Although some have described Dr. Relman's 1980 New England Journal of
Medicine essay on the medical-industrial complex as controversial, it
would better be described as a release of the medical profession from
the shackles of the old conservative guard of organized medicine.
Although always exercising editorial independence, the NEJM was a
publication of the Massachusetts Medical Society - the state chapter of
organized medicine. For those of us on the West Coast who were somewhat
removed from Boston and Chicago medical politics, Dr. Relman became and
remained a beacon of hope for the future of a health care system that
would be wholly dedicated to the patient rather than to vested interests.

Perhaps the greatest breakthrough was in 1989 when he published in NEJM
"A National Health Program for the United States: A Physicians'
Proposal," by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29
others. That signaled the start of a movement coming from within the
medical profession in support of health care justice for all.

Although Dr. Relman had requested that donations be made to PNHP in lieu
of flowers, the paramount action that we should take is to honor his
legacy by intensifying our efforts to transform our health card system
from a medical-industrial complex into a nirvana of the healing arts.
That does require that we become more thoroughly enmeshed in technical
details such as enacting an Expanded and Improved Medicare for All. But
Bud Relman wouldn't have it any other way.

Friday, June 20, 2014

qotd: Facts disappoint both sides of the reform debate

Kaiser Family Foundation
June 19, 2014
Survey of Non-Group Health Insurance Enrollees
By Liz Hamel, Mira Rao, Larry Levitt, Gary Claxton, Cynthia Cox, Karen
Pollitz and Mollyann Brodie

The Kaiser Family Foundation Survey of Non-Group Health Insurance
Enrollees is the first in a series of surveys taking a closer look at
the entire non-group market. This first survey was conducted from early
April to early May 2014, after the close of the first ACA open
enrollment period. It reports the views and experience of all non-group
enrollees, including those with coverage obtained both inside and
outside the Exchanges, and those who were uninsured prior to the ACA as
well as those who had a previous source of coverage (non-group or

* The ACA motivated many non-group enrollees to get coverage, and
nearly six in ten Exchange enrollees were previously uninsured

* Enrollees in ACA-compliant plans report somewhat worse health than
those in pre-ACA plans

* Majority gives positive ratings to their new insurance plans and says
they are a good value, though four in ten find it difficult to afford
their monthly premium

* Among plan switchers, as many report paying less as paying more for
their new plans, but survey shows some signs of a trend toward narrower
provider networks

* Plan switchers are less likely to be satisfied with plan costs, maybe
because half of them report having their previous plan cancelled

* Half got help with enrollment; most say the shopping process was
easy, but a third say it was difficult to set up a Marketplace account

* In the non-group market, those most likely to feel they have
benefited from the ACA are people getting subsidies, those most likely
to feel negatively impacted are those who had their plans cancelled

As a whole, non-group enrollees are more likely than the public overall
to have a favorable view of the ACA – they are roughly evenly split
between positive and negative views (47 percent favorable, 43 percent
unfavorable), while views among 18-64 year-olds nationally are more
negative than positive (38 percent favorable, 46 percent unfavorable1.
Like it is nationally, opinion of the ACA among non-group enrollees is
strongly divided along party lines. About equal shares of non-group
enrollees feel their families have benefited (34 percent) and been
negatively affected (29 percent) by the ACA. However, these averages
mask substantial differences within the non-group market. Those who are
most likely to feel they have benefited from the law are people
receiving government financial assistance for Exchange plan premiums (60
percent benefited), while those most likely to feel they have been
negatively affected by the law are people who experienced a plan
cancellation in the past year (57 percent negatively affected).

The Wall Street Journal
June 19, 2014
Does the Affordable Care Act Cover the Uninsured?
By Drew Altman

Among the facts: 57% of those who bought coverage from the new
marketplaces during the first ACA open-enrollment period were previously
uninsured, and seven out of 10 of them had been uninsured for two years
or more.

The number of uninsured people covered through the exchanges is far
higher than critics of the ACA have suggested. On the other hand, the
number is probably a little lower than supporters of the health-care law
would like. As is typical in the highly polarized debate about the ACA,
the facts are not what either side would want them to be.


Comment by Don McCanne

It is ironic that we have a health reform program that satisfies neither
proponents nor opponents. On the question of how effective has the
Affordable Care Act been in insuring those who were previously
uninsured, supporters are concerned that it was not enough and critics
are disappointed to see that more people became insured under the
program than had been insured under prior plans (since that refutes
their argument that the exchanges are ineffective because it only
shifted previously insured individuals into the exchanges).

KFF's Drew Altman makes the point that "in the highly polarized debate
about the ACA, the facts are not what either side would want them to be."

So is this a balanced debate between two sides with legitimate views?
Opponents would like to see much of the Act repealed, but the few
recommendations they do have, they can't even agree on. Besides, most of
their recommendations would not repair the flaws in our health care
system, and some would make them worse.

Supporters at least want to see improvements in coverage, access and
affordability, not to mention quality, but they realize that ACA is
falling far short of goals (though they may not want to admit it) and
has actually had a negative impact in lowering the actuarial value of
plans - making health care less affordable for many by increasing
out-of-pocket costs - while also reducing access by paring down the
numbers of physicians and hospitals in the insurers' provider networks.

We can reject the views of those polarized against reform as not being
responsive to our overpriced and underperforming health care system.

Although we support the views of those who would repair the flaws, we
can reject the policies they have selected as being cruelly inadequate.
Those who really do want reform should join us in supporting single
payer - a model that would be truly universal, accessible, affordable,
and, properly designed, would improve the quality of health care in the
United States. In fact, many of the current opponents might consider
supporting a program that actually would work, especially if they see
that it would not increase overall spending. We should tell them about it.

Thursday, June 19, 2014

qotd: Correction - 6/19/14 comment

In today's comment, the following sentence is obviously in error:

"In the meantime, we have an administration that is willing to waive the
penalties for not being uninsured for 23 million people to whom they are
granting hardship exemptions."

Of course, the administration is providing hardship exemptions for those
not being insured (not uninsured).

Sorry, I'm human.

qotd: Aetna’s Bertolini assures us that premium increases will be less than 20%

The Wall Street Journal
June 18, 2014
Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law
By Louise Radnofsky

Hundreds of thousands of consumers nationwide who bought insurance plans
under the Affordable Care Act will face a choice this fall: swallow
higher premiums to stay in their plan, or save money by switching.

That is the picture emerging from proposed 2015 insurance rates in the
10 states that have completed their filings, which stretch from Rhode
Island to Washington state. In all but one of them, the largest health
insurer in the state is proposing to increase premiums between 8.5% and
22.8% for next year, according to a Wall Street Journal review of the
filings. That percentage represents the average rate increases for all
individual health plans offered by that carrier.

At the same time, insurers with the smallest enrollments are proposing
to cut rates so they can lure customers as the cheapest plans in their

The rate proposals reflect a combination of big carriers stepping back
from initial aggressive pricing, rising medical costs and increased
competition during the second year of President Barack Obama's health law.

With dominant market share now, analysts say, carriers feel they have
room to raise rates. Nine of the carriers are proposing average
increases for 2015 that range from 8.5% by Anthem Inc. in Virginia to
22.8% from CareFirst for its BlueChoice plans in Maryland. Most of these
large carriers' proposed rate increases hover around 10%.

Erin Shields Britt, a spokeswoman for the Department of Health and Human
Services, said the new exchange system "drives competition among plans,
requiring issuers to be more conscious of how they stack up to their
competitors, which is a trend we are already seeing accelerate in a
number of states, with new plans entering the market."


June 11, 2014
Aetna CEO says 2015 Obamacare rates increase less than 20 pct
By Caroline Humer

Health insurer Aetna Inc is submitting premium rates to regulators for
2015 Obamacare insurance plans that generally increase less than 20
percent from 2014, Chief Executive Officer Mark Bertolini said on Wednesday.

Bertolini said that customers are disenrolling from exchange plans on a
regular basis but that the company still expects to have 450,000
exchange customers at year end. He said that while he did not know the
reason for these customers leaving, he suspected that it was due to the
out-of-pocket costs before members reach their deductibles.


Comment by Don McCanne

Because of uncertainty of claims experience and instability in
enrollment, it is difficult for insurers to set their 2015 premiums to
match market conditions. But what is projected so far is that the
dominant insurers intend to raise their premiums about 10 percent,
ranging between 8.5 and 22.8 percent, according to this WSJ report.
Aetna's Mark Bertolini assures us that increases will be "less than 20
percent." What a relief.

Our Department of Health and Human Services is thoroughly sold on the
concept of using markets to price insurance products. As their
spokeswoman, Erin Britt, says, the new exchange system "drives
competition among plans, requiring issuers to be more conscious of how
they stack up to their competitors." Let's look a little bit closer at
what this market competition means.

The insurance underwriting cycle is a phenomenon in which insurers enter
the market with low premiums in an effort to gain a larger share of the
market. Once they have that share, they increase their premiums to the
maximum tolerated. In the meantime, competitors with a smaller share of
the market lower their premiums in an attempt to increase their share.
Because their premiums are too low and their volume is too small, they
fail and shut down. That leaves the dominant insurers in a position to
charge even higher premiums than their costs would warrant.
Patient/consumers end up being the losers.

That is precisely what is happening now, according to this report. The
dominant insurers are raising their rates significantly (but "under
20%") and "insurers with the smallest enrollments are proposing to cut
rates so they can lure customers as the cheapest plans in their markets."

These sick market dynamics are part of the reason that we have the least
effective health care financing system in the world. Nobel laureate
Kenneth Arrow explained to us decades ago why markets do not work in
health care. While it is true that they do not work for the
patient/consumer, market distortions work very well in moving our
financial resources into the hands of those controlling the markets.

Mark Bertolini, who is keeping Aetna's premium increases below 20
percent, for 2013 received an executive compensation of $30,712,565.
Works pretty well for him. In the meantime, we have an administration
that is willing to waive the penalties for not being uninsured for 23
million people to whom they are granting hardship exemptions. Those 23
million have to suffer because we dare not interfere with the dynamics
of market competition between health insurers.

Each day I write these comments, this is the point at which my blood
pressure goes up and I have to restrain myself from using inappropriate
language. I don't know how much longer I can do that. Using the
democratic process, we need to take over our government by electing
representatives who serve us, the people, rather than serving those
whose "r" is greater than our "g."

At the following link, Paul Krugman explains Thomas Piketty's r>g. It is
very wonkish, but skim on through to the end and you'll get the point.

Tuesday, June 17, 2014

qotd: Narrow Provider Networks: Balancing Affordability with Access - a flawed approach

Urban Institute
Georgetown University Center on Health Insurance Reforms
May 2014
Narrow Provider Networks in New Health Plans: Balancing Affordability
with Access to Quality Care
By Sabrina Corlette, JoAnn Volk, Robert Berenson and Judy Feder

New network configurations offer trade-offs for consumers. Many insurers
were able to lower their overall costs by reducing the prices they pay
participating providers, which in turn allowed them to lower their
premiums to attract price-conscious shoppers. However, in many cases,
consumers have been surprised to discover that their new plan offers a
more limited choice of providers. Some others willing to pay more to
purchase a plan with broader access to providers have found that only
limited-network plans are available in their area.

It is not yet clear whether these new, narrower network plans can
effectively deliver on the benefits promised under the plan. If
policyholders opt to seek medically necessary care out-of-network, it
could expose them to significant financial liabilities. If policyholders
delay or forgo care because in-network providers can't meet their needs,
it could put their health at risk.

Consequently, state and federal policy-makers are taking another look at
the Affordable Care Act (ACA) requirement that plans participating on
the new health insurance marketplaces maintain an adequate provider
network. In doing so, they must strike a delicate balance. If they
overly constrain insurers' ability to negotiate with providers,
consumers could face significant premium increases. On the other hand,
consumers must be able to choose among plans with confidence that they
have a sufficient network to deliver the benefits promised and that they
will not be exposed to unanticipated health and financial risks because
of an inadequate network. Insurers also need incentives to take provider
quality into account (in addition to prices).


There is no perfect approach to the oversight of health plan networks.
In the absence of other government policies to constrain provider
prices, insurers' ability to exclude or threaten to exclude providers
from the network is important to their ability to negotiate
reimbursement rates and offer more affordable premiums to consumers. On
the other hand, if insurers narrow their networks too much, consumers
could be harmed if forced to go out-of- network or to a less-preferred
provider tier to meet their needs. Policy-makers therefore need to
strike a balance between consumer protection and insurer flexibility.

Our proposed approach sets minimum quantitative standards, with waivers
for certain providers based on price and quality; improves transparency
and consumer information to give consumers better tools to make informed
choices; gives insurers the flexibility to develop more value-oriented
network designs so long as they maintain a provider network that can
meet people's needs; and — to assure effective consumer protection — calls
for continuous monitoring of consumers' use of out-of-network services,
complaints and appeals, and more active oversight of plan behavior.

Full report (10 pages):


Comment by Don McCanne

This report provides an excellent discussion of the tradeoffs between
affordability and access to care when insurers use networks of
providers, especially the trendy narrow networks in many of the ACA
exchange plans. Unfortunately, the authors' approach to trying to
achieve an optimal balance misses an opportunity both to totally avoid
the impaired access characteristic of narrow networks, and to make
health care even more affordable.

The flaw is that they assume that private health plans are a given. With
that, they then try to achieve a compromise between avoiding excessively
reduced access to providers and reducing insurance premiums by
restricting patients to providers who agree to lower contracted rates. A
single payer system would have full choice of providers and would be
more affordable because of the efficiencies of a government administered
program, including its power as a monopsony. Compared to single payer,
patients enrolled in narrow network plans have less choice of providers
and pay more. They lose on both counts.

Even broader networks found in the majority of private plans still
compromise between these choices, though not to as great of a degree.
But they still do compromise.

The remedial proposals in this report are designed to support the
superfluous private insurer intermediaries, while compromising access
and cost for patients. Our health care system should be about patients,
not insurers.

It is not as if the authors of the report do not understand this. They
write, "In the absence of other government policies to constrain
provider prices…" If they are going to change policy, why don't they
move to policies that actually benefit patients? Like a single payer
national health program - full access to all health care professionals
and institutions, in an equitably funded system that all of us can afford.

Friday, June 13, 2014

qotd: Pew Research on the Government’s Role in Health Care

Pew Research Center
June 12, 2014
Political Polarization in the American Public

Section 4: Political Compromise and Divisive Policy Debates

Government's Role in Health Care

The idea of a single-payer health care system – in which the government
pays for all health care costs – has long been a dream of many liberals.
But when Congress took up health care reform in 2009, Democrats united
behind a market-based proposal – what became the Affordable Care Act –
which was seen as more politically feasible.

The current survey finds that government involvement in the health care
system continues to draw extensive liberal support: Fully 89% of
consistent liberals say it is the responsibility of the federal
government to make sure all Americans have health care coverage. And
roughly half – 54% – think health insurance "should be provided through
a single national health insurance system run by the government."

Overall, the public is divided over how far the government should go in
providing health care. About half (47%) say the government has a
responsibility to make sure all Americans have health care coverage,
while 50% say that is not the responsibility of the federal government.

Those who believe the government does have a responsibility to ensure
health coverage were asked if health insurance should be provided
through a mix of private insurance companies and the government, or if
the government alone should provide insurance. The single-payer option
was supported by 21%, while about as many (23%) favor a mix of public
and private insurance.

On the other side of the issue, while half say it isn't the government's
responsibility to make sure all have health care coverage, relatively
few want the government to get out of the health care system entirely.
Rather, 43% say it's not the government's responsibility to ensure
health care coverage for all, but believe the government should
"continue programs like Medicare and Medicaid for seniors and the very
poor." Only 6% of Americans go so far as to say the government "should
not be involved in providing health insurance at all."

Even among consistent conservatives, there is minimal support for the
government having absolutely no role in providing health care.
Three-quarters of consistent conservatives (75%) say the government
should continue Medicare and Medicaid while just 20% think the
government should not be involved in providing health insurance.

Bar graph of poll results on government involvement in health care:

Table 4.7 Government Role in Health Care

Q121/a/b: Do you think it is the responsibility of the federal
government to make sure all Americans have health care coverage, or is
that not the responsibility of the federal government?

ASK IF GOV'T RESPONSIBILITY: Should health insurance (Be provided
through a single national health insurance system run by the government)
OR (Continue to be provided through a mix of private insurance companies
and government programs) [RANDOMIZE]?

ASK IF NOT GOV'T RESPONSIBILITY: Should the government (Not be involved
in providing health insurance at all) OR (Continue programs like
Medicare and Medicaid for seniors and the very poor) [RANDOMIZE]?

Table of results at this link:


Comment by Don McCanne

It is often said, based on many polls, that about 60 percent of
Americans support a single payer national health program. How solid is
that support? This important poll from Pew Research Center provides some

Those polled were split into two groups based on whether or not they
thought that it is the responsibility of the federal government to make
sure all Americans have health care coverage. They were split fairly
evenly - 47 percent believing that it is a government responsibility and
50 percent believing that it is not. But then the 50 percent who thought
it is not a government responsibility split into 43 percent of the total
believing that we should keep Medicare and Medicaid and only 6 percent
holding the position that government should not be involved at all.

This demonstrates a problem with polling. We tend to think that answers
to seemingly straightforward questions accurately represent the views of
the public. But against a background of rhetoric, memes, subliminal
persuasion, and the messages of controlled media (think Fox), simple
responses are not all that simple. The oft-repeated line, "Keep
government out of my Medicare," facetiously represents the complexity of
seemingly simple concepts. Fully half of people seem to believe that
they do not want the government to have the responsibility of making
sure that all Americans have health care coverage, yet actually only 6
percent do not want the government involved if it means eliminating
Medicare and Medicaid. That does not seem to be intuitive. People do
want the government involved, even though half said that health care
coverage wasn't the government's responsibility.

Single payer supporters likely will be troubled by the further responses
of the nearly one-half who do believe that the government should be
involved. Of those individuals ideologically classified as "Consistently
Liberal" 89 percent believe that it is a government responsibility, yet
only 54 percent believe that we should have a single national health
insurance system run by the government; 31 percent believe that we
should have a mix of private insurance and government programs. Of
"Consistently Conservative" 98 percent believe that the government
should not be involved, and zero percent support single payer (though
that 98 percent drops to 20 percent of the "consistently conservative"
when asked about Medicare and Medicaid).

Overall, only 21 percent of Americans in this poll seem to believe that
we should have a single national health insurance system run by the

Most single payer supporters find this difficult to believe. But the
view is quite malleable and subject to exposure to memes, rhetoric,
political advertising and whatever. As examples, California's
Proposition 186 and Oregon's Measure 23 - two single payer ballot
measures - had support in the polls early in their campaigns, yet
three-fourths of voters rejected Prop. 186, and four-fifths rejected
Measure 23. Late in each campaign, the insurance industry had very
little difficulty in taking advantage of the malleability of the views
on single payer.

How could the voters be so deceived? It's easy. It took only one more
question in this Pew poll to change opposition to government involvement
from 50 percent to 6 percent!

The lesson is that we cannot rest on believing that the 60 percent of
Americans who support single payer will eventually drive the political
process and bring us reform. That 60 percent is not an absolute - ask
single payer supporters in California and Oregon. People need to have a
much better understanding of health policy than they do. We need a solid
foundation that cannot be washed away by memes. That is a monumental
task, but that is what we are faced with.

We have a lot of educating to do. Get to work.

Addendum: The full Pew report represents a massive undertaking of
defining political polarization in America. It is important to
understand better this polarization if we hope to communicate our views
on a superior alternative for health care financing - a single payer
national health program (or, using malleable political rhetoric, "an
improved Medicare for all").

Political Polarization in the American Public:

I also want to thank Harvard Professor Robert Blendon for the help he
has given me in understanding political polling. Several years ago,
responding to my request to get the wording right on single payer in the
polls that Harvard and Kaiser Family Foundation were conducting, he sent
me a large package of material that amounted to a mini-course on
political polling. He convinced me how naive my view was that if we
could just phrase the poll questions appropriately, we could get a
stronger response supporting single payer and then use that to move the
political process. We may have many polls with a 60 percent favorable
response, but do we have single payer?

Thursday, June 12, 2014

qotd: Austin Frakt: ACA fails moral test for affordable care

The JAMA Forum
June 11, 2014
The Moral Case for Affordable Coverage and How Obamacare Fails To Live
Up to It
By Austin Frakt, PhD

Some health policy commentators have claimed that President Obama and
Affordable Care Act (ACA) supporters have not made a convincing moral
case for coverage expansion. Scholars suggest that support for the law
could turn, in part, on the moral argument for it. What is that
argument, and is implementation of the law consistent with it?

We can make some headway by turning to Norman Daniels, PhD; Brendan
Saloner, PhD; and Adriane Gelpi, who articulate one possible moral case
for universal coverage. Their key assumption is that there is a "social
obligation to protect opportunity."

From this, a lot follows. One's opportunity is threatened by poor
health. In sickness, one cannot learn or earn as efficiently, let alone
enjoy the same length or quality of life. Therefore, protecting
opportunity implies protection of access to health care services that
promote and preserve health. And, it's hard to argue with the notion
that such access should be protected equally.

Access to health care is enhanced by health insurance. As Daniels,
Saloner, and Gelpi argue, universal health insurance is a means to this
end. But it's not the only way. The key is to recognize that equality of
access is not equality of receipt. The authors are not suggesting that
we have a moral obligation to ensure that everyone receive the same
amount of health care, merely that everyone have the same degree of
access to it.

This more modest obligation would be met in a system that does not cover
everyone but extends equal opportunity of access to affordable coverage
to everyone. That is, equal opportunity to obtain coverage is a
necessary condition for equal access to health care, though some may
choose not to avail themselves of that care or that coverage. Put
another way, if we are morally satisfied with a regime under which
people can choose whether to receive care, we ought to be morally
satisfied with one under which people can choose whether to obtain
coverage for it, so long as there is equal opportunity of access to that
coverage and the care it facilitates.

The distinction is crucial because the ACA was not designed for
universal coverage, and it will not achieve it. However, it was passed
with the more modest ambition to provide universal access to affordable
coverage, the very thing we're morally obligated to provide.

But, when you go beyond the law's ambition and consider its actual
implementation, there are some problems. It has failed to provide
universal access to affordable coverage in at least 2 ways. First, the
Supreme Court ruled to permit states to opt out of Medicaid expansion
without penalty. Though gradually, more states are expanding their
programs, many states still have not. In those states, millions of poor
residents lack access to affordable coverage. No matter what institution
one wishes to blame, this is a moral failing.

Second, for some consumers, the products offered in the new exchanges
are unaffordable, even with subsidies. This is a serious ethical
concern, as addressed by Saloner and Daniels.

"[T]he exchanges leave families vulnerable to burdensome out-of-pocket
spending for treating health conditions that are costly but not
necessarily catastrophic. For example, 25 percent of individuals in the
United States have a major chronic condition such as a mood disorder,
diabetes, heart disease, asthma, or hypertension. The annual cost of
treating such conditions, including visits with specialists and payments
for medications, can exceed several thousands of dollars, even with
health insurance (Soni 2009). Under the ACA, a family of four with an
income around 275 percent of the [federal poverty level] ($64 000 in
2010) would be responsible for premium costs of around $5600 and would
not experience relief from cost sharing until it had reached half the
family cap, around $6000 in 2010 (KFF 2010b)."

Jed Graham of Investor's Business Daily recently reported that such
affordability concerns have become reality. He documents that some
families covered by exchange plans could face out-of-pocket costs as
high as 40%. By any reasonable definition of affordable, this is not.
This is another moral failing.

So, what can be done to bring policy into better alignment with
morality? First, all states could expand Medicaid. Second, Saloner and
Daniels suggest that subsidies could be increased for families with
higher health care burdens, such as chronic conditions. Third, tax
credits, (which now kick in when premiums are higher than a specified
percentage of income) could take into account other out-of-pocket costs.
Saloner and Daniels offer a final suggestion:

"[E]xchanges could be redesigned to protect specific types of
investments by providing income disregards for money that low-income
families set aside for paying children's college tuition, opening a
small business, or saving for retirement. An added benefit is that such
a proposal would encourage families to increase their assets and to
build financial stability."

All of these approaches would make coverage expansion more expensive,
unless they could be offset by policies that would make health system
delivery or health insurance more efficient.

Perhaps the moral argument for the ACA was not made fully or loudly in
years past. That's a failing we can now easily remedy. I've just done my
part. But, having done so, it's now clear that as designed and
implemented, the law is not consistent with what that moral reasoning
demands. That too can be remedied, but it will require some changes,
potentially at some cost. Do we have the moral fiber to make them?


Comment by Don McCanne

Austin Frakt is a highly credible health economist with great values,
and a person for whom I have profound respect. But sometimes he thinks
too much. He is certainly correct when he states that the design and
implementation of the Affordable Care Act (ACA) is not consistent with
"what moral reasoning demands." Where he falls short is in his
endorsement of flawed recommendations for improvement.

In conceding that ACA was not designed for universal coverage and will
not achieve it, he implies that this is acceptable since our only moral
obligation is to provide universal access to affordable coverage. The
problem is that no matter how much you modify our existing fragmented,
multi-payer system, you can never achieve truly universal access to
affordable coverage, much less to affordable health care.

Let's look at his suggestions. He says that all states could expand
Medicaid. Sure, but they aren't, and the Supreme Court ruled that we
can't make them do it. He says that we could increase subsidies for
families with greater health care burdens. Sure, but imagine the
administrative complexity assigning a health-care-needs status to each
individual and then continually adjusting that status as needs change
with time. He says that premium tax credits could take into
consideration other out-of-pocket costs. Sure, but which would be
allowable and how much documentation would be required? He says that
exchanges could be redesigned to protect certain investments such as the
children's college education fund, the expenses of starting a small
business, or saving for retirement. Sure, but talk about an
administrative nightmare, and the error rate would likely be very great.

He says that these approaches would make coverage expansion more
expensive. Sure. Much of the increased cost would be in the waste
inherent in adding more administrative complexity to a system that is
already uniquely heavily burdened with expensive administrative
excesses. He says that these extra costs could be offset by increasing
efficiency in health system delivery, but that has proven to be an
elusive goal with little gain to date. Besides, wouldn't we want the
gains from increased efficiency to be used to improve health care
delivery rather than to add to the administrative waste we already have?

The proper moral argument is to make actual health care - not health
care coverage - accessible and affordable for absolutely everyone. This
is what a single payer system would do. Tweaking our highly flawed
financing system so that more people have access to an insurance card
falls far short of the moral obligation that we have to each other.
Austin Frakt knows this. He should give up on trying to think up ways to
skirt single payer.

Wednesday, June 11, 2014

qotd: AHIP supports catastrophic plans as option

America's Health Insurance Plans (AHIP)
June 2014
Continuing Our Commitment to Consumers: Solutions That Will Enhance
Affordability, Stability and Accessibility in the New Health Care

Enhancing affordability by creating a new lower premium Catastrophic
Plan option

While millions of Americans have the peace of mind that health insurance
provides, more can be done to maximize choice and affordability for
individuals and families. As a solution to bring more families into the

Health plans support the creation of a new, lower-premium catastrophic

Such a plan would offer consumers the option of coverage that has lower
monthly premiums but still provides the comfort of knowing that their
costs will be limited in the event of a serious illness or injury.

Under the ACA, plans offered in the marketplaces fall into several
metal-level categories, based on their "actuarial value" (AV) standard -
essentially, what percentage of health care costs the policy would cover
for a standard population. Plans are labeled as platinum (90% AV), gold
(80% AV), silver (70% AV), or bronze (60% AV). A limited number of
individuals — including individuals under the age of 30 — also have the
option to purchase a catastrophic, high-deductible plan, although it has
an actuarial value that is comparable to the bronze plan.

The new catastrophic plan would offer an AV just below the current
minimum requirement, allowing for lower premiums, but would still
include coverage of the law's mandated essential health benefits, have
no annual or lifetime benefit limits, and cover all preventive health
services with zero cost-sharing for consumers. This would allow
individuals and families eligible for premium subsidies to use that
financial assistance to purchase the new plan, an option currently
unavailable to consumers purchasing the ACA catastrophic plan.

We believe a new catastrophic plan would further the public policy goal
of affordability and call upon policymakers to expand consumer choices
by allowing this lower-premium option to be offered.


Comment by Don McCanne

One of the worst failures of the Affordable Care Act (ACA) is that, even
with subsidies, the premiums and out-of-pocket expenses are unaffordable
for far too many people. AHIP now proposes to make the premiums slightly
more affordable by offering catastrophic plans with very high
deductibles that would make accessing health care truly unaffordable for
even more people (cost sharing subsidies are available only for silver
plans, but coverage of the proposed catastrophic plans would fall even
below the lowest-level bronze plans).

Why would they do this? Could it be that they want to capture a portion
of the market of the 31 million people who will still remain uninsured
after ACA is fully implemented?

Who would actually select these plans with very high deductibles but
lower premiums? Those with very low incomes who would struggle even with
subsidized premiums might choose these plans if they consider their
subsidized premiums to be "all that they can afford." These are
individuals who would be much more likely to forgo essential health care
simply because they couldn't afford their portion of the deductibles.

Very high income individuals might select these plans to insure against
catastrophic losses while deciding to self insure against more modest
medical costs. The problem with this is that this is a form of
regressive financing of the insurance risk pools. Since average health
care costs are well beyond the means of middle income families to pay
for them, wealthier individuals need to contribute more to the
collective insurance pools (as they would in a single payer financing
system). The AHIP proposal for low-premium catastrophic plans would
allow them to contribute less than average instead.

For healthy middle-income families there is a preference for the
tradeoff of lower premiums for higher-deductibles - an observation
confirmed by behavior in the individual insurance market before the
enactment of ACA. Families that remain healthy will come out ahead, but
those families that later face significant health problems often find
that they will face severe financial hardship as well - even bankruptcy.

So the insurance industry is taking a position that they can increase
their market, that they will not have to pay for routine medical
expenses, and that they can lower their medical losses by paying only
for the comparatively few individuals with high medical expenses. Little
does it matter that they have the health coverage function backwards in
that the healthy and wealthy do very well but the sick and poor suffer.
Limiting essential protection for the most vulnerable demonstrates again
why the private insurance industry should be dismissed.

The insurance industry has been very successful in getting innovations
that benefit themselves. This release by AHIP suggests that this is the
beginning of another self-serving public campaign - this time to allow
individuals to have (in marketing terms) "the choice of purchasing only
the insurance they need" - a high-deductible catastrophic health plan.

Social solidarity takes another beating.

Tuesday, June 10, 2014

qotd: CBO microsimulation of demand for health insurance

Congressional Budget Office
AcademyHealth Annual Research Meeting
June 9, 2014
Microsimulation of Demand for Health Insurance: A Method Based on
By Jessica S. Banthin

CBO's Health Insurance Simulation Model (HISIM)

* The first version was developed in 2002 to model various proposals for
expanding coverage, including direct subsidies, changes to tax
incentives, and insurance market reforms.

* The model is updated regularly to incorporate new data, the most
recent economic forecast, changes in law or regulations, and technical

Major Outcomes Modeled by CBO's HISIM

* Effects on the federal budget

* Changes in coverage by source of coverage
– Uninsured
– Employment-based coverage
– Medicaid
– Exchange(Subsidized and unsubsidized)
– Other(Including nongroup coverage outside of the exchanges, Medicare,
and military health care)

* Occasional analyses of premiums, individual out-of-pocket spending,
and outcomes by relationship to the Federal Poverty Level

By simulating behavior for each individual and family unit, the
estimates capture the distribution of responses rather than average
response by cell or subgroup, as in a simpler spreadsheet-type approach.

By taking advantage of detailed information collected in household
surveys such as the SIPP on individuals and families and the
relationships between key variables such as income, health status,
employment status, and coverage, the estimates better reflect outcomes
under new policies.

Individual behavior is modeled using an elasticity approach, not an
expected utility approach.

The General Form of HISIM's Take-Up Response

* For each person i considering coverage k:
Where 𝑗 is the initial type of insurance coverage (including uninsured)
for person i and 𝑘 is the type the person is considering selecting.

* 𝜀_𝑗𝑘 is the elasticity of the change in probability of taking-up
coverage type k, given the person's initial coverage status j, and with
respect to a percent change in price, %∆𝑝_ 𝑖𝑗𝑘 in moving from
coverage 𝑗 to coverage 𝑘.

Estimated Effects of the Affordable Care Act on Health Insurance
Coverage, 2024 (non-elderly people):


Without the ACA: 57 MILLION
Under the ACA: 31 million


Without the ACA
35 million - Medicaid and CHIP
166 million - Employment-Based
27 million - Nongroup and Other

Under the ACA
25 million - Exchanges
48 million - Medicaid and CHIP
159 million - Employment-Based
22 million - Nongroup and Other

Estimated Budgetary Effects of the Insurance Coverage Provisions of the
Affordable Care Act, 2015 to 2024:

~ $1,400 billion


Comment by Don McCanne

Imagine how complex it is trying to estimate who will be eligible for
and how many will select each of the various sources of coverage, how
many will end up uninsured, and what impact that will have on the
federal budget. The few excerpts above from the CBO presentation,
"Microsimulation of Demand for Health Insurance: A Method Based on
Elasticities," provide an inkling of the complexity of that task.

Now imagine how simple it would be to estimate coverage under a single
payer system. To the total population, estimates of births and
immigration would be added and estimates of deaths and emigration would
be subtracted. The CBO microsimulation serves as a proxy for the
profound unnecessary administrative complexity and waste in our system.

The CBO is tasked with making projections for our federal budget. They
estimate that the increase in federal spending on health care over the
next decade due solely to the insurance coverage provisions of the
Affordable Care Act will be ~ $1.4 trillion! This does not include the
fact that individuals will be paying more because of the decrease in
actuarial value of plans within and outside of the exchange, including
especially the declining actuarial value of the largest sector of all -
employer-sponsored plans. Our total national health expenditures is a
much more important number than is the portion in the federal budget.

As we've said repeatedly, the ACA model falls short on most of the goals
and it is the most expensive of the comprehensive models of reform. In
contrast, the single payer model meets essentially all goals and is the
least expensive of comprehensive models.

Because of the great number of variables and interdependent complexity
of our health care financing, the CBO has declared that in the future it
can no longer give a reasonable estimate of the changes in the federal
budget due to the implementation and perpetuation of the provisions of
the Affordable Care Act. That should tell you something. It's time for
single payer.

Monday, June 9, 2014

qotd: Charity, but not for all

The New York Times
June 8, 2014
Shifts in Charity Health Care
By The Editorial Board

Health care reform was supposed to relieve the financial strain on
hospitals that have provided a lot of free charity care to poor and
uninsured patients. The reform law, known as the Affordable Care Act,
was expected to insure most of those patients either through expanded
state Medicaid programs for the poor or through subsidized private
insurance for middle-income patients, thereby funneling new revenues to
hospitals that had previously absorbed the costs of uncompensated care.

In return for the new income streams, hospitals that treat large numbers
of the poor and get special subsidies to defray the cost would have
those subsidies reduced on the theory that they would no longer need as
much help.

But after the Supreme Court ruled that the reform law could not force
states to expand their Medicaid programs, 20 or more states declined to
do so. That failure has hurt some big urban hospitals, because their
charity care burden remains essentially the same even as their federal
aid has been cut. Even in California, which has expanded its Medicaid
program, public hospitals that serve the poorest patients could face a
big funding shortfall in future years, according to a study just
published by researchers at the University of California at Los Angeles.

A recent report in The Times by Abby Goodnough found that some hospital
systems have started tightening the requirements for charity care in
efforts to push uninsured people into signing up for subsidized health
plans on the insurance exchanges created by the reform law. In St.
Louis, for example, Barnes-Jewish Hospital has started charging
co-payments to uninsured patients no matter how poor they are. Those at
or below the poverty level ($11,670 for an individual) are charged $100
for emergency care and $50 for an office visit.

But some medical centers have seen their charity care costs decline. A
report late last month in Kaiser Health News and USA Today said that
Seattle's largest "safety net" hospital, run by the University of
Washington, saw its proportion of uninsured patients drop from 12
percent last year to a surprisingly low 2 percent this spring, putting
the hospital on track to increase its revenue by $20 million this year
from annual revenues of about $800 million.

How all of this will shake out is still uncertain. Some vulnerable
groups may find it even harder to get the care they need. Through a
quirk in the reform law, residents below the poverty line in states that
have failed to expand Medicaid are not eligible for either Medicaid or
for subsidized coverage on the insurance exchanges. Undocumented
immigrants are not eligible for Medicaid or the subsidized coverage. And
some low-income people who have enrolled in subsidized health plans may
have trouble paying their cost-sharing.

There are some ways to address these gaps. All states ought to expand
their Medicaid programs since the federal government is offering very
generous matching funds. Hospitals should move aggressively to help
people enroll in Medicaid or in subsidized plans on the exchanges. And
federal health officials need to review regularly whether health plan
co-payments are actually affordable to those living on very modest incomes.

Reader Comments:

NYT Picks

paradocs2 San Diego

It has been little appreciated that one of the most important
accomplishments of the Affordable Care Act was to create universal
national health insurance for all poor legal residents of the United
States who earned less than 138 percent of the federal poverty level.
This magnificent and compassionate action of social innovation and
national unity was frustrated by the insensitive, tragic and immoral
decision of the Supreme Court. The consequences described in this
editorial go beyond costs and inefficiencies to the persistence of the
lack of medical services in many areas of our country with appallingly
poor health statistics. The problem is more than "the financial strain
on hospitals that have provided a lot of free charity care to poor and
uninsured patients," for it extends to the suffering of those millions
of people excluded from ongoing medical care. In addition, the
circumstances described in this editorial highlight the conundrum of our
country's health care system, based as it is on on a commercial market
model and profit generating insurance companies. The best solution to
these problems, both the economic inefficiencies and the human
suffering, is the creation of a universal, national, single payer health
system looking like Medicare expanded to cover all residents. It is
profoundly upsetting that our individualistic contemporary culture and
the politicians who represent it are blind to both the moral and
economic consequences of their position.


Comment by Don McCanne

PNHP's Jeoffry Gordon, MD (paradocs2, above) stated it so well that no
additional comment is being provided today.

Friday, June 6, 2014

qotd: Insurer executive rolls her eyes over hokey ACOs

Orange County Register
updated May 1, 2014
Doctors, hospitals and insurers team up
By Bernard J. Wolfson

In an office building across the street from St. Joseph Hospital in
Orange, midlevel managers from Blue Shield of California gathered around
a conference table last week with representatives of St. Joseph Heritage
Healthcare. The setting was unremarkable, but the conversation that took
place was part of an increasingly common collaboration between a larger
insurer and one of its key medical providers.

Christy Mokrohisky perked up when Nancy England, a senior pharmacist at
Blue Shield of California, proposed a pilot program in which pharmacists
would be parachuted into the clinics and physician offices of St. Joseph
Heritage Healthcare to manage the prescriptions of sick patients for
doctors who are too busy to do it.

For Mokrohisky, who oversees St. Joseph's performance improvement
efforts, the idea spoke directly to one of her driving ambitions: to
keep chronically ill patients out of the hospital and away from the
emergency room.

"We all know that issues around medication are the number one or close
to the number one reason for trips to the ER or admissions to the
hospital," said Mokrohisky, giving voice to the consensus around the table.

The weekly meeting is only one manifestation of the huge upgrade in
communication and information sharing between the two groups that has
resulted from a 2-year-old alliance known, in the techno-jargon of the
industry, as an accountable care organization, or ACO.

The main goal of the ACO is to improve the quality of patient care and
save money through closer attention to patients' needs, monitoring of
their compliance with doctors' orders and avoidance of unnecessary

Early signs indicate the Blue Shield-St. Joseph ACO is paying dividends.
In its first year, it produced a sharp reduction in patient admissions,
length of hospital stays, emergency room visits, outpatient surgeries
and readmissions, according to in-house data from the insurance company.
The group saved a total of $11.5 million, some of which the parties
divvied up.

The financial windfall aside, people in both organizations say this kind
of ongoing collaboration between an insurance company and a large
medical group – virtually unheard of a few years ago – has changed the
way they do business with each other.

"It sounds kind of hokey, and sometimes when I say it out loud I have to
roll my eyes at myself, but it has created something I have never seen,"
says Kristen Miranda, who oversees Blue Shield's 15 ACOs statewide. "It
absolutely has changed the way we interact with these providers and the
way they interact with each other. We all now see ourselves as coming
together to look at this population as if we are on the same side
instead of just battling it out at the negotiating table every year."

Blue Shield views the kind of orchestrated care it is offering through
its ACOs as a competitive wedge against Kaiser Permanente, a health care
giant in California that has a built-in advantage because its doctors,
hospitals and insurance are integrated.

Some industry observers say ACOs are little more than traditional HMOs
in new clothing.

(Glenn Melnick, a health economist at USC) worries that the ability of
ACOs to save health care dollars may be time-limited.

"At some point, you are going to reduce inpatient days and other
measures as low as they can possibly go," he says. "Then the question
becomes whether these ACOs will be able to generate additional savings
from other areas that might be more difficult."


Comment by Don McCanne

So now with ACOs, insurers and providers are "coming together to look at
this population as if we are on the same side instead of just battling
it out at the negotiating table every year." They are sharing a
"financial windfall" by having accomplished "a sharp reduction in
patient admissions, length of hospital stays, emergency room visits,
outpatient surgeries and readmissions, according to in-house data from
the insurance company." The insurers and providers have conspired to
split the gains from not providing care. No wonder the person overseeing
Blue Shield's 15 ACOs has to "roll my eyes" since it seems so "hokey."

No more hokey. Let's have a financing system geared to patients, not to
insurers - a single payer national health program.

Thursday, June 5, 2014

qotd: Center for Public Integrity on the Medicare Advantage Money Grab

The Center for Public Integrity
June 4, 2014
The Medicare Advantage Money Grab

Why Medicare Advantage costs taxpayers billions more than it should
By Fred Schulte, David Donald and Erin Durkin

(Medicare Advantage) plans have sharply driven up costs in many parts of
the United States — larding on tens of billions of dollars in
overcharges and other suspect billings based in part on inflated
assessments of how sick patients are, an investigation by the Center for
Public Integrity has found.

Dominated by private insurers, Medicare Advantage now covers nearly 16
million Americans at a cost expected to top $150 billion this year. Many
seniors choose the managed-care Medicare Advantage option instead of the
traditional government-run Medicare program because it fills gaps in
coverage, can cost less in out-of-pocket expenses and offers extra
benefits, such as dental and eye care.

But billions of tax dollars are misspent every year through billing
errors linked to a payment tool called a "risk score," which is supposed
to pay Medicare Advantage plans higher rates for sicker patients and
less for those in good health.

Government officials have struggled for years to halt health plans from
running up patient risk scores and, in many cases, wresting higher
Medicare payments than they deserve, records show.

The Center's findings are based on an analysis of Medicare Advantage
enrollment data from 2007 through 2011, as well as thousands of pages of
government audits, research papers and other documents.

Federal officials who run the Medicare program repeatedly refused to be
interviewed or answer written questions.

Key findings:

* Federal officials have made billions in "improper" payments to
Medicare Advantage plans traced to risk score errors.

* Medicare Advantage risk scores rose much faster than the national
average in hundreds of counties nationwide between 2007 and 2011. That
rise in risk scores cost taxpayers more than $36 billion; critics
attribute that more to aggressive billing than sicker patients.

* Though federal health officials have recently disclosed some Medicare
billing data, key financial records of Medicare Advantage plans have
been kept under wraps.

* The failure to crack down on health plans that overbill doesn't bode
well for the Affordable Care Act, which relies on a similar risk scoring

Thomas Scully, who helped get the program running under President George
W. Bush, said rates were generous in hopes of enticing insurers to
expand their Medicare business and not shy away from people in poor health.

"We very intentionally tried to overpay them a little bit," said Scully,
now a Washington lobbyist with numerous health care industry clients.

"The Medicare Advantage Money Grab"


Comment by Don McCanne

Medicare Advantage is a program in which our government has conspired
with insurers to privatize Medicare, even though it costs far more when
private insurers are inserted as intermediaries than it does when
Medicare is administered as a public program. This report from The
Center for Public Integrity is just the latest that has exposed this
outrageous use of our tax funds.

The program was set up to deliberately overpay the plans so that they
could offer additional benefits that would entice Medicare beneficiaries
into the private plans (see Scully's comment above). Recognizing these
overpayments, Congress included in the Affordable Care Act gradual
reductions. Not to be outdone, the insurance industry has conspired with
the Obama administration and has enlisted individual members of Congress
to fight these reductions. In response, the Obama administration has
used dishonest budgetary manipulations to offset a portion of the
reductions for 2013, 2014 and 2015.

Even more outrageous is that the private insurance industry has used
"innovations" to selectively enroll healthier beneficiaries, yet used
"touch of illness" serious diagnostic codes to game risk adjustment,
which has rewarded the insurers handsomely for claiming that their
beneficiaries were much sicker than they really were. According to this
report, federal Medicare officials refused to answer questions about
these perverse practices.

The insurance industry has been very successful in framing this as
"cutting payments for Medicare," while mobilizing citizens to demand
that these cuts be prevented. The cuts are not in Medicare, but they are
a reduction of overpayments to private insurers. Yes, those who sign up
with the private plans often have lower out-of-pocket costs, but the
rest of us are paying for that through higher taxes and through our Part
B Medicare premiums that are partially transferred to the private insurers.

Since we are paying for it, we should be receiving in the traditional
Medicare program the same benefits of reduced out-of-pocket expenses.
Let the people enrolled in Medicare Advantage keep the same level of
benefits, but increase the benefits in the traditional Medicare program
to the same level, then fire the private insurers that have been
responsible for most of the cost overruns in the Medicare Advantage program.

The politicians seem to agree that we should be spending these excess
funds on Medicare, so let's be fair and spend them equitably on an
improved Medicare, but not on insurer profits and waste. While we're at
it, let's make that an improved Medicare for all.

Wednesday, June 4, 2014

qotd: Large variation in cost-sharing reductions in silver plans harms patients

Avalere Health
June 2014
Analysis of Benefit Design in Silver Plan Variations
By Kelly Brantly, Hillary Bray and Caroline Pearson

Both state-based and federally-facilitated exchanges offer financial
assistance for low-income enrollees. The assistance takes two forms:
advanced premium tax credits and cost-sharing reductions (CSRs). This
report focuses on CSR plans, which are available to individuals and
families earning between 100% of the federal poverty level (FPL) and
250% FPL.

CSR plans use federal subsidies to increase their actuarial value (AV)
and lower cost-sharing for low-income exchange enrollees. Avalere Health
conducted an analysis of the standard silver and CSR plans offered in
the federally-facilitated exchange (FFE) that spans 34 states.

* Cost-sharing reductions are more often applied across multiple types
of benefits
in 94% and 87% AV plans compared to 73% AV plans.

* Many CSR plans have MOOP (maximum out-of-pocket) limits lower than
the amount required by law.

* Almost all CSR plans feature lower deductibles than the standard
silver plans, though wide variation remains.

* Consistent with standard silver plans, copays for specialist visits
are higher than those for primary care visits.

* Low-income consumers may face very high coinsurance for drugs on
tiers three and four, which is least likely to be reduced in CSR plans.

The large variation in co-payments, co-insurance, and deductibles
required by CSR plans may not be clear to exchange enrollees with
limited income.

Across all CSR plans, there is broad variation in how issuers reduce
cost-sharing across benefit categories relative to the standard silver
plans. Because issuers have a high level of flexibility in designing
these CSR plans, cost-sharing amounts vary across services and in some
cases mirror the cost-sharing in standard silver plans.

The large variation in how plans apply the cost-sharing reductions
across covered benefits may not be clear to consumers while they are
shopping and comparing plans.

Notably, consumers with the lowest income who qualify for the highest
level of financial assistance (100% to 150% FPL) could encounter some
94% AV CSR plans with cost-sharing requirements for specific services
that are identical to standard silver plans. Even for CSR plan
cost-sharing that is reduced, out-of-pocket costs could still serve as a
barrier to accessing care.

(This analysis was funded by PhRMA.)

At this link, click "Download PDF" for full report:


Comment by Don McCanne

This report provides a highly technical explanation of the great
variation in cost-sharing provisions for lower-income individuals
insured by the various silver plans in the exchanges. This is just
another example of the unnecessary increase in administrative complexity
brought to us by the Affordable Care Act.

What is particularly egregious is the intolerably high cost-sharing
required of low-income individuals who need higher-tier drugs. High cost
drugs, such as those used to treat hepatitis C or those that meet the
expanded recommendations for HIV prophylaxis, will be unaffordable for
individuals with low incomes, in spite of the cost-sharing reductions.

By making these drugs unaffordable, the insurers accomplish two ends: 1)
the cost sharing is so high that many lower-income individuals will not
fill their prescriptions, saving the insurers those costs, and 2) those
with chronic hepatitis C, those at high risk of HIV exposure, or the
many others who have disorders requiring expensive tier 4 drugs will
likely select other insurers once they realize that the drugs that they
need will be unaffordable (favorable selection). These are some of the
newer innovations that the insurers are using since they are now
prohibited from using medical underwriting to deny insurance to
individuals with greater anticipated health care costs.

More administrative complexity. More insurer chicanery. More inequity in
the provision of health care. And this is because our politicians
selected the most expensive model of health care reform - one that
places insurers and pharmaceutical firms above patients. Many studies
have shown that the most efficient and equitable model of comprehensive
health care coverage - single payer - is also the least expensive of the
comprehensive models of reform. Amongst other important measures, it
would put pharmaceutical firms in their place, and it would dismiss the
intrusive and wasteful insurers from the scene.

We can still do that.