Insurance shopping without health insurance literacy

American Institutes for Research
October 2014
A Little Knowledge Is a Risky Thing: Wide Gap in What People Think They
Know About Health Insurance and What They Actually Know
By Kathryn A. Paez and Coretta J. Mallery

Health insurance is among the most complicated and costly products that
consumers buy. Lacking health insurance-related knowledge and skills —
or health insurance literacy — puts people at risk of choosing an
insurance product that could fail to provide needed benefits or protect
them financially.

More than half of all people surveyed were moderately or very confident
in their ability to choose and use a health plan that is best for their
family, but their actual knowledge was less.

Because many people believe they know more than they do about health
insurance, they may not fully understand their options before committing
to a particular health plan for an entire year, or they may have an
unpleasant surprise when they use health care services and end up owing
a larger amount out of pocket than expected.

Understanding Plan Type and Calculating Cost Sharing

When comparing and selecting health plans, 61 percent of people said
they were moderately or very confident that they could choose the best
health plan for themselves. Only 23 percent could identify
characteristics of a preferred provider organization (PPO) — for
example, "you may have to pay a percentage of the bill."

Three out of four people said they were moderately or very confident
that they have the knowledge to use health insurance. However, only 20
percent could accurately calculate how much they would pay for a visit
to an in-network doctor when presented with a cost-sharing scenario that
included a copayment, deductible and coinsurance.

Skills Differ by Age, Care Use, Race, Income, Education

Generally younger people were less health-insurance literate — for
example, people aged 22 to 34 got an average of 55 percent of knowledge
and skills items correct.

Likewise, people who use health care less frequently had more difficulties.

Health insurance knowledge and skills also varied greatly by race, with
blacks and Hispanics on average having less knowledge about health
insurance.

Knowledge and skills also decreased with income and education.

Implications

Choosing and using a health insurance plan can be daunting, especially
for people with little experience with the health care system and health
insurance. According to the 2013 AIR Health Insurance Literacy Survey,
many Americans are unprepared to make informed choices when selecting
and using health plans — especially younger people, minorities, people
with lower incomes and those with less education.

At the same time, health insurance and benefit structures are becoming
even more complex. As mentioned previously, consumers likely don't need
to know the exact differences between an HMO and PPO, but they do need
to consider important health plan characteristics — such as patient cost
sharing, which hospitals and doctors are in network, and the rules for
out-of-network coverage — when choosing a plan.

Without efforts to increase health insurance knowledge and skills, many
insured people will remain at risk of forgoing needed care if they don't
understand how their health insurance works or how to estimate
out-of-pocket costs.

At a minimum, counseling efforts could stress that once people are
enrolled, they should contact their health plan member services
department to get questions answered.

http://aircpce.org/wp-content/uploads/2014/10/11801-451-05_Issue_Brief_102014.pdf

****


Comment by Don McCanne

Great. The insurance exchanges established by the Affordable Care Act
have created a shoppers paradise for health insurance. People can choose
from different premiums, different plans, at different levels of
coverage, with different benefits, and different cost-sharing
deductibles, co-payments and coinsurance, with different networks of
physicians and hospitals, and different rules on out-of-network
coverage, not to mention different insurance structures such as PPOs,
HMOs, EPOs, and ACOs, whatever they are.

How many times have you heard physicians, nurses, health policy wonks,
and knowledgeable others say that they have trouble figuring out their
own insurance plans. Most end up waiting until they receive their
Explanation of Benefits to find out just what was covered. How on earth
can we ever expect people with little prior exposure to the intricacies
of health insurance to be able to shop intelligently for plans offered
in the exchanges? We can't.

The tragedy is that poor choices in plan selection can have major
impacts on both the physical and financial well being of the health plan
purchasers. But when you think about it, virtually every plan offered
has significant deficiencies, especially in limiting access through
narrow networks and in increasing risk of financial hardship through
excessive cost sharing. The subsidies may help some, but they are
inadequate for most. Not only are the choices difficult to make, they
are mostly all bad choices.

Those concerned about lack of "health insurance literacy" - an almost
universal phenomenon - suggest that the solution is to increase
transparency in the exchanges. But the authors of this report suggest
that we need much more. Health insurance shoppers need additional
training to "increase health insurance knowledge and skills." Is that
the answer?

What we want is a system wherein whenever we need health care, we go get
it. Period. What we have is a conglomeration created by private and
public intermediaries that make it difficult to decide where you can go
when you need health care and how to pay for it ex-ante (premiums) and
ex-post (cost sharing). And we end up paying much more for all of the
administrative excesses that these intermediaries have created.

Do we want to make it all go away so that each of us can simply get the
health care that we need? Easy - single payer.

Vermont is giving up on single payer

VTDigger
October 26, 2014
Correction: State No Longer Looking to Administer Medicare
By Anne Galloway

Two recent stories about the relationship between Medicare and Green
Mountain Care, the state's planned universal publicly financed health
care program – often called single-payer – were inaccurate. The stories
were based on statutes on the Legislature's website that had not been
updated.

Section (e) of chapter 18, Public Private Universal Health Care System,
in Title 33, Human Services, still states online that, "The Agency shall
seek permission from the Centers for Medicare and Medicaid Services to
be the administrator for the Medicare program in Vermont. If the Agency
is unsuccessful in obtaining such permission, Green Mountain Care shall
be the secondary payer with respect to any health service that may be
covered in whole or in part by Title XVIII of the Social Security Act
(Medicare)."

Act 144, which was enacted in 2014, repeals that section, though the
statutes have not been updated online.

Section (f) of the same chapter now reads, "Green Mountain Care shall be
the payer of last resort with respect to any health service that may be
covered in whole or in part by any other health benefit plan, including
Medicare, private health insurance, retiree health benefits, or federal
health benefit plans offered by the military, or to federal employees."

State officials have said they are no longer seeking to administer
Medicare as part of Green Mountain Care, and the law reflects that change.

It is currently unknown what Green Mountain Care will cover or what
private supplemental health insurance policies will be offered once the
program is in place.

Gov. Peter Shumlin has said there is no reason to expect that currently
available supplemental coverage options for Medicare would change if the
state moves forward with a single-payer health care system.

http://vtdigger.org/2014/10/26/correction-state-longer-looking-administer-medicare/

****

Vermont Act 144
An act relating to miscellaneous amendments to health care laws.

Sec. 1 Principles for Health Care Financing

(3) As provided in 33 V.S.A. § 1827, Green Mountain Care shall be
the payer of last resort for Vermont residents who continue to receive
health care through plans provided by an employer, by another state, by
a foreign government, or as a retirement benefit.

Sec. 2 Vermont Health Benefit Exchange

(4) To the extent permitted by the U.S. Department of Health and
Human Services, the Vermont Health Benefit Exchange shall permit
qualified employers to purchase qualified health benefit plans through
the Exchange website, through navigators, by telephone, or directly from
a health insurer under contract with the Vermont Health Benefit Exchange.

Sec. 6 Administration; Enrollment

(e) [Repealed.]

(f) Green Mountain Care shall be the payer of last resort with
respect to any health service that may be covered in whole or in part by
any other health benefit plan, including Medicare, private health
insurance, retiree health benefits, or federal health benefit plans
offered by the military, or to federal employees.

Governor signed bill: May 27, 2014

http://www.leg.state.vt.us/docs/2014/Bills/H-0596/ACT0144%20As%20Enacted.pdf

Green Mountain Care
http://www.greenmountaincare.org/vermont-health-insurance-plans

Vermont Health Connect
http://info.healthconnect.vermont.gov/healthplans

****

VPR
September 12, 2014
Shumlin Won't Pursue Single Payer If It Doesn't Help Economy
By Bob Kinzel

Act 48, the law that put Vermont on the path to a single-payer health
care system, was passed in 2011. It called on the governor to unveil a
single-payer financing plan in January of 2013.

That didn't happen because Shumlin said he needed more time to develop a
plan. Shumlin said he would be ready to release his proposal in January
of this year.

But Shumlin missed this deadline as well. He now says he'll unveil his
plan at the start of the Legislative session in January.

Shumlin says there's no point pursing a single-payer option if the
effort will hurt the state's business community.

"If we come up with a financing plan that doesn't grow jobs, economic
opportunity, and make Vermont more prosperous, trust me, we're not going
to do it," said Shumlin.

http://digital.vpr.net/post/shumlin-wont-pursue-single-payer-if-it-doesnt-help-economy

****


Comment by Don McCanne

Many consider Vermont to be the trailblazer for a state single payer
program, serving as a model for other states to enact single payer
reform. Vermont does have lessons for the rest of us. Let's see what
they are so far.

Green Mountain Care is Vermont's program for Medicaid and for Dr.
Dynasaur (Vermont's Medicaid program for children and pregnant women).
Most participants are now required to enroll in PC Plus - a Medicaid
primary care managed care program. Vermont Health Connect is Vermont's
health insurance exchange (marketplace) under the Affordable Care Act
through which individuals and small businesses can purchase insurance.
Many Vermonters still have access to other programs such as Medicare,
employer-sponsored health plans, retiree plans, and federal employee
programs such as FEHBP and Tricare. So far this is not really much
different than programs in other states - certainly far from single payer.

What about Medicare? Vermont has given up on attempting to become the
administrator of Medicare, much less rolling Medicare funds into a
universal single payer program. Gov. Peter Shumlin has even stated that
"there is no reason to expect that currently available supplemental
coverage options for Medicare would change." Thus apparently they are
continuing even the private Medigap supplements and private Medicare
Advantage plans.

What about Green Mountain Care - the Medicaid program that was to be the
single payer for Vermont? A few months ago legislation was signed by
Gov. Shumlin that stated, "Green Mountain Care shall be the payer of
last resort with respect to any health service that may be covered in
whole or in part by any other health benefit plan, including Medicare,
private health insurance, retiree health benefits, or federal health
benefit plans offered by the military, or to federal employees."
Further, "Green Mountain Care shall be the payer of last resort for
Vermont residents who continue to receive health care through plans
provided by an employer, by another state, by a foreign government, or
as a retirement benefit." At this point in time, that does not look like
a program that is being remodeled to fulfill the role of a single payer.

The original Vermont legislation called on Gov. Shumlin to unveil a
single payer financing plan in January, 2013. He missed that deadline
and again missed the next one in January, 2014. He now says that he
intends to release a plan in three months. We will have to wait to see
what that proposal is, but at this late stage he is saying, "trust me,
we're not going to do it," if the effort will hurt the business
community. That seems quite tenuous for having worked on it a couple of
years.

Many still talk about the enabling ACA waiver that Vermont will obtain
in 2017, but the ACA section 1332 waiver applies only to the subsidies
and some specific requirements of ACA. Even combined with Sec. 1115
Medicaid waivers and waivers for Medicare demonstration programs,
especially considering the ERISA barriers, we simply do not have enough
leeway for states to independently establish their own bona fide single
payer systems.

The point is that we must have comprehensive federal legislation if we
wish to establish state-level single payer systems. We need need the
federal funds currently used in other federal health programs such as
Medicare and Medicaid, and we need relief from federal statues and
regulations such as ERISA. It would be far better to simply enact a
national single payer program, but those who wish to pursue a state
model must still advocate for comprehensive federal legislation.

Regardless, we can have single payer if we all work together to create
the momentum for federal legislation, state and/or national, but none of
us will see single payer if we each confine our activities to our
respective states. Many have called for a cooperative effort. This is it!

Improving trust in the profession

The New England Journal of Medicine
October 23, 2014
Public Trust in Physicians — U.S. Medicine in International Perspective
By Robert J. Blendon, Sc.D., John M. Benson, M.A., and Joachim O. Hero,
M.P.H.

One emerging question is what role the medical profession and its
leaders will play in shaping future national health care policies that
affect decision making about patient care.

Research suggests that for physicians to play a substantial role in such
decision making, there has to be a relatively high level of public trust
in the profession's views and leadership. But an examination of U.S.
public-opinion data over time and of recent comparative data on public
trust in physicians as a group in 29 industrialized countries raises a
note of caution about physicians' potential role and influence with the
U.S. public.

In a project supported by the Robert Wood Johnson Foundation and the
National Institute of Mental Health, we reviewed historical polling data
on public trust in U.S. physicians and medical leaders from 1966 through
2014, as well as a 29-country survey conducted from March 2011 through
April 2013 as part of the International Social Survey Programme (ISSP),
a cross-national collaboration among universities and independent
research institutions.

In 1966, nearly three fourths (73%) of Americans said they had great
confidence in the leaders of the medical profession. In 2012, only 34%
expressed this view. But simultaneously, trust in physicians' integrity
has remained high. More than two thirds of the public (69%) rate the
honesty and ethical standards of physicians as a group as "very high" or
"high" (Gallup 2013).

Today, public confidence in the U.S. health care system is low, with
only 23% expressing a great deal or quite a lot of confidence in the
system. We believe that the medical profession and its leaders are seen
as a contributing factor.

This phenomenon does not affect physicians in many other countries.
Indeed, the level of public trust in physicians as a group in the United
States ranks near the bottom of trust levels in the 29 industrialized
countries surveyed by the ISSP. Yet closer examination of these
comparisons reveals findings similar to those of previous U.S. surveys:
individual patients' satisfaction with the medical care they received
during their most recent physician visit does not reflect the decline in
overall trust. Rather, the United States ranks high on this measure of
satisfaction. Indeed, the United States is unique among the surveyed
countries in that it ranks near the bottom in the public's trust in the
country's physicians but near the top in patients' satisfaction with
their own medical treatment.

Part of the difference may be related to the lack of a universal health
care system in the United States. However, the countries near the top of
the international trust rankings and those near the bottom have varied
coverage systems, so the absence of a universal system seems unlikely to
be the dominant factor.

The United States also differs from most other countries in that U.S.
adults from low-income families (defined as families with incomes in the
lowest third in each country, which meant having an annual income of
less than $30,000 in the United States) are significantly less trusting
of physicians and less satisfied with their own medical care than adults
not from low-income families.

In drawing lessons from these international comparisons, it's important
to recognize that the structures in which physicians can influence
health policy vary among countries. We believe that the U.S. political
process, with its extensive media coverage, tends to make physician
advocacy seem more contentious than it seems in many other countries.
Moreover, the U.S. medical profession, unlike many of its counterparts,
does not share in the management of the health system with government
officials but instead must exert its influence from outside government
through various private medical organizations. Moreover, in terms of
health policy recommendations, the U.S. medical profession is split
among multiple specialty organizations, which may endorse competing
policies.

Nevertheless, because the United States is such an outlier, with high
patient satisfaction and low overall trust, we believe that the American
public's trust in physicians as a group can be increased if the medical
profession and its leaders deliberately take visible stands favoring
policies that would improve the nation's health and health care, even if
doing so might be disadvantageous to some physicians. In particular,
polls show that Americans see high costs as the most important problem
with the U.S. health care system, and nearly two thirds of the public
(65%) believes these costs are a very serious problem for the country.
To regain public trust, we believe that physician groups will have to
take firm positions on the best way to solve this problem. In addition,
to improve trust among low-income Americans, physician leaders could
become more visibly associated with efforts to improve the health and
financial and care arrangements for low-income people. If the medical
profession and its leaders cannot raise the level of public trust,
they're likely to find that many policy decisions affecting patient care
will be made by others, without consideration of their perspective.

http://www.nejm.org/doi/full/10.1056/NEJMp1407373

****


Comment by Don McCanne

Another unique feature of the U.S. health care system that sets us apart
from other nations: "You just can't trust doctors nowadays, but my
doctor is really good." What can we make of this?

In general, individuals are relatively satisfied with their personal
care. Low-income individuals are less satisfied, but that is likely
related to the deficient financing of their care and the consequences of
that - a characteristic of our fragmented, dysfunctional system of
financing health care. But, overall, our system is capable of ensuring
patient contentment.

It is the confidence in physician leadership that has deteriorated. The
authors of this article suggest some possible explanations, but it is
more likely that the image of the profession at large has changed from
that of the dedicated personal physician steeped in the Hippocratic
tradition, to that of the high-tech, entrepreneurial agent of the
medical-industrial complex. Combine that perspective with the very high
costs of health care today - costly care which physicians orchestrate -
and it is no wonder that the public is no longer as trusting of the
profession. Only "my doctor" is immune to this.

When you look at the role that the AMA had in the enactment of the
Affordable Care Act, it is evident that they were not there to represent
patients; they were there alongside the other elements of the
medical-industrial complex - especially the insurance, pharmaceutical
and hospital industries - to be sure that they got their own share of
the action. The only patient advocates present were the consumer
organizations that chose the default option of "political feasibility,"
becoming "strange bedfellows" of the private insurance industry.

There are many dedicated individual physicians and other health care
professionals who clearly place patients first. They are well
represented in organizations such as Physicians for a National Health
Program. They are also well represented in the AMA and the various
specialty organizations, but, as a collective voice, they are
ineffective in communicating the tradition of caring; rather they
passively communicate the acceptance of the medical-industrial complex -
a very sterile advocacy position.

Let's indulge in a fantasy. Let's imagine that our professional
organizations all joined together in a clarion call for comprehensive,
affordable, high-quality care for absolutely everyone - including those
low-income individuals who distrust the profession today. Single payer
would bring us such quality that is truly affordable.

With a voice unified in support of the patient, what do you think would
then happen to the level of confidence that the public has in the
medical profession? Physicians would once again relish respect as a
noble profession advocating for their patients. As an aside, it would
also mean that they would have a very pleasant work environment and be
adequately compensated for their efforts. If the system works for
patients, it will work for physicians.

Administrative burden on U.S. physicians

International Journal of Health Services
Volume 44, Number 4 / 2014
Administrative Work Consumes One-Sixth of U.S. Physicians' Working Hours
and Lowers Their Career Satisfaction
By Steffie Woolhandler and David U. Himmelstein

Abstract:

Doctors often complain about the burden of administrative work, but few
studies have quantified how much time clinicians devote to
administrative tasks. We quantified the time U.S. physicians spent on
administrative tasks, and its relationship to their career satisfaction,
based on a nationally representative survey of 4,720 U.S. physicians
working 20 or more hours per week in direct patient care. The average
doctor spent 8.7 hours per week (16.6% of working hours) on
administration. Psychiatrists spent the highest proportion of their time
on administration (20.3%), followed by internists (17.3%) and
family/general practitioners (17.3%). Pediatricians spent the least
amount of time, 6.7 hours per week or 14.1 percent of professional time.
Doctors in large practices, those in practices owned by a hospital, and
those with financial incentives to reduce services spent more time on
administration. More extensive use of electronic medical records was
associated with a greater administrative burden. Doctors spending more
time on administration had lower career satisfaction, even after
controlling for income and other factors. Current trends in U.S. health
policy—a shift to employment in large practices, the implementation of
electronic medical records, and the increasing prevalence of financial
risk sharing—are likely to increase doctors' paperwork burdens and may
decrease their career satisfaction.

From the Discussion

A few studies have examined the amount of time physicians spend on
billing and insurance-related paperwork—a narrower definition of
administrative work than we used. A 2000 California study estimated
billing and insurance-related work consumed 4.9 percent of physician
time. In a 2006 survey, physicians reported spending 3 hours per week
interacting with private insurance plans, with primary care doctors and
solo practitioners reporting slightly higher figures; 81.5 percent
perceived that this work was increasing. A companion 2006 survey of
office-based private practitioners in Ontario found they spent 2.2 hours
per week interacting with insurers (vs. 3.4 hours in the United States
when Medicare and Medicaid were included along with private insurers).
Differences in the time spent on these tasks by non-physician office
staff were even larger; 20.6 hours of nurse time per physician in the
United States versus 2.5 hours in Canada; 53.1 hours per week of
clerical time in the United States versus 15.9 hours in Canada; and 3.1
hours per week of senior administrators' time in the United States
versus 0.5 hours in Canada.

Much time and money are currently spent on medical billing and
paperwork. A simpler system could realize substantial savings, freeing
up more resources to expand and improve coverage.

International Journal of Health Services (click on the article for the
abstract):
http://baywood.metapress.com/app/home/issue.asp?referrer=parent&backto=journal,1,176;linkingpublicationresults,1:300313,1

Full article:
http://org.salsalabs.com/o/307/images/Physician%20admin%20time_IJHS.pdf

PNHP Press Release:
http://www.pnhp.org/news/2014/october/administrative-work-consumes-one-sixth-of-us-physicians'-time-and-erodes-their-mor

****


Comment by Don McCanne

The health care system in the United States is unique for its profound
administrative waste. This article by Steffie Woolhandler and David
Himmelstein demonstrates the intensity of the administrative burden on
physicians - a burden that is correlated with lower career satisfaction.

The good news is that we could reduce that burden and improve
satisfaction by adopting a single payer system such as they have in
Canada. But then the bad news is that we have left the political agenda
in the hands of those who are adept at buying the votes in Congress -
especially the insurance and pharmaceutical industries.

It doesn't have to be this way. After all, we are a democracy, but we
have to make the effort to have our voices heard.

****

U.S. Department of State
Bureau of International Information Programs

What Is Democracy?

The essence of democratic action is the active, freely chosen
participation of its citizens in the public life of their community and
nation. Without this broad, sustaining participation, democracy will
begin to wither and become the preserve of a small, select number of
groups and organizations.

At a minimum, citizens should educate themselves about the critical
issues confronting their society--if only to vote intelligently for
candidates running for high office.

http://www.ait.org.tw/infousa/zhtw/docs/whatsdem/whatdm3.htm

Important: Uwe Reinhardt on health care price transparency and economic theory

JAMA
October 22/29, 2014
Health Care Price Transparency and Economic Theory
By Uwe E. Reinhardt, PhD

Citizens in most economically developed nations have health insurance
coverage that results in only modest cost sharing at the time health
care is used. Furthermore, physicians, hospitals, and other clinicians
and entities that provide health care within most systems outside the
United States are paid on common fee schedules uniformly applied to all
clinicians, health care organizations, and insurers. That approach
spares the insured the need to seek out lower-priced health care and
obviates the need for transparency on the prices charged by individual
clinicians and organizations that provide health care.

Not so in the United States, where every private health insurer
negotiates prices with every health care practitioner and organization,
where large public health insurance systems such as Medicaid and
Medicare pay fees that do not cover the full cost of treating patients
covered by these programs, and where uninsured, self-paying patients can
often be asked to pay whatever can be extracted from their household
budgets, sometimes with the help of debt collectors and the judiciary.
Economists call the approach price discrimination, which means the
identical service is sold to different buyers are different prices.

This approach to pricing health care has led in the United States to a
system in which, at one end of the spectrum, hospitals and physicians
are expected by society to treat low-income patients free of charge, on
a charitable basis, or for modest fees that do not cover the cost of
those treatments and then to finance that informal catastrophic health
insurance system for the poor out of the other part of their enterprises
that they can operate as profit-maximizing business firms. This is true
even in some of the large segment of institutions referred to as
not-for-profit. The harsh excesses that this quest for profits in health
care can unleash—even among not-for-profit hospitals—have been well
reported in various articles in the popular press.

Private employers in the United States have played a pivotal role in the
evolution of this system. They hired as their agents in health care the
private insurers who helped put that system into place, and they
supported it. To gain better control over the growth of their health
spending, employers have of recent resorted to a technique long
recommended to them by the market devotees among health economists,
namely, putting the patient's "skin in the game," as the jargon goes. It
is done with health insurance policies imposing on the insured very high
annual deductibles before insurance coverage even begins, followed by
significant coinsurance, perhaps requiring patients to pay 10% to 20% of
every medical bill, up to a maximum total annual out-of-pocket
expenditure that can potentially exceed $10 000 for a family.

This approach of shifting more of the cost of employment-based health
insurance visibly and directly into the household budgets of employees
amounts to rationing parts of US health care by price and ability to pay
and delegates the bulk of the hoped-for belt-tightening to low-income
families. Because the word rationing is anathema in the US debate on
health policy, the strategy has been marketed instead under the
felicitous label of consumer-directed health care, presumably designed
to empower consumers in the health care market to take control of their
own health care. However, this strategy, based mainly on economic
theory, so far has put the cart before the horse.

In virtually all other areas of commerce, consumers know the price and
much about the quality of what they intend to buy ahead of the purchase.
This information makes comparison shopping relatively easy and is the
sine qua non of properly functioning markets. By contrast,
consumer-directed health care so far has led the newly minted consumers
of US health care (formerly patients) blindfolded into the bewildering
US health care marketplace, without accurate information on the prices
likely to be charged by competing organizations or individuals that
provide health care or on the quality of these services. Consequently,
the much ballyhooed consumer-directed health care strategy so far has
been more a cruel hoax than a smart and ethically defensible health policy.

http://jama.jamanetwork.com/article.aspx?articleid=1917413

****

JAMA
October 22/29, 2014
Association Between Availability of Health Service Prices and Payments
for These Services
By Christopher Whaley, BA; Jennifer Schneider Chafen, MD, MS; Sophie
Pinkard, MBA; Gabriella Kellerman, MD; Dena Bravata, MD, MS; Robert
Kocher, MD; Neeraj Sood, PhD

Conclusions

Use of price transparency information was associated with lower total
claims payments for common medical services. The magnitude of the
difference was largest for advanced imaging services and smallest for
clinician office visits.

http://jama.jamanetwork.com/article.aspx?articleid=1917438

****


Comment by Don McCanne

In a JAMA editorial commenting on an article about price transparency
and health care spending, Uwe Reinhardt first describes the ridiculous
system we currently have, concluding, "the much ballyhooed
consumer-directed health care strategy so far has been more a cruel hoax
than a smart and ethically defensible health policy."

He then discusses the article by Christopher Whaley and his colleagues
in which they describe price savings resulting from health care price
shopping: an average of a mere $1.18 for clinician office visits, $3.45
for laboratory tests, and a more impressive average savings of $124.74
for advanced imaging services.

Imaging aside, think about that one dollar saved by shopping office
visit prices. Does that one dollar really pay for the labor involved in
price shopping, much less the additional transportation costs and other
inconveniences of going to a different doctor, not to mention the
disruption in care provided by a primary care medical home? Not exactly
a shopper's paradise.

Even the more significant savings in advanced imaging can have drawbacks
if it results in non-coordinated care outside of a system functioning as
an integrated unit, whether or not it is technically a single integrated
health care entity.

But what is really important here lies in Uwe Reinhardt's comments. As
he states, "other clinicians and entities that provide health care
within most systems outside the United States are paid on common fee
schedules uniformly applied to all clinicians, health care
organizations, and insurers. That approach spares the insured the need
to seek out lower-priced health care and obviates the need for
transparency on the prices charged by individual clinicians and
organizations that provide health care."

Other nations pay the right amount to sustain he system, without the
waste of overpaying some nor the threat of inequitable access caused by
underpaying others. No matter how much price transparency we have in the
United States, our highly dysfunctional, fragmented system of financing
health care will never get pricing right.

Yes, we need a single payer national health program. Under such a system
the pricing would be transparent to our public administrators, and who
better could determine whether or not the price is right? We surely can't.

Covered California demonstrates the administrative complexity in renewing exchange plans

Los Angeles Times
October 17, 2014
California spends $13.4 million to fix Obamacare service woes
By Chad Terhune

California's health insurance exchange hired two outside firms for $13.4
million to address long wait times for consumers calling about their
Obamacare coverage.

"We had call response times that were far too long," said Peter Lee, the
exchange's executive director. "We were swamped."

Lee said the exchange is nearly doubling its service-center staff to
1,300 to help more than 1 million Californians renew their health-law
policies by Jan. 1. The first batch of renewal notices for 2015 went out
this week.

Covered California said more than 200,000 people have signed up for
Obamacare coverage since regular enrollment ended in April under the
Affordable Care Act.

But in a sign of the churn in the individual insurance market, an
additional 150,000 people dropped out of the exchange after getting
health benefits at work or failing to pay their premium.

People who move, lose their employer coverage or have some other
qualifying event in their life can enroll outside the normal sign-up period.

Overall, Covered California said it has 1.1 million people enrolled now,
down from its previous tally of 1.2 million.

Part of that was because the exchange said 81% of enrollees paid their
initial premium compared with its earlier estimate of 85%.

http://www.latimes.com/business/healthcare/la-fi-obamacare-california-enrollment-20141016-story.html

****


Comment by Don McCanne

When the Affordable Care Act (ACA) was being crafted, it was almost as
if the designers thought that they were developing a relatively static
system. They would simply cover the lowest-income individuals with
Medicaid, make available subsidized private plans for
moderately-low-income individuals, and then use individual and employer
mandates, under threat of penalty, to force the rest of the uninsured
into private plans. Although a limited amount of churning in and out of
various plans and programs was expected, what they did not seem to
understand was how unstable these categories actually are. The churning
is massive.

California's health insurance exchange - Covered California - provides
an example of only one part of the churning - that within the exchanges.
Just look at some of the numbers:

* The 1.2 million enrolled in Covered California dropped to 1.1
million, though the instability is much more than the 100,000 difference

* After open enrollment ended, 200,000 more enrolled in the several
months following, allowable only because they had some qualifying event
that changed their eligibility status

* Only 81 percent of enrollees paid their initial premium, so the other
19 percent were dropped

* 150,000 dropped out of the exchange for reasons such as gaining
health benefits at work, or failing to pay the premium for the exchange
plans

* 1,300 Covered California staff members are required to help about 1
million Californians renew their coverage

Although this amount of churning did not seem to be expected by the
designers of ACA, it was thought that at least those remaining in the
exchanges would have stable coverage - a static situation for them. No,
not really. Because of the variable bids of the private insurers, the
benchmark plan - the second lowest cost silver plan - is changing for
many exchange participants. Since most premiums are going up, not down,
the change in the benchmark plans will change the portion of the
premium for which most of the exchange enrollees will be responsible. To
keep their share of the premium lower, many will have to change plans.
That means that they will have to shop not only the premiums but also
shop the amount of the deductibles, and, as if that weren't enough, they
will have to shop the provider network lists which have been notorious
for their inaccuracies, if you can even find a list. Even if the
provider lists were accurate, they too are not a static as these lists
continue to change as well, with providers moving onto and off of the lists.

If nothing changes, enrollees can accept automatic renewal. That means
that nothing could have happened that would change eligibility - no
change in employment, income, residence, family size, etc. Also it means
that the insurer must be offering the same plan, and yet we know that
plan designs change frequently. Nevertheless, everyone enrolled through
the exchange plans should enquire as to their options for next year if
for no other reason than that the benchmark plan will likely have
changed, changing the amount of the premium they will have to pay. Some
patients may be dismayed that shopping for premiums may cause them to
lose their established health care providers.

There are about 1.7 million Californians who are eligible for coverage
but who remain uninsured. This does not count the undocumented. For both
logistical and administrative reasons, this will be a more difficult
group to insure. Combine this with the fact that perhaps 1 million
people already enrolled in Covered California will have to revisit their
options means that the task will inevitably necessitate extensive
administrative services.

And next year? This static system is not so static after all. And
remember that here we are discussing only the administrative hassles of
the exchanges. This does not count all of the hassles with Medicaid,
employer-sponsored plans, private plans purchased outside of the
exchanges, and the administrative nightmare of determining which of the
uninsured must pay penalties, how much they must pay, and how the
penalties are to be collected when they are linked to income tax refunds.

Suppose we had a single payer national health program. This annual
renewal, with all of the administrative costs, hassle, and especially
the grief, disappears. Why is nobody in power seriously considering an
improved Medicare for all?

Complexity of the 90 day grace period for paying exchange plan premiums

Health Affairs
Health Policy Briefs
October 16, 2014
The Ninety-Day Grace Period

To help enrollees new to the system keep their insurance, the ACA
provides a ninety-day grace period before an insurer can discontinue
someone's coverage for failure to pay a monthly premium. This applies
only to those who have received an advance premium tax credit to
purchase health insurance through the Marketplaces and have previously
paid at least one month's full premium in that benefit year.

The grace period allows for continuity of care for patients by
preventing people from shifting or "churning" in and out of coverage
when they fail to make a monthly premium payment.

In final regulations, CMS said issuers must pay all appropriate claims
for medical services rendered to the enrollee during the first month of
the grace period, and the insurer may put on hold claims for services
rendered to the enrollee in the second and third months. Issuers must
also notify HHS of such nonpayment and notify providers of the
possibility for denied claims when an enrollee is in the second and
third months of the grace period.

During these second and third months of the grace period, because the
patient is still insured, he or she cannot be billed by the provider for
any remainder that is owed for medical services that the enrollee
received. But if an enrollee fails to pay his or her premiums and the
entire grace period elapses, providers are allowed to seek payment for
the medical services they gave to that patient and for which the
insurance company did not reimburse claims.

Patient assistance programs: Some providers have expressed interest in
providing premium and cost-sharing assistance for their patients
enrolled in coverage through the Marketplaces. By helping their patients
maintain coverage and avoid the grace period in the first place,
providers hope to reduce the risk that medical claims for care they
provide will go unpaid.

However, questions continue to swirl about the legality of such an
approach. Although federal anti-kickback regulations might seem to
prohibit this type of practice, HHS has stated that such regulations do
not apply to the Marketplaces, their plans, and premium tax credits
because they are not considered "federal health care programs."

The ACA's uniform grace period could prove to play an important role in
keeping people enrolled in their plans. But big questions remain
unanswered about the financial risks to which physician practices or
hospitals could be exposed, as well as how much risk insurers face for
claims in the grace period and how that might affect premium growth for
all enrollees over time.

http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=128

****


Comment by Don McCanne

The Affordable Care Act provides a 90 day grace period during which
health care coverage through exchange plans is continued before insurers
can cancel the plans for non-payment of premiums. However, the insurers
must pay claims for only the first 30 days, whereas providers are not
allow to collect from the patient during the remaining 60 days. After 90
days of nonpayment of premiums, the patient can be retroactively billed,
though collection can be difficult since most of these patients do not
have enough funds to pay their premiums, much less their health care bills.

If you read the full Health Policy Brief, you will see that the issues
are even more complex. The 90 day rule is yet one more unnecessary
administrative burden that ACA added to our already highly complex
system of financing health care. Under a single payer system there would
be no such thing as a 90 day grace period. Financing of the health care
system would be as automatic as it is now with Medicare.

Will malpractice reform prevent “defensive medicine”?

The New England Journal of Medicine
October 16, 2014
The Effect of Malpractice Reform on Emergency Department Care
By Daniel A. Waxman, M.D., Ph.D., Michael D. Greenberg, J.D., Ph.D., M.
Susan Ridgely, J.D., Arthur L. Kellermann, M.D., M.P.H., and Paul
Heaton, Ph.D.

Emergency department care has been a particular focus of a new
generation of malpractice reform laws. Approximately a decade ago, the
states of Texas (in 2003), Georgia (in 2005), and South Carolina (in
2005) changed their malpractice standard for emergency care to "willful
and wanton negligence" (in Texas) and "gross negligence" (in Georgia and
South Carolina). From a legal standpoint, these two standards are
considered to be synonymous and are widely considered to be a very high
bar for plaintiffs. Under typical interpretations of this standard, a
plaintiff must show that a physician had "actual, subjective awareness"
of "the likelihood of serious injury" but nevertheless proceeded with
"conscious indifference."

The Texas, Georgia, and South Carolina laws are intended to protect
physicians who are practicing with incomplete information in
high-intensity care settings. The enactment of these laws offers an
unusual circumstantial experiment with which to evaluate a type of
reform that is qualitatively different from what has been studied
previously.

Study Design

We used a quasi-experimental analytic approach that was designed to
evaluate the effect of legal reform on the treatment of Medicare
patients in the emergency department; we attempted to isolate the effect
of the law from temporal trends and from characteristics of patients and
hospitals (i.e., to evaluate changes that could be attributable to the
new policy).

Results

Malpractice reform was not associated with a significant decrease in CT
or MRI utilization in any of the three states. There was no significant
reduction in per-visit emergency department charges in Texas or South
Carolina. In Georgia, reform was associated with a 3.6% reduction (95%
confidence interval [CI], 0.9 to 6.2; P=0.01) in charges. There was no
reduction in the rate of hospital admissions in any of the three states.

Discussion

Malpractice reforms in Texas, Georgia, and South Carolina, which changed
the liability standard for emergency care from ordinary negligence to
gross negligence, provide unusually broad protection for emergency
physicians. We did not find evidence that these reforms decreased
practice intensity, as measured by the rate of the use of advanced
imaging, by the rate of hospital admission, or in two of three cases, by
average charges. Although there was a small reduction in charges in one
of the three states (Georgia), our results in aggregate suggest that
these strongly protective laws caused little (if any) change in practice
intensity among physicians caring for Medicare patients in emergency
departments.

In the context of the existing literature, our findings suggest that
physicians are less motivated by legal risk than they believe themselves
to be. Although a practice culture of abundant caution clearly exists,
it seems likely that an aversion to legal risk exists in parallel with a
more general risk aversion and with other behavioral, cultural, and
economic motivations that might affect decision making. When legal risk
decreases, the "path of least resistance" may still favor
resource-intensive care. Our results suggest that malpractice reform may
have less effect on costs than has been projected.

http://www.nejm.org/doi/full/10.1056/NEJMsa1313308

****


Comment by Don McCanne

When the topic of controlling health care costs comes up, those opposed
to single payer reform, and, for that matter, opposed to the Affordable
Care Act, frequently cite the need for malpractice reform, often
claiming that defensive medicine (ordering unnecessary tests and medical
interventions merely to prevent lawsuits) is a major cause of excess
health care spending. This article casts doubt that malpractice reform
would reduce supposed defensive medicine.

The three states studied - Texas, Georgia and South Carolina - passed
laws requiring a much more rigid standard of "gross negligence" for
emergency department physicians to be found liable for malpractice. Data
available from Texas demonstrates that their reforms did reduce
malpractice claim filings by 60 percent, and reduced malpractice
payments by 70 percent. Physicians were reassured that they were
protected as long as they did not proceed with "conscious indifference"
with care that had a "likelihood of serious injury."

Now that there was no longer a need for CT and MRI scans and hospital
admissions that were done only to prevent lawsuits, the level of these
presumed defensive medicine measures should have decreased. They did not.

This suggests that these measures were taken for reasons other than
simply to prevent lawsuits. A low yield test or procedure is not
necessarily a no yield intervention. These are done because there is a
real chance, even if at low odds, that the intervention may benefit the
patient.

This study leads us to conclude that the concept that there is excessive
resource-intensive care provided strictly as defensive medicine should
be abandoned and replaced with patient-centered outcomes research to
better determine what is of value in health care (PCORI in ACA is such
an attempt).

We should no longer allow ourselves to be distracted by false promises
of health care savings through flawed concepts such as defensive
medicine. We know what will greatly reduce wasteful spending, and that
is a single payer national health program. We must not be distracted
from trying to achieve that goal.

States largely ignoring network inadequacies

Urban Institute
September 2014
Implementation of the Affordable Care Act: Cross-Cutting Issues
Six-State Case Study on Network Adequacy
By Sabrina Corlette, Kevin Lucia, and Sandy Ahn

During the transition to new health plans and new marketplaces under the
Affordable Care Act (ACA), many insurers revamped their approach to
network design, and many now offer narrower provider networks than they
have in the past. In this study for the Robert Wood Johnson Foundation's
project to monitor ACA implementation, researchers assessed network
changes and efforts at regulatory oversight in six states: Colorado,
Maryland, New York, Oregon, Rhode Island, and Virginia. Researchers
found that insurers made significant
changes to the provider networks of their individual market plans, both
inside and outside the marketplaces, and that insurers took varying
approaches to network design. Across all six states, insurers and state
officials alike reported consumer and provider confusion about which
plan networks included which providers, but most have received few
consumer complaints about their ability to obtain in-network services.
While three of the six states have taken action to improve provider
directories, it appears unlikely that state legislatures, officials and
regulators will dramatically change network adequacy standards, at least
in the short-term.

Conclusion

Insurers have used—and are likely to continue to use— network design to
curb costs and offer customers a more affordable premium. This was a
clear trend in the individual market as insurers approached the 2014
plan year, and some of our informants believe it will soon extend to the
group market as employers look for ways to reduce premiums. However,
despite concerns among some regulators, consumer advocates, and
providers that overly narrow networks could harm quality of care and
place consumers at significant financial risk, most of our study states
are not planning to significantly change their oversight of plan
networks. Though consumers reported problems with inaccurate provider
directories and a lack of consumer-friendly, comparable information
about the scope of plan networks, only half of our study states report
requiring insurers to improve the information made available to
consumers. At the same time, state officials and insurers also reported
that consumers were generally not complaining about difficulty obtaining
needed care from providers. Consequently, most state legislatures,
officials and regulators are unlikely to change network adequacy
standards, at least in the short-term.

http://www.urban.org/UploadedPDF/413240-Six-State-Case-Study-on-Network-Adequacy.pdf

****


Comment by Don McCanne

Private insurers use narrow networks of physicians and hospitals so that
they can negotiate more favorable provider rates which then supposedly
allows them to keep their insurance premiums more competitive. The
trade-off is that patients lose their choice of providers and increase
the risk that they will suffer severe financial penalties because of
unavoidable circumstances wherein care is obtained out of network, or
worse, care is not received at all because of impaired access.

The use of narrow networks will cause harm to many patients. Yet,
according to this report, for the present, "most state legislatures,
officials and regulators are unlikely to change network adequacy
standards." Also, although provider directories are notoriously
inaccurate, "only half of our study states report requiring insurers to
improve the information made available to consumers."

How much do the insurers really save by using narrow networks? The
savings is not the difference between the prices specified by the
providers and the amount contracted with the narrow network providers.
Insurers already receive sharp discounts from the providers in their
broad networks. So the savings is only the very modest additional amount
squeezed out of those who contract for the more exclusive narrower
networks. That savings is surely not worth the impaired access, loss of
choice, and potential financial hardship brought by narrow networks.

With a single payer system, fair payments apply to all physicians and
hospitals, therefore there is no need to establish separate networks.
The one network is the entire health care delivery system (except for
those who choose integrated delivery systems such as Kaiser Permanente).
Government administered pricing is far more patient friendly than
market-based manipulations, and isn't the patient what it is all about?

qotd: Status of higher payment for primary care under Medicaid

Kaiser Family Foundation
October 14, 2014
Medicaid in an Era of Health & Delivery System Reform: Results from a
50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015
By Vernon K. Smith, Kathleen Gifford, Eileen Ellis, Robin Rudowitz and
Laura Snyder

Primary Care Payments

The ACA included a provision to increase Medicaid payment rates for
primary care services to Medicare rates from January 1, 2013 through
December 31, 2014. The federal government funded 100 percent of the
difference between Medicaid rates that were in effect as of July 1, 2009
and the full Medicare rates for these two years. States were asked about
their plans to extend this provision beyond December 31, 2014 (at
regular FMAP rates). For states that have Medicaid rates for physician
services that were already at or close to 100 percent of Medicare rates,
this issue was not significant.

* Twenty-two states indicated that they would not be continuing the
primary care rate increase.

* Fifteen states (Alaska, Alabama, Colorado, Connecticut, Delaware,
Hawaii, Iowa, Maryland, Maine, Michigan, Mississippi, Nebraska, Nevada,
New Mexico, and South Carolina) indicated that they will continue the
higher rates at least partially if not fully. For example one state will
provide a proportionate increase for all primary care physicians (half
of the ACA rate increase); others plan to continue temporarily or target
it to certain types of primary care.

* Fourteen states indicated they had not yet made a decision on this
policy and were still evaluating whether the enhanced rates had any
impact on provider participation. Given the delayed implementation of
the rate enhancement and the difficulty of attributing changes in
provider enrollment and access to the enhanced payments, the impact of
the increased rates is difficult to determine.

http://kff.org/report-section/medicaid-in-an-era-of-health-delivery-system-reform-provider-rates-and-taxes-or-fees-8639/

****

Medicaid.gov

Qs &As on the Increased Medicaid Payment for Primary Care CMS 2370-F -
MANAGED CARE

Primary Care Services under Managed Care Delivery Systems

The requirements under 42 CFR 438.804 specify that the states submit two
methodologies to the Centers for Medicare & Medicaid Services (CMS) for
review and approval to implement this rule. How does approval of these
methodologies impact the approval process for managed care contracts and
rate packages for 2013?

Implementing regulations at 42 CFR 438.804 require states to submit to
CMS a methodology for calculating the July 1, 2009, baseline rate for
eligible primary care services and a methodology for calculating the
rate differential eligible for 100 percent of Federal Financial
Participation (FFP) by March 31, 2013. Further, 42 CFR 438.6 (c)(5)(vi)
establishes Managed Care Organization (MCO), Prepaid Inpatient Health
Plan (PHIP) or Prepaid Ambulatory Health Plan (PAHP) contract
requirements to comply with this provision. It is CMS's expectation that
as soon as practicable after the State submits the required
methodologies in 42 CFR 438.804 and receives CMS approval, the State will:

1. submit revised actuarial certification documents reflecting the
Medicare rate for eligible primary care services in their MCO, PIHP or
PAHP capitation rates; and
2. submit amendment(s) to this contract to ensure compliance with 42 CFR
438.6 (c)(5)(vi).

After CMS approval of the revised contract and rates, the MCO, PIHP or
PAHP must direct the full amount of the enhanced payment to the eligible
provider to reflect the enhanced payment effective January 1, 2013.
Federal financial participation (FFP) is available at a rate of 100
percent for the portion of capitation rates attributable to these
enhanced payments; however, receipt of the enhanced FFP is contingent
upon the state's successful completion of this process.

http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/Q-and-A-on-Increased-Medicaid-Payments-for-PCPs-managed-care.pdf

CMS 2370-F - MANAGED CARE (Set II)

The final rule specified that states will need to recoup the enhanced
payments made to non- eligible providers identified through the annual
statistically valid sample. Must health plans follow the same procedure
for non-eligible providers?

States must require health plans to recoup erroneous payments found
through the sampled pools of providers, and in a number of states, this
sample will include both FFS and managed care providers.

Are MCOs permitted to include amounts sufficient to account for the
payment differential on expected utilization while still holding the
sub-capitated primary care physicians at risk for some level of increase
in utilization due to the higher rates? Or must MCOs remove the risk to
primary care physicians for utilization to ensure that these physicians
receive the increased amount for actual experience?

The purpose of section 1202 of the Affordable Care Act and the final
rule is to ensure access to and utilization of beneficial primary care
services. Towards that goal, eligible primary care physicians must
receive the full benefit of the enhanced payment at the Medicare rate
for eligible services rendered. If a Medicaid managed care health plan
retains sub-capitation arrangements, the health plan would be obligated
to provide additional payments to providers to ensure that every unit of
primary care services provided is reimbursed at the Medicare rate.

http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/Qs-andAs-on-the-Increased-Medicaid-Payment-for-Primary-Care-MANAGED-CARE-Set-II.pdf

****


Comment by Don McCanne

As the Affordable Care Act (ACA) was being crafted, it was recognized
that the expansion of coverage under Medicaid could result in greater
access problems because of the low Medicaid payment rates and the lack
of willing providers. In order to improve access, at least to primary
care, it was decided to increase Medicaid primary care payment rates to
the same level as Medicare for the years 2013 and 2014. As with so many
of the ACA provisions, this seemingly simple solution has proven to be
more complex.

Before and during this transition most states were moving many or all of
their Medicaid patients into managed care programs. So the government
had to issue guidelines on how to move enhanced Medicaid primary care
payments into managed care organizations receiving capitation payments,
and to be sure that these enhanced payments were directed to the
eligible primary care providers (more administrative excesses). Although
we are near the end of the two year period in which primary care
payments are enhanced, news reports suggest that confusion and delays
have not been entirely resolved.

Although these enhanced payments were considered to be crucial in
ensuring adequate participation of primary care providers, twenty-two
states have indicated that they would not be continuing the primary care
rate increases. Fifteen states have decided to continue, though many at
lower rates and perhaps only temporarily. Fourteen states are undecided.
"Given the delayed implementation of the rate enhancement and the
difficulty of attributing changes in provider enrollment and access to
the enhanced payments, the impact of the increased rates is difficult to
determine."

Medicaid is a welfare program, and, as such, will continue to be
chronically underfunded. Medicaid patients frequently have difficulties
accessing primary care services, and the continued underfunding will
perpetuate that problem. Access to specialized services is even more
limited because of the very low participation rates of specialists.

Single payer would eliminate these injustices since we would all have
the same high-quality program - an improved Medicare for all.

qotd: Private health plans no longer assure adequate protection

The Associated Press-NORC Center for Public Affairs Research
October 2014
Privately Insured in America: Opinions on Health Care Costs and Coverage

A significant minority of those with private health insurance, including
those covered by high-deductible health plans (HDHPs), are greatly
impacted by the out-of-pocket cost of health care—they are concerned
with the uncertainty of major expenses, skip necessary medical
treatment, and experience real financial burden when obtaining health
care. All told, about 1 in 8 privately insured Americans—or more than 16
million people—face major financial hardships like going without food or
using up all of their savings as a result of medical bills.

When asked about nine specific behaviors to reduce personal health care
expenses, about half of privately insured adults age 18-64 experienced
at least one of them.

* As a result of health care costs, significant minorities of privately
insured individuals don't go to the doctor when they are sick (19
percent), go without preventive and recommended care (18 percent), use
up all or most of their savings (18 percent), and go without basic needs
(13 percent).

* A quarter of privately insured adults age 18-64 lack confidence in
their ability to pay for a major unexpected medical expense.

* The privately insured who report having a HDHP are more likely than
those who do not to decrease their contributions to savings (41 percent
vs. 26 percent) and retirement plans (28 percent vs. 15 percent) as a
result of health care costs.

* Nearly 1 in 4 adults age 18-64 covered by a HDHP reports that paying
for health care expenses caused them to use up their savings.

* Thirty-five percent of those surveyed indicate that when enrolling in
a health insurance plan, their current plan was the only option available.

* With out-of-pocket costs emerging as a major source of uncertainty
among the privately insured, more privately insured Americans choose a
health care plan with a relatively high monthly premium but lower
out-of-pocket costs (52 percent) over a plan with relatively low
premiums and higher out-of-pocket costs (40 percent), when presented
with the tradeoff.

* But, there isn't overwhelming support for plans with select networks5
designed to keep out-of-pocket costs low. Twenty percent say they are
extremely or very willing to
participate in this type of plan, 38 percent are somewhat willing, and
40 percent are not too or not at all willing.

Of those who indicate they have used health care services since
enrolling in their current health insurance plan, 39 percent say the
out-of-pocket costs being higher than expected has been a major (14
percent) or a minor (24 percent) problem.

As the health care marketplace is evolving with the advent of new
exchanges, those who purchase their health insurance plans directly or
through exchanges are more likely to express difficulty finding health
care providers covered under their plans.

Those who have changed health insurance plans and say they have HDHPs
are especially likely to cite increased costs without a corresponding
increase in quality.

http://www.apnorc.org/PDFs/Coverage/AP-NORC-Opinions%20on%20Health%20Care%20Costs%20and%20Coverage_FINAL%20web%20(1).pdf

****


Comment by Don McCanne

This new survey conducted by the Associated Press-NORC Center for Public
Affairs Research confirms, once again, that private health insurance in
the United States often is not providing adequate financial protection
for those with health care needs. More than 16 million people who have
private insurance "face major financial hardships like going without
food or using up all of their savings as a result of medical bills." The
one-half of Americans who use hardly any health care at all likely do
not realize that they are one major illness away from similar financial
hardship.

When something is not working, we should fix it. The inadequacies of
private plans cannot be repaired without intolerable increases in health
insurance premiums. Yet a well designed single payer national health
program could remove the financial barriers to care - for everyone -
without any increase in our current national health expenditures.
Without action, 30 million will remain without any insurance at all, and
many of the rest of us could remain vulnerable to high out-of-pocket
medical costs in spite of our private insurance coverage.

qotd: “Reference pricing” is yet another intrusive diversion from real reform

National Institute for Health Care Reform
NIHCR Research Brief No. 18
October 2014
Reference Pricing: A Small Piece of the Health Care Price and Quality Puzzle
By Chapin White, Megan Eguchi

As purchasers seek strategies to reduce high health care provider
prices, interest in reference pricing—or capping payment for a
particular medical service—has grown significantly. However, potential
savings to health plans and purchasers from reference pricing for
medical services are modest, according to a new analysis by researchers
at the former Center for Studying Health System Change (HSC) using 2011
private insurance claims data for about 528,000 active and retired
nonelderly autoworkers and their dependents. In 2011, the California
Public Employees' Retirement System (CalPERS) adopted reference pricing
for inpatient knee and hip replacements. Using quality and price
information, CalPERS set an upper limit of $30,000—the reference
price—for hospital facility services for a knee or hip replacement.
CalPERS designated certain in-network hospitals as meeting the reference
price, and patients using designated hospitals are responsible only for
the health plan's usual cost-sharing amounts. However, if patients use a
non-designated hospital, they are responsible for both usual cost
sharing and any amount beyond the $30,000 reference price. While
reference pricing for inpatient services has some potential to steer
patients to hospitals with better quality metrics, only limited
savings—a few tenths of a percent of total spending—are possible from
applying a similarly narrow reference pricing to other privately insured
populations. The potential savings from reference pricing are modest for
two reasons: Shoppable services only account for about a third of total
spending, and reference pricing only directly affects prices at the high
end of the price distribution. When considering reference pricing,
employers and health plans need to weigh potential savings against
increased plan complexity and financial risk to enrollees, along with
the analytical and financial resources needed to create and manage the
program.

From the Implications

The CalPERS reference pricing experience tells two different but equally
true stories—a dramatic percentage decline in prices and spending on
knee and hip replacements and an extremely small percentage decline in
total spending. To significantly impact spending among the privately
insured, reference pricing would have to be applied quite broadly. And,
even using a very inclusive list of shoppable services, the potential
savings are relatively modest.

Both conventional network-based plans—preferred provider organizations
and health maintenance organizations—and reference pricing suffer some
of the same limitations. Both types of plans rely on patient
cost-sharing differentials to steer patients to certain providers, but
the higher cost sharing cannot reasonably be applied in emergencies when
patients can't choose their provider. Also, both types of plans are
vulnerable to the demands of dominant "must-have" providers, either to
be in network or to be both in network and designated.

Compared to a limited-network plan, reference pricing faces at least
three additional logistical hurdles. First, the health plan must have
reliable price data for specific providers for specific services so that
it can set the reference price and designate providers. Even very large
plans will lack the historical data to accurately measure the prices
they typically pay to smaller hospitals. Second, the plan would ideally
have provider-specific quality metrics on hand that can be used to
assure patients that they are not being steered to low-quality
providers. Although hospital quality metrics and rankings abound, the
methodologies behind those rankings are still under development. Third,
reference pricing requires new customer-service tools to support
shopping by patients and to deal with inevitable member complaints.
Implementation would require commitment of significant resources by the
plan, potentially offsetting some or all of the savings from reductions
in payments to high-price providers.

The main disadvantage of reference pricing is that it adds a new layer
of complexity for plan administrators and enrollees. Rather than
facilities simply either being in or out of the network, there are now
three types of facilities: in-network designated, in-network
non-designated and out of network. Even more confusingly, a single
facility might be designated for one type of service—for example, an
inpatient hospital providing a knee replacement—but not designated for
another—that same hospital providing a colonoscopy in an outpatient
department. Additional complexity raises significant concerns, given
that the basic elements of conventional benefit design are already
beyond the grasp of many consumers.

One question is whether a reference pricing program can steer patients
to lower-price, adequate-quality providers. The answer, based on the
CalPERS experience, appears to be yes. But, that may not be the right
question. A better question may be why private health plans would ever
pay negotiated prices over $30,000 for inpatient knee and hip
replacements. The CalPERS reference pricing program seemingly took a
hard line against hospitals charging unreasonably high prices—$30,000 or
more—for knee and hip replacements. But, is $30,000 really a reasonable
price for an inpatient knee or hip replacement? To put that amount in
perspective, the Medicare program on average paid $14,324 for inpatient
knee and hip replacements in 2011.

http://www.nihcr.org/Reference-Pricing2

****


Comment by Don McCanne

Our policy wonks continue to look for methods of controlling health care
costs that will protect the role of private insurers, and, above all,
prevent us from drawing the inevitable conclusion that we desperately
need a single payer national health program. Reference pricing is one
more supposed cost-saving tool that has garnered much interest. What is
it and will it work?

Reference pricing is a process in which a maximum price is set for a
given medical service. The patient then either goes to a designated
provider who has agreed to accept that amount, along with contracted
patient cost sharing, as payment in full, or, if the patient chooses a
provider with higher prices, the patient must pay the full difference.

California Public Employees' Retirement System (CalPERS) experimented
with reference pricing by establishing $30,000 as a reference price for
the hospital services for a knee or hip replacement. The experiment was
considered to be a success based on the fact that 15 to 30 percent of
patients who would have gone to a non-designated hospital switched and
went to a designated hospital instead. But how do you define success?

The package fee that the private market was able to negotiate was
$30,000. Medicare on average paid $14,324 for the same services. Is it a
success when private insurers are paying double the fees set by a public
insurer?

Some might consider it to be a success when the patient did not have to
pay the difference between the reference price and the price that would
have been charged in a non-designated hospital, though what is the
patient giving up?

Consider how a decision is usually made to have a joint replacement. The
patient typically goes to his or her primary care professional where
initial evaluation indicates that a joint replacement may be indicated.
A referral is made to a specialist qualified to do joint replacements.
If the decision is made to go ahead with the procedure, arrangements are
made with the hospital the specialist is associated with. But then the
insurer intervenes and threatens the patient with severe financial
penalties (all costs above the reference price) unless the patient
agrees to give up the specialist and hospital that is part of the team
of her primary care professional, either as a formal integrated health
system or as an informal team of community professionals working
together. To escape the financial penalty, the patient pays the penalty
of disruption in care.

So what did this successful experiment that everyone wants to emulate
actually accomplish? Care of 15 to 30 percent of patients was disrupted
in exchange for establishing a cap on payment that was twice what
Medicare pays, and yet netting only "an extremely small percentage
decline in total spending."

Another important consideration discussed in this report is that
reference pricing significantly increases administrative complexity -
just what we need in a system that is unique in the world for all of its
profound administrative waste. But very telling is the comment in this
report that some of this administrative increase will be in the form of
new customer-service tools "to deal with inevitable member complaints."

Great- a disruptive program that doesn't work very well but ticks
everyone off! We'll say it again - single payer.

qotd: Do opinions of Medicaid patients matter?

Health Affairs
October 8, 2014 (online)
Low-Income Residents In Three States View Medicaid As Equal To Or Better
Than Private Coverage, Support Expansion
By Arnold M. Epstein, Benjamin D. Sommers, Yelena Kuznetsov and Robert
J. Blendon

Abstract

Expansion of Medicaid under the Affordable Care Act to millions of
low-income adults has been controversial, yet little is known about what
these Americans themselves think about Medicaid. We conducted a
telephone survey in late 2013 of nearly 3,000 low-income adults in three
Southern states—Arkansas, Kentucky, and Texas—that have adopted
different approaches to the options for expansion. Nearly 80 percent of
our sample in all three states favored Medicaid expansion, and
approximately two-thirds of uninsured respondents said that they planned
to apply for either Medicaid or subsidized private coverage in 2014. Yet
awareness of their state's actual expansion plans was low. Most viewed
having Medicaid as better than being uninsured and at least as good as
private insurance in overall quality and affordability. While the debate
over Medicaid expansion continues, support for expansion is strong among
low-income adults, and the perceived quality of Medicaid coverage is high.

From the Discussion

In our survey of nearly 3,000 low-income adults in three states, we
found strong and consistent enthusiasm—among nearly 80 percent of
respondents—for expanding Medicaid under the ACA and a more nuanced
picture of whether it would be preferable to gain coverage via
traditional Medicaid or subsidized private insurance.

Support for expansion by the population who would most likely be
eligible for it may provide further impetus for expansion, although
low-income adults and the uninsured may lack the clout to bring about
this policy change in many states where the ACA remains unpopular among
the political leadership.

Quality and affordability of care were generally rated as better with
Medicaid coverage, while private coverage was seen as offering better
access to and more respect from providers. These views represent a
nuanced but reasonable comparison of Medicaid versus private health
insurance and are consistent with some of the empirical evidence in this
area. Recent studies indicate that Medicaid provides low-income adults
with better financial protection than does private coverage, while lower
reimbursement rates in Medicaid have been linked to lower physician
participation rates in that program compared to private coverage.
Favorable views toward Medicaid were most common among racial and ethnic
minorities, people with lower education and income, and those in worse
health.

http://content.healthaffairs.org/content/early/2014/10/02/hlthaff.2014.0747

****

The New York Times
October 9, 2014
Medicaid, Often Criticized, Is Quite Popular With Its Customers
By Margot Sanger-Katz

A study published in the journal Health Affairs found that poor
residents of Arkansas, Kentucky and Texas, when asked to compare
Medicaid with private coverage, said that Medicaid offered better
"quality of health care" and made them better able to "afford the health
care" they needed.

Medicaid, the federal-state program for poor and disabled Americans, is
a frequent political target, often described as substandard because of
its restricted list of doctors and the red tape — sometimes even worse
than no insurance at all.

But repeated surveys show that the program is quite popular among the
people who use it.

When asked to consider it alongside other big, popular government
programs, Medicaid compares favorably, said Robert Blendon, a public
health professor at Harvard who studies public opinion on health care
issues and was a co-author on the recent study. "It's only when you
compare it to Medicare, which is so much more popular than 96 percent of
what the federal government does, that it looks unimpressive," Mr.
Blendon said.

The people surveyed by the Harvard researchers didn't prefer Medicaid to
private insurance in every respect. They gave private coverage the edge
when it came to seeing "doctors you want, without having to wait too
long" and "to have doctors treat you with care and respect." But
Medicaid came out ahead on the question of whether it enabled them to
"be able to afford the health care you need," and on the overall
question of "quality of health care."

http://www.nytimes.com/2014/10/10/upshot/medicaid-often-criticized-is-quite-popular-with-its-customers.html

****


Comment by Don McCanne

Low-income patients strongly support the Medicaid program. It provides
better financial protection than does private insurance, and they
perceive the care to be of high quality. Their primary concern is that
"private coverage was seen as offering better access to and more respect
from providers" than does Medicaid.

When asked whether it was better to have Medicaid or to be uninsured,
there was strong agreement that Medicaid patients have higher quality of
care, have greater access to doctors, are treated with better respect,
and, especially, are better able to afford the health care that they
need, than are the uninsured.

In fact, according to Harvard's Robert Blendon, Medicaid compares quite
favorably to other popular government programs, though the support is
"unimpressive" when compared to the support for Medicare.

Unfortunately, the politicians in many states do not seem to care. Even
though the federal government would provide most of the funds, they
would rather leave these people uninsured. Obviously, they could care
less about the opinions of this low-income population that lacks
political clout.

Why would Medicare be more popular than Medicaid? Medicare that is
supplemented with Medigap, retiree plans, or Part C plans removes
financial barriers to care, thus providing a similar level of financial
protection as Medicaid - with the exception that Medicaid covers long
term care as well. Medicaid does have the stigma of a welfare program
whereas Medicare is considered to be an earned right available to all
qualified by age or disability. The greatest reason that Medicare is
preferred is that the patients have free choice of their physicians,
including specialists.

Under what system would a low-income patient fare best? One in which the
welfare stigma is removed, and everyone is treated equal. One in which
financial barriers such as large deductibles and coinsurance are
removed. One in which patients have free choice of their health care
professionals and hospitals. One in which a high standard of quality is
the norm for all. In other words, low-income patients would fare best is
a system that would work well for all of us - a single-payer, improved
Medicare for all.

qotd: Will Walmart raise wages of those losing their insurance?

Walmart
October 7, 2014
Providing Quality Health Benefits for Our Associates
By Sally Welborn, Sr. Vice President, Global Benefits, Walmart

In the U.S., the 1.3 million people who work at our stores, clubs and
distribution centers are vital to a great experience for the 140 million
customers shopping with us each week. We're in business because our
associates bring us their unique skills and talents – and so we do our
absolute best to offer all the benefits that come with a great job,
particularly affordable health insurance.

Like every company, Walmart continues to face rising health care costs.
This year, the expenses were significant and led us to make some tough
decisions as we begin our annual enrollment. As a result, today we
announced that our associates will see an increase in premiums for 2015.

We're also changing eligibility for some part-time associates. We will
continue to provide affordable health care to all eligible associates,
including part-time, who work more than 30 hours. However, similar to
other retailers like Target, Home Depot, Walgreens and Trader Joe's, we
will no longer be providing health benefits to part-time associates who
work less than 30 hours. This will impact about 2% of our total U.S.
workforce.

We don't make these decisions lightly, and the fact remains that our
plans exceed those of our peers in the retail industry. Our premiums
remain well below the industry average compiled by expert Aon Hewitt.
We also continue to pay the majority of health care costs for associates
covered under our medical plans. For example, on average we cover more
than 60% of our associates' total health care costs and more than 75% of
their premium costs. In contrast, the retail industry pays, on average,
about 54% of total health care costs and 68% of employee premiums.

http://blog.walmart.com/providing-quality-health-benefits-for-our-associates

****

The New York Times
October 7, 2014
Walmart to End Health Coverage for 30,000 Part-Time Workers
By Hiroko Tabuchi

Walmart Stores, the world's largest retailer and the nation's largest
private employer, said on Tuesday that it would terminate health
insurance coverage for about 30,000 part-time workers, joining a string
of retailers that have rolled back benefits in response to the
Affordable Care Act.

Starting on Jan. 1, Walmart will no longer offer insurance to employees
working less than an average of 30 hours a week, a move the retailer
said was in response to an unexpected rise in health care costs.

The workers losing their coverage make up about 5 percent of the
company's part-time work force of about 600,000, including in-store,
logistics and corporate workers, said Brooke Buchanan, a company
spokeswoman. Walmart did not disclose what percentage of the part-time
work force would be left without coverage. Many part-time employees were
never covered for a variety of reasons.

Walmart said that it would work with a health coverage specialist to
guide workers through the process of finding alternative coverage.

http://www.nytimes.com/2014/10/08/business/30000-lose-health-care-coverage-at-walmart.html

****


Comment by Don McCanne

Large retailers are infamous for low wages and limited benefits. Walmart
has been a special target of critics, no doubt in part because a few
members of the Walton family are amongst the very wealthiest people in
the world - not just in the top 1 percent, but at the very top of the
0.01 percent. Providing more generous health benefits for all of their
employees would cost only a small fraction of the annual net gain in
wealth of the Walton family.

It is not as if Walmart's health plans are comparable to those
traditionally offered by most other large employers. According to their
release, they cover only 60 percent of their employees' health care
costs - a level equivalent to the bronze plans in the very bottom tier
of the insurance exchanges created by the implementation of the
Affordable Care Act (ACA).

As ACA was being crafted it was decided that employers would not have to
provide health care coverage for employees working under 30 hours per
week. To no surprise, many employers adjusted the hours of their
part-time employees to avoid having to include them in their health
plans. Walmart previously had less than 24 hours a week as the cut-off
for providing health coverage, but they changed that to under 30 hours
since ACA allowed them to get more hours out of their employees without
having to provide health benefits.

Walmart intends to provide guidance to the 30,000 employees who will
lose their insurance. Those with poverty level incomes will no doubt be
directed to Medicaid in those states in which they are eligible. Those
just above poverty wages will likely be sent to the exchanges where they
may be eligible for generous taxpayer supported subsidies. Why should
the Walton billionaires provide coverage for these workers when the
taxpayers will do it for them?

This should provide a good test of the principle that almost all
economists preach: that employer-sponsored health plans are paid for by
the employee in the form of forgone wage increases. Now that 30,000
employees working 30 hours or less will lose their insurance, surely
Walmart will provide them with wage increases equivalent to perhaps
three-fourths of the the employer contribution to the health plan
premiums (since they work three-fourths of the full time hours). Walmart
takes every opportunity to publicize how well they are taking care of
their employees, yet they remain silent on wage increases for those
losing their insurance. Economists need to take another look at the
slight of hand revealing the deception of the forgone wage increases.
Wage increases are forgone when health care costs increase for the
employer, but just try to get the employers to restore alleged forgone
wages when the health benefits are terminated.

When we change to a single payer national health program - and we will -
employers will be relieved of their responsibility under ACA to provide
health insurance for their employees. At that time efforts can be
concentrated on ensuring that employees then receive living wages. That
could be another great spin-off benefit of an improved Medicare for all.