Pew: The Precarious State of Family Balance Sheets

The Pew Charitable Trusts
January 29, 2015
The Precarious State of Family Balance Sheets

* The majority of American households (55 percent) are savings-limited,
meaning they can replace less than one month of their income through
liquid savings.

* Most families face financial strain across all balance sheet
elements: income, expenditures, and wealth. In addition to being
savings-limited, households face other financial challenges; just under
half of families are "income-constrained," reporting household spending
greater than or equal to their income; and 8 percent are
"debt-challenged," with payments equal to 41 percent or more of their
gross monthly income. Fully 70 percent of households face at least one
of these problems, with many confronting two or even all three.

Conclusion

Previous Pew research has shown that family finances are a critical
component of future economic mobility, not just for individuals but also
for their children. However many families, even those with relatively
high incomes, are walking a financial tightrope, and have little, if
any, cushion to absorb an unexpected financial emergency. What's more,
this is not a new phenomenon. While the most recent recession shined a
spotlight on the fragility of family balance sheets, the downturn alone
did not cause households' financial insecurity; many of the indicators
explored here have been stable for the past 30 years.

No single solution exists for stabilizing family balance sheets. Putting
families on solid financial footing and the road to upward economic
mobility will require a selection of thoughtful and strategic policy
interventions. As policymakers strive to increase opportunity for all
Americans, policies and programs that support asset accumulation will be
key. These efforts will also require careful design and rigorous
evaluation to ensure that they are effective in helping families improve
all elements of their balance sheets.

http://www.pewtrusts.org/en/research-and-analysis/reports/2015/01/the-precarious-state-of-family-balance-sheets

****


Comment by Don McCanne

Far too many American families simply do not have the income or assets
to meet unexpected expenses such as health care, especially now that
insurers are shifting more of the costs to patients. This Pew report
recommends "thoughtful and strategic policy interventions," carefully
designed and rigorously evaluated to be sure they are effective. We
already have a carefully designed and rigorously evaluated proposal for
health care - a single payer national health program, aka an improved
and expanded Medicare for all. We merely have to enact and implement it.

A Canadian physician responds to Gov. Pence’s Medicaid program

Yesterday's Quote of the Day ("Government supports rotten teeth for
patients in poverty") discussed the Medicaid waivers obtained by Indiana
Governor Mike Pence. Today's post continues on that topic.


The New York Times
January 28, 2015
The Goal Was Simplicity; Instead, There's a Many-Headed Medicaid
By Margot Sanger-Katz

Indiana has become the latest Republican-led state to expand its
Medicaid program as part of the Affordable Care Act. As has become the
pattern, it was done with a series of waivers from particular federal
requirements.

When the state's governor, Mike Pence, announced the news on Tuesday,
the focus of his speech was less about his state's decision to embrace
this part of Obamacare than about the special concessions he'd been able
to extract from the Obama administration.

Newly eligible Medicaid recipients will have to pay monthly premiums or
be locked out of certain services, he announced, and higher-earning
beneficiaries who fail to pay will be shut out of the program for six
months. People who use the emergency room frequently will need to pay
higher co-payments than the federal government has ever allowed.

The provisions, designed to encourage residents to take more
responsibility for the costs of their health care, break new ground in
what the Obama administration will allow in exchange for expansion.


NYT Readers' Comments:

Dr. Bob Solomon
Edmonton, Canada

You live in "Cloud-Cuckoo Land" in the fantasy you have the best medical
care system on earth. Baloney. Check it out.

Canada is right next door. Come see how a sane federal health plan
works, covering all and ensuring that (1) we live longer, (2) we have
fewer chronic ills, (3) we have lower cost drugs, (4) we have lower cost
hospitals, (5) we have lower cost operations, (6) we have lower
accounting costs for all parties, and (7) we have no medical
bankruptcies and impoverishment anywhere, for any income, for the
unemployed, for the elderly. Long waits for ER? I waited 4 minutes for
an asthma attack to be dealt with, 2.4 hours for a minor ear problem --
wax. In Philly, I waited 2.4 for a back injury. Twice. So no difference.

We get free (tax-paid) care in Alberta. No out of pocket, no minimum, no
exclusions, no co-pays, no nothin'.

Premiums exist in certain provinces: $35 a month per person or about
that, and some people purchase extended coverage. I also pay approx.
$1200 a year for added features: free or nearly free drugs, and a large
subsidy for glasses, hearing aids, private rooms, canes, and things like
that.

Americans live in a "exceptional" med world -- a medical services
madhouse. It was not created by ACA, of course. And because of the med
and drug and hospital corporations, I mean "people", and the
know-little-or-nothing GOP, it was ensured to endure after ACA. Medical
madness is still a disease you need to cure.

And…

Don McCanne
San Juan Capistrano, CA

Denying poor people dental care simply because they cannot pay the
premium, as Pence's program does, defies logic. Does sentencing poor
people to rotten teeth truly motivate them to find money that they don't
have in order to provide them with the "dignity to pay for their own
health insurance"?

Does Pence propose that we change the rhetoric from "skin in the game"
to "rotten teeth in the mouth"?

http://www.nytimes.com/2015/01/29/upshot/the-goal-was-simplicity-instead-theres-a-many-headed-medicaid.html

Government supports rotten teeth for patients in poverty

The New York Times
January 27, 2015
Indiana Will Allow Entry to Medicaid for a Price
By Abby Goodnough

After a lengthy back-and-forth, the Obama administration has agreed to
let Gov. Mike Pence of Indiana, a Republican, expand Medicaid on his own
terms, including some that have not been allowed before under federal rules.

The plan will extend coverage to an additional 350,000 Indiana residents
with incomes of up to 138 percent of the federal poverty level — about
$16,100 for a single person and $27,310 for a family of three — starting
next month.

Mr. Pence, like several Republican governors before him, insisted on
adding a conservative twist to the expansion, mostly by requiring
beneficiaries to pay something toward their coverage. Under his plan,
most people will have to pay monthly premiums equaling 2 percent of
their household income — between about $3 and $25 a month for a single
childless adult — for coverage that includes dental and vision benefits.

At the Obama administration's insistence, people who earn less than the
poverty level will not have to pay premiums. But if they do not, their
coverage will be downgraded to exclude dental and vision benefits. And
they will owe co-payments for medical care, including $4 for a doctor's
visit and $75 for a hospitalization.

In another unusual concession, the Obama administration will let Indiana
lock some people out of coverage for six months if they stop paying
monthly premiums.

Joan Alker, executive director of the Georgetown University Center for
Children and Families, called the Indiana plan "enormously complicated"
and questioned the fairness of withholding dental and vision coverage
from those who cannot come up with premium payments.

"It's just common sense that when people take greater ownership of their
health care," Mr. Pence said, "they make better choices."

http://www.nytimes.com/2015/01/28/us/politics/indiana-will-allow-entry-to-medicaid-for-a-price.html

****

Indystar
January 27, 2015
Gov. Pence gets federal OK for Medicaid alternative
By Shari Rudavsky and Maureen Groppe

Those who are eligible for the plan already live at the poverty level,
said Timothy Jost, a law professor at Washington and Lee University and
a healthcare reform expert. People who by definition are already having
trouble covering basic costs such as food and rent will struggle to make
an addition payment. Instead, they may opt not to participate in the
program or avoid getting care.

"The question is how far is CMS willing to go in accommodating governors
or states that want to work their own policy agenda into the Medicaid
program," Jost said. "This is pretty much pushing the limits of how far
they should go if it's not beyond it."

Throughout the months of back and forth with federal health officials,
Pence had said he was not willing to compromise on the personal
responsibility piece.

http://www.indystar.com/story/news/politics/2015/01/27/gov-pence-gets-federal-ok-medicaid-alternative/22396503/

****


Comment by Don McCanne

This is insane! In an age when we are supposed to be a society that
cares enough to see that all of us receive the health care that we need,
we still have amongst us those who insist that people with no assets,
often homeless, frequently missing meals, are supposed to exercise
"personal responsibility" by paying funds that they don't have as a
condition for receiving much needed medical care.

And, oh, if they don't come up with those funds, let their teeth rot
out. That will show them! And sentence some of them to six months
without any medical care at all.

We have covered extensively the irrationality and inhumanity of the
consumer-directed, moral hazard-based policies that erect financial
barriers to care for the four-fifths of us with minimal or modest
resources. But this exposes the colors of these "skin in the game "
advocates. What kind go people are we that we elect individuals like
this to take charge of our federal and state governments. What is
government all about? This!? It can't be. Tell me it isn't.

Correction: Gallup

... not Gallop

New poll on single payer and a Medicare buy-in

Progressive Change Institute
Poll of Likely 2016 Voters
Conducted by GBA Strategies, January 9-15, 2015


SINGLE PAYER HEALTHCARE VIA MEDICARE

"Enact a national health plan in which all Americans would get their
insurance through an expanded, universal form of Medicare."

51% Support
36% Oppose
12% Neutral

Percent supporting by party

79% Democrat
23% Republican
45% Independent


MEDICARE BUY-IN FOR ALL

"Give all Americans the choice of buying health insurance through
Medicare or private insurers, which would provide competition for
insurance companies and more options for consumers."

71% Support
13% Oppose
14% Neutral

Percent supporting by party

77% Democrat
63% Republican
71% Independent

https://s3.amazonaws.com/s3.boldprogressives.org/images/Big_Ideas-Polling_PDF-1.pdf

****


Comment by Don McCanne

This poll shows that the nation's attitude towards single payer remains
essentially unchanged. About four-fifths of Democrats support single
payer, three-fifths of Republicans are opposed, and Independents remain
evenly split. But what about the attitude towards the "public option" -
allowing all Americans the choice of purchasing Medicare instead of
private insurance?

Support for the option of a Medicare buy-in is strong across the
political spectrum. What can we make of this?

The debate in Congress during the reform process was highly partisan,
the public option having been defeated by the defection of just one
senator - Joseph Lieberman. The support that we now see amongst
Republican voters is probably genuine. The opposition of the Republican
members of Congress at that time was probably more related to the
decision to defeat the Affordable Care Act (ACA) regardless of any
benefits in it, just to "make Obama a one-term president."

If the Republicans in Congress can forget about their prior opposition
and decide that they want to move forward with constructive policies,
those who want changes in Medicare may decide that placing it in
competition with private insurance plans may bring market concepts to
the traditional Medicare program. They can conveniently ignore the fact
that the current market experiment with private Medicare Advantage plans
has been unsuccessful in providing comparable benefits at a lower cost.

The Democrats in Congress are likely to support a renewed effort to
enact a public option, especially since many still regret that it was
not included in ACA.

We have to keep in mind that the insurance industry was successful in
changing the public option from a Medicare plan to a public plan that
had most of the unfavorable features of private health plans along with
restrictions on how it could compete with private plans. This was to
prevent it from having an "unfair advantage" in the marketplace - by
giving the private plans an unfair advantage over the public option.

During the implementation of ACA we have seen that the private insurers
still control the puppet strings. Should the political environment
become more favorable for a public option, we can be sure that the
insurance industry will once again write the legislation, creating a
flawed public option that will surely invoke the wrath of those
enrolling in the program, "proving" once again the meme that "the
government can't do anything right."

These comments bring back memories of how the reform debate was hijacked
by histrionics over the public option, which played into the hands of
the insurance industry. The debate should have been over single payer,
but remember we were emphatically and ungraciously denied a seat at the
table from very early on in the process (back when the Democratic
strategists in control wanted us to sell "CHOICE" to the public - choice
of private health plans - and single payer was banned from the strategy
sessions).

Little attention was given to the fact that adding another option - the
public option - would still leave in place our inefficient, costly and
highly dysfunctional system. We would have gained virtually none of the
other benefits of single payer. And that would still be true if we
abandon our quest for single payer and head off towards the Medicare
buy-in. We would still have an outrageously expensive system with
profound administrative waste, and intolerable inequities in
affordability and access.

At least more Democrats favor single payer (79%) than favor the Medicare
buy-in (71%). We need to start tailoring our message to appeal to the
Republicans and Independents as well.

The April surprise for not being insured

Kaiser Health News
January 21, 2015
Tax Preparers Brace To Be Bearers Of Bad Health Law News
By April Dembosky, KQED and Jeff Cohen, WNPR

IRS Commissioner John Koskinen declared this tax season one of the most
complicated ever, and tax preparers from coast to coast are trying to
get ready for the first year that the Affordable Care Act will show up
on your tax form.

The penalty for being uninsured in 2014 is $95 or 1 percent of income,
whichever is greater. Next year, it's 2 percent. (Sue Ellen Smith of H&R
Block in San Francisco) says the smartest move for people to avoid those
penalties is to sign up for insurance before Feb. 15, the end of the
health law's open enrollment period.

But a lot of people may not think about this until they file their taxes
in April. For them, it will be too late to sign up for health insurance
and too late to do anything about next year's penalty too, says Mark
Steber, chief tax officer for Jackson Hewitt Tax Services.

http://kaiserhealthnews.org/news/tax-preparers-brace-to-be-bearers-of-bad-health-law-news/

HealthCare.gov: Fees and Exemptions
https://www.healthcare.gov/fees-exemptions/fees-exemptions-overview/

****


Comment by Don McCanne

Many of those who decided to pay the $95 penalty instead of being
insured in 2014 may be surprised to learn at tax time that the penalty
at their income level is 1 percent of income over the tax filing
threshold - roughly $300 for an individual with a $40,000 income. If
they wait until April to file their taxes and still don't have
insurance, open enrollment for 2015 will have already ended and their
penalty increases to 2 percent. A double surprise.

Actually it is much more complex than this. The link for "Fees and
Exemptions," above, describes other considerations such as what
constitutes minimum essential coverage, numerous exemptions from the
requirement to pay the penalty, specific hardship exemptions, the
various application processes for exemptions, instructions on paying the
"shared responsibility" penalty, and so forth.

This is only one of the multitude of unnecessary administrative
complexities introduced by the Affordable Care Act, layered on top of
the most administratively complex system in the world. Had we enacted a
single payer national health program, we would have had a dramatic
reduction in this administrative waste, with a recent study
demonstrating that we could save about $375 billion simply by addressing
our excessive billing and insurance-related functions. This doesn't
include the savings that we would realize by eliminating much of the
other administrative excesses such as the one described here.

It's never too late. We can still make the change to single payer.

Insurers slam patients with underwriting cycle

The New York Times
January 19, 2015
In Colorado, Disparity in Health Plan Prices Underscores Ambitions, and
Limits, of Affordable Care Act
By Reed Abelson and Agustin Armendariz

An analysis by The New York Times shows that the cost of one midlevel
silver plan in Colorado rose 36 percent west of the Rocky Mountains this
year, while another dropped nearly 40 percent in the northeastern plains.

The law was intended to drive prices lower and broaden coverage through
competition. While 10 insurers offer plans to individuals in Colorado
through the state's online marketplace, the law does not require
insurers to offer all plans in all regions of a state.

The wild disparity in prices results from many insurers trying to
attract more customers by pricing plans as low as they can. But it is
not at all clear that the low prices will be sustainable, so prices may
well swing sharply upward as time goes on.

The variations in premium prices are also a direct result of what the
insurer-friendly health care law permits. Insurers can target
territories, choosing areas within a given market where they can attract
enough members and put together provider networks that will negotiate on
price. In addition, insurers were given some protection by the federal
government to reduce possible losses in the early years, so some are
experimenting with very low prices that may not be sustainable over the
long term.

And no one expects premium costs to stabilize anytime soon. Because
buyers are so sensitive to price, the markets may experience cycles in
which insurers alternately offer low premiums to attract customers and
sharply raise them in later years to cover costs, experts said.

http://www.nytimes.com/2015/01/20/business/in-year-2-of-affordable-care-act-premiums-diverge-widely.html?ref=policy

****


Comment by Don McCanne

Although medical underwriting for preexisting disorders supposedly has
been eliminated, the insurers apparently are still taking advantage of
the "underwriting cycle" - capturing the market by selling plans at a
loss and then jacking up rates after the competition has been thinned
out. This volatility results in uncertainties for patients in both their
insurance costs and in the composition of the networks of covered providers.

And under single payer? Costs would be stable and fair since they are
based on ability to pay, and provider choice would be assured. So do we
leave the system under the control of the cutthroat insurers, or do we
finally place our own public stewards in charge?

What would Martin Luther King, Jr. say about the Oxfam brief?

Second Convention of the Medical Committee for Human Rights
Chicago
March 25, 1966

"Of all the forms of inequality, injustice in health care is the most
shocking and inhumane." -- Dr. Martin Luther King, Jr.

http://www.huffingtonpost.com/amanda-moore/martin-luther-king-health-care_b_2506393.html

****

Oxfam
Issue Brief
January 19, 2015
Wealth: Having It All and Wanting More
By Deborah Hardoon

Global wealth is increasingly being concentrated in the hands of a small
wealthy elite. These wealthy individuals have generated and sustained
their vast riches through their interests and activities in a few
important economic sectors, including finance and
pharmaceuticals/healthcare. Companies from these sectors spend millions
of dollars every year on lobbying to create a policy environment that
protects and enhances their interests further.

* In 2014, the richest 1% of people in the world owned 48% of global
wealth, leaving just 52% to be shared between the other 99% of adults on
the planet.1 Almost all of that 52% is owned by those included in the
richest 20%, leaving just 5.5% for the remaining 80% of people in the world.

* The very richest of the top 1%, the billionaires on the Forbes list,
have seen their wealth accumulate even faster over this period. In 2010,
the richest 80 people in the world had a net wealth of $1.3tn. By 2014,
the 80 people who top the Forbes rich list had a collective wealth of
$1.9tn; an increase of $600bn in just 4 years, or 50% in nominal terms.
The wealth of these 80 individuals is now the same as that owned by the
bottom 50% of the global population, such that 3.5 billion people share
between them the same amount of wealth as that of these extremely
wealthy 80 people. In 2010, it took 388 billionaires to equal the wealth
of the bottom half of the world‟s population; by 2014, the figure had
fallen to just 80 billionaires.

* In 2014 there were 1,645 people listed by Forbes as being
billionaires. This group of people is far from being globally
representative. Almost 30% of them (492 people) are citizens of the USA.

* Between 2013 and 2014 billionaires listed as having interests and
activities in the pharmaceutical and healthcare sectors saw the biggest
increase in their collective wealth. Twenty-nine individuals joined the
ranks of the billionaires between March 2013 and March 2014 (five
dropped off the list), increasing the total number from 66 billionaires
to 90, in 2014 making up 5% of the total billionaires on the list. The
collective wealth of billionaires with interests in this sector
increased from $170bn to $250bn, a 47% increase and the largest
percentage increase in wealth of the different sectors on the Forbes list.

* During 2013, the pharmaceutical and healthcare sectors spent more
than $487m on lobbying in the USA alone. This was more than was spent by
any other sector in the US, representing 15% of $3.2bn total lobbying
expenditures in 2013. In addition, during the election cycle of 2012,
$260m was spent by this sector on campaign contributions. Twenty-two of
the 90 pharmaceutical and healthcare billionaires are US citizens.

http://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/ib-wealth-having-all-wanting-more-190115-en.pdf


Comment by Don McCanne

In 1966, Martin Luther King, Jr. famously noted that injustice in health
care was the most shocking and inhumane form of inequality. The Oxfam
brief issued today - Martin Luther King, Jr. Day - gives some insight as
to how well we are fulfilling his dream of social justice for all. We
are seeing exponential increases in wealth inequality and the fastest
expansion of that inequality is in the pharmaceutical and health care
sectors.

Are we still learning from him, or have we given up?

Why do we need to improve Medicare?

The New England Journal of Medicine
January 14, 2015
Medicare at 50 — Origins and Evolution
David Blumenthal, M.D., M.P.P., Karen Davis, Ph.D., and Stuart Guterman,
M.A.

Many Americans have never known a world without Medicare. For 50 years,
it has been a reliable guarantor of the health and welfare of older and
disabled Americans by paying their medical bills, ensuring their access
to needed health care services, and protecting them from potentially
crushing health expenses. However, as popular as Medicare has become,
Congress created the program only after a long and deeply ideological
struggle that still reverberates in continuing debates about its future.

Future Challenges

Medicare is a much larger, more comprehensive, and more complex program
than it was in 1965. In its response to cost and quality concerns, it
has also become much more assertive in trying to improve the performance
of the national health care system. For much of its history, Medicare
just paid bills. Now, it has joined private-sector insurers in the
effort to manage care as well.

Despite these changes, however, Medicare continues to face major
challenges, which will be discussed in more detail in part two of this
series. Perhaps the most important of these challenges is its cost.
Growth in Medicare spending per beneficiary has slowed sharply in recent
years, and although that slowdown is projected to continue over the next
few years, the growth in total program spending is projected to outpace
that in the overall economy as the retiring baby-boom generation
increases the number of beneficiaries. This will put more pressure not
only on Medicare finances but also on the federal budget, with Medicare
spending projected to rise as a share of federal revenues from 17% in
2014 to 27% in 2050 and to approach 40% by the end of the century.

The current structure of Medicare is anachronistic and unnecessarily
complex. Most employers offer their employees a comprehensive benefit
package that includes hospital care, physician services, and
prescription drugs. Medicare, in contrast, offers its beneficiaries
fragmented coverage, with separate parts for each of these services. As
a result of its substantial deductibles and the lack of a ceiling on
out-of-pocket costs, most beneficiaries purchase supplemental private
insurance to cover gaps in Medicare. Low-income beneficiaries, unable to
afford care provided through substantial cost sharing in Medicare, can
enroll in Medicaid to obtain help in paying Medicare premiums and
out-of-pocket costs, but each state has its own income and asset rules.
As a result, the complexity of the current insurance system for the
elderly becomes truly startling. This complexity frustrates efforts to
coordinate care for the sickest and frailest patients and to create an
understandable and consistent set of incentives for providers.

Despite the importance of Medicare in improving its beneficiaries'
access to care, the program does have substantial limitations in
coverage. These limitations result in large out-of-pocket payments for
the most vulnerable beneficiaries. Although Medicare covers some
rehabilitation services and limited home care, it does not pay for
extended long-term services and supports, a gap that surprises many
elderly persons and their families when they need such care. Medicaid
does cover these benefits but only for the poorest elderly. The role of
Medicare in addressing growing societal needs for long-term services
remains uncertain.

These and other issues suggest that preserving and strengthening
Medicare over the next 50 years will continue to require active, wise,
and humane policy development. Such a task would be a challenge for the
federal government under any circumstances but particularly if the
current intense partisan divisions persist.

http://www.nejm.org/doi/full/10.1056/NEJMhpr1411701

****


Comment by Don McCanne

Although Medicare is the most popular health insurance program in the
nation, it still has some serious deficiencies. As an example, 27
percent of Medicare beneficiaries spend more than 20 percent of their
income for out-of-pocket health care expenses.

There are two pressing reasons why efforts should be made to strengthen
Medicare. The most obvious is that current Medicare beneficiaries should
have at least the level of financial security and health security that
citizens of other nations receive through their health care financing
systems.

The other reason is that Medicare is thought by many to be a natural
model for a national health program that covers everyone. It is
important that the model be improved so that we can do away with
wasteful and inefficient supplementary programs such as Medigap
coverage, retiree health benefits, Medicare Advantage plans, and Part D
drug plans, and, while we are at it, eliminate the financial barriers of
cost sharing that impair access to care. Once we have an improved
Medicare we can combine it with the other important features of a single
payer national health program, finally realizing our dream of an
expanded and improved Medicare for all.

For those who wish to be reminded of the key features of single payer
that should be combined with an improved Medicare, a brief list is at
this link:

http://www.pnhp.org/resources/key-features-of-single-payer

Over 60 million still face medical-related financial difficulties

The Commonwealth Fund
January 15, 2015
The Rise in Health Care Coverage and Affordability Since Health Reform
Took Effect
By Sara R. Collins, Petra W. Rasmussen, Michelle M. Doty, and Sophie Beutel

Abstract

New results from the Commonwealth Fund Biennial Health Insurance Survey,
2014, indicate that the Affordable Care Act's subsidized insurance
options and consumer protections reduced the number of uninsured
working-age adults from an estimated 37 million people, or 20 percent of
the population, in 2010 to 29 million, or 16 percent, by the second half
of 2014. Conducted from July to December 2014, for the first time since
it began in 2001, the survey finds declines in the number of people who
report cost-related access problems and medical-related financial
difficulties. The number of adults who did not get needed health care
because of cost declined from 80 million people, or 43 percent, in 2012
to 66 million, or 36 percent, in 2014. The number of adults who reported
problems paying their medical bills declined from an estimated 75
million people in 2012 to 64 million people in 2014.

Conclusion

For the first time since it was launched in 2001, the Commonwealth Fund
Biennial Health Insurance Survey has found significant declines in the
number and share of U.S. adults who lack health insurance. The survey
also finds evidence to suggest that the coverage gains are allowing
working-age adults to get the health care they need while reducing their
level of financial burden because of medical bills and debt.

But, while there were minor improvements reported by insured adults in
cost-related access and medical bill problems, rates of these problems
remain high, especially among adults with low incomes. Prior
Commonwealth Fund survey results have found that the increasing size and
prevalence of high deductibles and copayments in private health plans,
including employer-based plans, is leading many people with low and
moderate incomes to avoid or delay needed health care. Excessive
cost-sharing for Americans across all insurance types could jeopardize
improvements in access to care and medical bill burdens documented in
the survey.

States' decisions to reject the Medicaid expansion have left large
numbers of the poorest Americans in the country without health
insurance. Since the survey was fielded in July, one additional state
has expanded its program, seven others are in discussions to move to
forward, and still others may follow their lead this year.

http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2015/jan/1800_collins_biennial_survey_brief.pdf

****


Comment by Don McCanne

The media reports on the new Commonwealth Fund study are celebrating the
reduction in the numbers who remain uninsured and the reductions in the
financial consequences of being uninsured, supposedly proving that the
Affordable Care Act is working. What is difficult to celebrate is
confirmation that there are still 66 million people who did not get
needed health care because of cost, and there are 64 million people who
still reported problems paying their medical bills.

Rather than celebrating a modest improvement in the statistics we should
be be using this report to condemn the gross inadequacies of the
Affordable Care Act that leave in place the financial barriers that have
negatively impacted over 60 million people, and have the potential to
have the same negative impact on tens of millions more should they incur
a need to access the health care system.

For those who say, "But this is working," it is not working for the vast
majority for whom our prior system fell cruelly short. Continuing this
highly flawed experiment constitutes unethical experimentation when we
know that a single payer system with full prepaid financing will remove
the financial barriers and hardships that are perpetuated by the
Affordable Care Act.

When you have a forest fire, you don't pull out the candle snuffers; you
call in the tankers. Likewise, when our health care financing system is
leaving tens of millions broke and without adequate care, you don't
tweak what we have; you mobilize a powerful system that actually would
work - an improved and expanded Medicare for all.

Co-ops reflect the callous deception of Congress

PNHP
Quote of the Day
July 18, 2011
CO-OP (Consumer Operated and Oriented Plan) Health Plans under the
Affordable Care Act

From the comment by Don McCanne:

The proposed rule has now been released for the establishment of CO-OPs
under the Affordable Care Act. The CO-OPs are private, nonprofit
organizations that sell insurance, like HMOs and PPOs, under the same
rules as the other private insurers. The most important difference is
that a CO-OP is controlled by a board of directors that is elected by
the individuals enrolled in the CO-OP.

These are new organizations, and, as such, require a new infusion of
capital to meet the reserve requirements for future claims. These are
the same requirements that have been established by the states for other
private insurers already competing in the marketplace.

Private, for-profit insurers have the capability of establishing
start-up costs and solvency reserves by selling shares of stock. Since
the CO-OPs are nonprofit, they don't have this resource to tap.
Recognizing this, the Affordable Care Act included provisions for
government loans for start-up costs and other loans for solvency
(reserve funds for future claims). It is important to understand that
these are not grants but are loans that must be repaid, with interest,
within five years for start-up loans and fifteen years for solvency loans.

Think about that. The CO-OPs are required to compete with the private
insurers under the same terms, while having the additional requirement
of paying back these loans. Since their only revenue source is premiums
for the insurance they are selling, these loan costs that their
competitors don't have will have to be recovered through higher
premiums. Under these terms, how could they possibly compete with the
private insurers?

There are many other issues. How long would it take to establish a
critical threshold of enrolling enough members to create a viable
entity? Since it is likely that the CO-OPs would be subject to adverse
selection (enrolling a larger share of patients with greater health care
needs), there would be further upward pressure on their premiums (death
spiral) since current risk adjustment tools do not recover the full
excess losses (as if health care is a "loss").

It's too bad. CO-OPs should have offered us the opportunity to establish
altruistic health care organizations. Instead, the politicians bent over
backwards not only to keep the government out of these programs, but
also to protect the private insurers' marketplace by being sure that the
CO-OPs were not allowed a fair playing field by saddling them with
insurmountable debt.

We needed a seat at the table.

http://www.pnhp.org/news/2011/july/co-op-consumer-operated-and-oriented-plan-health-plans-under-the-affordable-care-act

****

NPR/Kaiser Health News
January 14, 2015
Health Insurance Startup Collapses In Iowa
By Clay Masters, Iowa Public Radio

CoOportunity Health has failed. The Affordable Care Act set aside
funding for health care co-ops, to enable the organizations to compete
in places where there aren't many insurers. CoOportunity Health was the
second largest co-op in the country in terms of membership, and one of
the largest in terms of the federal funding it received.

But then CoOportunity hit a kind of perfect storm, says Peter Damiano,
director of the University of Iowa's public policy center. First, the
co-op had to pay a lot more medical bills than those in charge expected.

"CoOportunity Health's pool of people was larger than expected, was
sicker than expected," Damiano says. "So their risk became much greater
than the funds that were available,"

When the Obama administration in late 2013 allowed people to keep the
insurance plan they already had, many customers happy with Wellmark
stayed put. Damiano says this meant many of the customers who flocked to
CoOportunity tended to be… people with expensive health problems who'd
had trouble paying for insurance before, in the market Wellmark dominated.

"It was always going to be a challenging market to try to reach," says
Damiano, "and on top of that, the whole idea of co-ops was relatively
new and experimental. But it was to try to create competition, on that
private sector approach," says Damiano.

According to Nick Gerhart, Iowa's insurance commissioner… the co-op
thought it was going to get more federal money. "On December 16 around 4
o'clock we were informed they weren't going to get any further funding,"
he says. "Nothing was pulled — it just wasn't extended further."

"Ours was the second largest in the country, so you've got to look at it
that way." Gerhart says. "If the second largest can't make it, how
viable are the other ones? I don't know. But at the end of the day they
didn't have enough capital to support 120,000 members."

http://kaiserhealthnews.org/news/health-insurance-startup-collapses-in-iowa/

****


Comment by Don McCanne

Those of us who watched closely as the health care reform process
unfolded were outraged by many of the decisions made by the members of
Congress. As single payer supporters we were denied a seat at the table.
Regardless, we still tried to inform the process but we were routinely
ignored. "What you guys want is just not politically feasible."

Look what I wrote July 18, 2011: "It's too bad. CO-OPs should have
offered us the opportunity to establish altruistic health care
organizations. Instead, the politicians bent over backwards not only to
keep the government out of these programs, but also to protect the
private insurers' marketplace by being sure that the CO-OPs were not
allowed a fair playing field by saddling them with insurmountable debt."

Now look at what happened to CoOportunity - the second largest co-op in
the country. Not only did they enroll patients with greater health care
needs, as we predicted, but the government loans were inadequate to
maintain its viability. The success in enrolling large numbers of
members accelerated the demise of this co-op, but what about the others?
With the premiums they receive, how will they be able to pay for the
health care services of a higher risk population plus service their
loans at the same time - loans that competing private insurers do not
have to face?

It isn't that we didn't know how to design a proper health care
financing program. We clearly did - single payer. What is tragic is that
the Affordable Care Act was designed to take special care of the private
insurance industry while supposedly showing some vague, deceptive
semblance of improving access and affordability for the patients served,
though caring for patients was certainly a lower priority than catering
to the private insurers.

With 30 million people being left uninsured, and with the establishment
of a new insurance standard of unaffordable under-insurance, our members
of Congress sure did a crappy job - not just crappy but far worse - it
was callous and inhumane.

Controlling prices - Government administration, or private sector kneecapping?

The Wall Street Journal
January 12, 2015
High Health-Care Prices: More Talk Than Action
By Drew Altman

People in the U.S. go to the doctor less frequently and have much
shorter hospital stays than people in other countries that spend far
less per capita on health care. But health services are consistently
more expensive here than in comparably wealthy countries.

Price is the major factor that distinguishes the cost of our system from
those in other developed nations. The sticker shock of some medical
services and drugs is also the dimension of the health-cost problem most
visible to the public. So it's interesting that most efforts in this
country to address health-care costs don't focus on price much at all.
Instead, they focus on reforming the delivery of health care and
provider reimbursement to reduce the volume of health care Americans use
and to weed out unnecessary procedures and hospitals days.

To be sure, high medical prices are talked about a lot. One reason there
is more talk than action is the anti-government environment, which would
inhibit regulatory action to constrain prices. Taking on price also
means taking on health care's powerful industry interests. More
effective competition between providers would help reduce prices, but
the health-care industry appears to be consolidating more than
competing, as is the health insurance industry.

It would be a mistake to make price the only focus of a cost-reduction
strategy. But it's striking that while price is such an important reason
our system appears to cost so much more than others, efforts to reduce
the high prices of medical care are not a meaningful part of current
cost-reduction efforts.

(Drew Altman is president and chief executive officer of the Kaiser
Family Foundation.)

http://blogs.wsj.com/washwire/2015/01/12/high-health-care-prices-more-talk-than-action/

****

Reuters
January 7, 2015
U.S. hedge fund plans to take on big pharma over patents

U.S. hedge fund manager Kyle Bass, who won fame for predicting the
subprime mortgage crisis in 2008, plans to take on some of the world's
biggest drug producers by challenging the patents of their top brands,
he said on Wednesday.

Bass, the founder of Dallas-based Hayman Capital Management, L.P., said
some drug firms were hanging onto patents in questionable ways and he
planned to take around 15 firms into a so called Inter Partes Review
(IPR) process created by the America Invents Act. in 2012.

"We are going to challenge and invalidate patents through the IPR
process ... (and) we are not going to settle," Bass said in a
presentation in Oslo, Norway's capital.

"The companies that are expanding patents by simply changing the dosage
or the way they are packaging something are going to get knee capped,"
he said.

Bass said the firms he planned to challenge had a combined market
capitalisation of $450 billion and if he succeeded that could halve,
benefitting his investments and reducing medicine prices in the United
States.

"This is going to lower drug prices for Medicare and for everyone," he said.

Bass did not name any targets and also declined to elaborate on how he
planned to make a financial gain from the challenges. He also declined
to give details on his investment position.

http://www.reuters.com/article/2015/01/07/pharmaceuticals-haymancapital-idUSL3N0UM42O20150107

****


Comment by Don McCanne

Health care prices are much higher in the United States than in other
nations. The difference seems to be that other nations rely much more on
government administration of pricing whereas we depend more on the
marketplace, especially on the private insurance industry that has a
relatively weak negotiating power over our medical-industrial complex,
worsened by ongoing consolidation within the industry.

That is not to say that the government does not play any role. The
administered pricing of our Medicare program has been more effective
than the private insurers in slowing the increases in the costs of
health care. The private insurers have slowed the increase in insurance
premiums but at the terrible cost of transferring risk and payment
responsibilities to patients.

That said, government administered health care pricing in the United
States is still too weak. We even prohibit the government from
negotiating drug prices in the Medicare Part D program. Drug pricing is
not only obscene, it is criminal, or at least it should be a crime when
companies can price their drugs at tens of thousands of dollars only
because our dysfunctional market will bear those prices.

Since we have not allowed our government to take a more active role, we
should ask if the private sector can be capable of providing greater
value. Up to this point it has not been so, as is verified by the fact
that we have far higher prices than other nations.

But suppose the private sector did move in using their unique tools to
control markets. Consider the approach of hedge fund manager Kyle Bass.
He is famous for creating large fortunes by betting against the market
with tools such as credit default swaps in the subprime mortgage crisis
and credit default swaps on government bonds in Greece.

Based on this Reuters article, apparently now Bass wants to bet against
drug firms that seem to be abusing the patent laws to drive up drug
prices. He is quoted as saying that these companies are "going to get
kneecapped." Wow! When he is finished, he says, "This is going to lower
drug prices for Medicare and for everyone." Although he has not revealed
his strategy, it does not take too much imagination to come to the
conclusion that he may well use credit default swaps to make another
fortune once he is effective in disabusing the industry of their belief
that these innovative patents are valid.

Which is better? Is it better to allow the private sector to use
innovations such as credit default swaps to bring about fairer pricing
of drugs, even though considerable funds are redirected upwards, further
increasing income and wealth inequality? Or is it better to have
government administered pricing wherein there is no opportunity to
create new fortunes by using Wall Street tools to divert health care
dollars to the wealthy? If for no other reason, you would think that
government administered pricing should be preferred simply because it is
more effective.

Since we do not seem to be inclined on relying on our government to
serve our needs, maybe we should think more about private sector
opportunities. For starters, someone might want to secure a patent on
kneecap replacements. Our friends on Wall Street would no doubt
recognize the investment potential, and the venture capitalists would be
lined up at your door.

$375 billion wasted on billing and insurance paperwork

BMC Health Services Research
Online November 13, 2014
Billing and insurance-related administrative costs in United States'
health care: synthesis of micro-costing evidence
By Aliya Jiwani, David Himmelstein, Steffie Woolhandler and James G Kahn

Abstract

Background: The United States' multiple-payer health care system
requires substantial effort and costs for administration, with billing
and insurance-related (BIR) activities comprising a large but
incompletely characterized proportion. A number of studies have
quantified BIR costs for specific health care sectors, using
micro-costing techniques. However, variation in the types of payers,
providers, and BIR activities across studies complicates estimation of
system-wide costs. Using a consistent and comprehensive definition of
BIR (including both public and private payers, all providers, and all
types of BIR activities), we synthesized and updated available
micro-costing evidence in order to estimate total and added BIR costs
for the U.S. health care system in 2012.

Methods: We reviewed BIR micro-costing studies across healthcare
sectors. For physician practices, hospitals, and insurers, we estimated
the % BIR using existing research and publicly reported data,
re-calculated to a standard and comprehensive definition of BIR where
necessary. We found no data on % BIR in other health services or
supplies settings, so extrapolated from known sectors. We calculated
total BIR costs in each sector as the product of 2012 U.S. national
health expenditures and the percentage of revenue used for BIR. We
estimated "added" BIR costs by comparing total BIR costs in each sector
to those observed in existing, simplified financing systems (Canada's
single payer system for providers, and U.S. Medicare for insurers). Due
to uncertainty in inputs, we performed sensitivity analyses.

Results: BIR costs in the U.S. health care system totaled approximately
$471 ($330 – $597) billion in 2012. This includes $70 ($54 – $76)
billion in physician practices, $74 ($58 – $94) billion in hospitals, an
estimated $94 ($47 – $141) billion in settings providing other health
services and supplies, $198 ($154 – $233) billion in private insurers,
and $35 ($17 – $52) billion in public insurers. Compared to simplified
financing, $375 ($254 – $507) billion, or 80%, represents the added BIR
costs of the current multi-payer system.

Conclusions: A simplified financing system in the U.S. could result in
cost savings exceeding $350 billion annually, nearly 15% of health care
spending.

From the Discussion

Eliminating added BIR costs of $375 billion per year (14.7% of US health
care spending) would provide resources to extend and improve insurance
coverage, within current expenditure levels. Since uninsured individuals
have utilization of about 50% of insured individuals, the current 15%
uninsured could be covered with roughly half of the $375 billion.
Remaining savings could be applied to improved coverage for those
already insured.

http://www.biomedcentral.com/content/pdf/s12913-014-0556-7.pdf

PNHP release: $375 billion wasted on billing and health
insurance-related paperwork annually: study
http://www.pnhp.org/news/2015/january/375-billion-wasted-on-billing-and-health-insurance-related-paperwork-annually-stud

****


Comment by Don McCanne

Previous studies have demonstrated the waste of billing and
insurance-related functions in health care in United States. This study
refines and unifies the estimates of these costs and shows how much
could be recovered if we were to switch to a simplified financing system
such as Canada's single payer system for providers, and U.S. Medicare
for insurers. The $375 billion recovered would be enough to cover the
uninsured and bring the coverage for the underinsured up to standard.

The PDF of the full study is available through open access at the
biomedcentral link above. It should be filed under landmark articles in
every health policy library.

Medicare Advantage as a precursor of premium support

Health Affairs
January 2015
Variations In County-Level Costs Between Traditional Medicare And
Medicare Advantage Have Implications For Premium Support
By Brian Biles, Giselle Casillas and Stuart Guterman

Abstract

Concern about the future growth of Medicare spending has led some in
Congress and elsewhere to promote converting Medicare to a "premium
support" system. Under premium support, Medicare would provide a
"defined contribution" to each Medicare beneficiary to purchase either a
Medicare Advantage (MA)–type private health plan or the traditional
Medicare public plan. To better understand the implications of such a
shift, we compared the average costs per beneficiary of providing
Medicare benefits at the county level for traditional Medicare and four
types of MA plans. We found that the relative costs of Medicare
Advantage and traditional Medicare varied greatly by MA plan type and by
geographic location. The costs of health maintenance organization–type
plans averaged 7 percent less than those of traditional Medicare, but
the costs of the more loosely structured preferred provider organization
and private fee-for-service plans averaged 12–18 percent more than those
of traditional Medicare. In some counties MA plan costs averaged 28
percent less than costs in traditional Medicare, while in other counties
MA plan costs averaged 26 percent more than traditional Medicare costs.
Enactment of a Medicare premium-support proposal could trigger cost
increases for beneficiaries participating in Medicare Advantage as well
as those in traditional Medicare.

From the Discussion

This analysis of the relationship between the costs to provide Medicare
benefits by MA private plans and by traditional Medicare in the same
county found that these costs varied widely by the type of MA plan and
the level of costs in traditional Medicare at the county level.

Most notably, Medicare Advantage HMO plans had lower costs than
traditional Medicare in areas in the nation where the average costs per
beneficiary in traditional Medicare were relatively high compared to the
national average. In contrast, the three less tightly organized MA plan
types had higher costs than traditional Medicare in almost all areas of
the nation, and their costs were much higher where the average costs in
traditional Medicare were lower than the national average.

Although both traditional Medicare and MA plans are changing, these
findings have broad implications for future Medicare policy, especially
for proposals to transform Medicare into a premium support-based program.

Nationwide, MA plans in rural areas have costs that average 115 percent
of local costs in traditional Medicare. In some metropolitan areas, MA
plan costs to provide Medicare benefits are also higher than in
traditional Medicare. In cities such as Rochester, New York; Sacramento,
California; and Seattle, Washington, Medicare Advantage HMO plan costs
are higher than costs in traditional Medicare by 18 percent or more. In
these areas, with low costs in traditional Medicare, a premium-support
program would not lead to an increase in the monthly Medicare premium to
traditional Medicare beneficiaries. It would, however, reduce payments
to MA plans, which would then need to raise their monthly premiums to
Medicare members and reduce any supplemental benefits that they now provide.

Policy Implications

This analysis suggests that reform of Medicare based on the
premium-support model will inevitably result in major changes in costs
for health insurance coverage and health care services for elderly and
disabled beneficiaries in substantial portions of the nation. The
analysis finds that only the more tightly organized Medicare Advantage
HMO–type plans have costs that are lower as a national average than
traditional Medicare costs in the same area. Medicare Advantage
HMO–model private plans, although very successful in some high-cost
urban regions, have proved expensive and difficult to develop and expand
in other areas with lower costs in traditional Medicare. After thirty
years of federal and private support, the most tightly organized
Medicare Advantage HMOs have achieved significant cost savings relative
to local costs in traditional Medicare in only a limited number of urban
counties.

The lesson is that these less structured MA plans, which mostly mimic
the fee-for-service payment system for which traditional Medicare is
criticized, have costs that are substantially higher than those of
traditional Medicare in the same area and would not contribute to lower
Medicare costs.

Finally, the analysis finds that the traditional Medicare program is not
as universally inefficient and expensive relative to private plans as is
often suggested. The findings described here indicate that MA plans have
average costs that are higher than costs in traditional Medicare in five
of the ten US county cohorts with the lowest traditional Medicare costs.
In the three county cohorts with the lowest traditional Medicare costs,
even HMO plans have costs that exceed those of traditional Medicare, by
more than 10 percentage points.

http://content.healthaffairs.org/content/34/1/56.abstract

****


Comment by Don McCanne

The contention that private Medicare Advantage (MA) plans competing with
the traditional Medicare program are able to lower costs has been proven
repeatedly to be a fiction. Yet there continues to be a push to convert
Medicare into a premium support system in which patients would use
vouchers to purchase private plans under the false promise of lower
costs through market competition.

Although tightly organized HMO-type Medicare Advantage plans may have
lower costs in areas where the costs of the traditional Medicare program
were higher, more loosely structured PPO and private fee-for-service
Medicare Advantage plans averaged 12 to 18 percent more than the costs
of the traditional Medicare program.

Understanding the distinction between tightly organized HMOs and loosely
organized PPOs and private FFS plans is important to be able to make
sense of the economic impact of these models. PPO and FFS Medicare
Advantage plans are business models of private insurance designed to be
marketed as insurance products that partially cover losses due to health
care. These models are associated with very high administrative costs, a
fact acknowledged in the Affordable Care Act since similar plans are
permitted to consume 15 to 20 percent of the premiums for their own
administrative costs and profits. These administrative costs are far
higher than those of the traditional Medicare program, as mentioned above.

Tightly organized HMOS, such as Kaiser Permanente, are designed as
patient service models providing prepaid health care. These models have
been shown to be effective in improving efficiency and sometimes
reducing health care costs. What distinguishes them from the loosely
organized models is that these HMOs are integrated health care delivery
systems whereas the loosely organized models are simply intermediary
insurance plans that contract with mostly non-integrated private providers.

Why is this important? Integrated systems such as Kaiser that are a part
of the delivery system would be covered under a single payer national
health program - an improved Medicare for all. The loosely organized
models are simply private insurers that are not part of the health care
delivery system. Under single payer they would be replaced by an
improved Medicare. Thus we would be keeping efficient prepaid delivery
systems while dumping the wasteful and intrusive private insurer
intermediaries.

How would premium support change this? The advocates would provide
generous vouchers for these wasteful intermediaries while failing to
provide adequate cost adjustments for the traditional Medicare program.
We know that they would do this because they already are doing it.
Although the Affordable Care Act called for the reduction of the
Medicare Advantage overpayments, a conspiracy between the insurance
industry and the administration has resulted in various accounting
innovations that have preserved these overpayments, though in a
disguised form. So they would eventually displace traditional Medicare
with a thriving market of private plans, but, as patients would
eventually discover, plans with unaffordable cost sharing and limited
choice of narrow networks.

This study is yet one more that demonstrates the irrationality of using
wasteful private insurance plans in a public program. Yet it also shows
that those who prefer to obtain care through an integrated delivery
model, such as Kaiser Permanente, could continue to do so under single
payer since it is a prepaid health delivery system rather than a
private, superfluous, intermediary insurer. But, by all means, be
prepared to protest vociferously when you hear talk of premium support.

Commonwealth - Workers paying more but getting less

The Commonwealth Fund
January 8, 2015
State Trends in the Cost of Employer Health Insurance Coverage, 2003–2013
By Cathy Schoen, David Radley, and Sara R. Collins


Abstract

From 2010 to 2013—the years following the implementation of the
Affordable Care Act—there has been a marked slowdown in premium growth
in 31 states and the District of Columbia. Yet, the costs employees and
their families pay out-of-pocket for deductibles and their share of
premiums continued to rise, consuming a greater share of incomes across
the country. In all but a handful of states, average deductibles more
than doubled over the past decade for employees working in large and
small firms. Workers are paying more but getting less protective
benefits. Costs are particularly high, compared with median income, in
Southern and South Central states, where incomes are below the national
average. Based on recent forecasts that predict an uptick in private
insurance growth rates starting in 2015, securing slow cost growth for
workers, families, and employers will likely require action to address
rising costs of medical care services.

From the Overview

For workers and their family members who are insured through employers,
annual premium increases have far exceeded wage growth for more than a
decade—with premiums rising three times faster than wages. In every
state in the country, from 2003 to 2013, the total costs of insurance
premiums rose far faster than median household income.

From the Discussion

Costs per person for private insurance have risen faster than in
Medicare since 2008. Over the next decade, federal projections indicate
that per-enrollee medical spending among the privately insured will
continue to rise faster than in Medicare, increasing to an average of
4.7 percent per year from 2014 to 2023. Concerns are mounting that the
recent wave of hospital mergers and hospital acquisition of physician
practices will result in higher prices paid by private insurers,
regardless of the quality of care provided. The higher prices paid in
the United States relative to other high-income countries account for a
large portion of the share of national income that is consumed by health
care in the U.S.

Although the Affordable Care Act offers a platform from which to build,
securing a more affordable future will likely require action beyond
those reforms, focusing on costs of care, particularly for the privately
insured.

The key question is how to slow health care cost growth in a way that
benefits middle class and lower-wage working families—that is, keeping
premium growth in check without eroding benefits. This will likely
require concerted efforts that span the private and public sectors. The
challenge to policy leaders will be to pursue reforms that improve the
quality of health care, rein in cost growth, and ensure that savings are
shared with patients and families across the income spectrum.

http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2015/jan/1798_schoen_state_trends_2003_2013.pdf?la=en

****


Comment by Don McCanne

Although some news reports are celebrating the slowdown in the growth of
premiums paid by employers for their employee health benefit programs,
the news is not so good for those the coverage is designed to serve -
workers and their families. As this report states, "Workers are paying
more but getting less protective benefits."

Specifically, "the costs employees and their families pay out-of-pocket
for deductibles and their share of premiums continued to rise, consuming
a greater share of incomes across the country." Further, "Costs per
person for private insurance have risen faster than in Medicare."

Employer-sponsored health insurance - the best coverage that the private
insurance industry has to offer - is further burdening workers and their
families, yet still falls short of Medicare in its effectiveness in
containing health care spending.

Although the Affordable Care Act was specifically designed to perpetuate
the role of employer-sponsored coverage, our experience shows that the
best that the private insurance industry had to offer is still not good
enough. Medicare is certainly better, although it has problems that need
to be addressed. But it would be far easier to fix Medicare - a system
designed for patient service - than it would be to harness the private
health insurance industry - a system designed to serve business interests.

It's time to relieve employers of their responsibility of providing
health benefit programs for their employees. We need to move forward
with enacting and implementing an expanded and improved Medicare for all.

The top complaint received by the Consumer Financial Protection Bureau

Consumer Financial Protection Bureau (CFPB)

Creating the Consumer Bureau

Beginning in 2007, the United States faced the most severe financial
crisis since the Great Depression. Millions of Americans saw their home
values drop, their savings shrink, their jobs eliminated, and their
small businesses lose financing. Credit dried up, and countless consumer
loans—many improperly made to begin with—went into default. Today, we're
still in the process of recovering.

In July 2010, Congress passed and President Obama signed the Dodd-Frank
Wall Street Reform and Consumer Protection Act. The Act created the
Consumer Financial Protection Bureau (CFPB). The CFPB consolidates most
Federal consumer financial protection authority in one place. The
consumer bureau is focused on one goal: watching out for American
consumers in the market for consumer financial products and services.

http://www.consumerfinance.gov/the-bureau/creatingthebureau/

****

Consumer Financial Protection Bureau
December 11, 2014
Consumer Advisory: 7 ways to keep medical debt in check
By Gail Hillebrand

Debt collection is the top complaint we've received since September
2013. Out of all debt types, medical collections make up 52 percent of
collection accounts on credit reports, far outpacing all other types of
debt.

Medical collections are so widespread, that an estimated 43 million
consumers with an account in collection have medical debt. We analyzed
medical collections in our latest report, to explain why medical debt is
affecting so many more credit reports than any other type of debt.

http://www.consumerfinance.gov/blog/consumer-advisory-7-ways-to-keep-medical-debt-in-check/

****


Comment by Don McCanne

In the financial crisis of the recent Great Recession, people lost their
jobs, lost their homes, lost their savings, and their consumer loans
went into default. The role of Wall Street compounded and sometimes even
created these problems, and that led to greater increases in income and
wealth inequality that have adversely impacted America's working
families. In response, Elizabeth Warren, Barney Frank, Chris Dodd and
others were instrumental in establishing the Consumer Financial
Protection Bureau. So what is the number one complaint that the bureau
is now receiving? Medical debt!!

Specifically, debt collection is the top complaint, and medical
collections, at 52 percent of collection accounts on credit reports, far
outpace all other types of debt.

With first dollar coverage under a single payer system, this problem
would disappear. Let's do it.

Harvard professors’ crusade against health care injustice

The Harvard Crimson
November 12, 2014
Harvard's Health Benefits Unfairness
(Authors listed below)

(Excerpts)

Last week, the Faculty of Arts and Sciences voted unanimously in favor
of a motion asking the President and Fellows to suspend changes to the
health benefits offered faculty and non-union staff for 2015. In
justifying the benefits changes, the University offered four main
explanations for its addition of deductibles and co-insurance: (1) the
cost of benefits relative to the overall budget; (2) parity with peer
institutions; (3) social science on containing health care costs and (4)
the future financial health of the University. In advancing these
explanations, the University has offered information that is incomplete,
incorrect, deeply misleading, and ethically troubling.

The second argument offered in favor of the health benefits changes has
been that we need to remain in line with our peers. We contend that the
only peer pressure Harvard should heed is that which makes us a better
research university. Increasing salaries and benefits might do this if
it allowed Harvard to recruit and retain the brightest minds in our
fields of research and teaching, as well as the post-doctoral fellows
and staff needed to support these research and teaching endeavors.

Perhaps the most distressing argument advanced in favor of the changes,
however, has been one that draws on a social science experiment from the
1970s to suggest that a co-insurance system, where the insured must pay
a percentage of after-deductible costs, is the best way to contain
health-care costs. At the November FAS meeting, Provost Alan M. Garber
'76 and members of the University Benefits Committee asserted that
because the RAND Health Insurance Experiment, or HIE, demonstrated a
reduction in healthcare utilization without decreasing overall
well-being, the new Harvard plan will do likewise.

We assert that, on the contrary, the HIE is irrelevant to the present
benefits proposal before us.

The HIE randomized individuals into different insurance plans (some
received health insurance free of charge, while others faced a range of
co-insurance options). It found that those paying a higher percentage of
costs visited primary care physicians less frequently and reduced their
health-care expenditures as a result. But copays for regular physician
visits have long been standard and are already part of Harvard's plan.
What Harvard now proposes is further extending cost-sharing to
hospitalizations, surgery, and diagnostic testing via co-insurance.

The HIE's measurement of outcomes is also irrelevant to the matters that
concern all of us. The study looked at indicators of general health such
as blood pressure, visual acuity, and propensity to smoke. The relevant
question for today's Harvard is not whether going to one's primary care
doctor more often makes one smoke less, but whether a diagnostic test
ordered by that doctor could save one's life, or detect an illness in
time to allow for a less invasive, and perhaps in the long run, less
expensive treatment.

Co-insurance is not only of questionable utility in the 21st century—at
a time when diagnostic testing is much more effective at influencing
outcomes than it was in the 1970s—it also unethically transfers risk and
expense to the most vulnerable in our community.

We often hear that Harvard is the apex of academic research and teaching
institutions, and that part of its success is due to its sense of
community. The University ignored that community when it embarked on a
secret and non-consultative planning process and disregarded the strong
concerns that faculty have about their own health and that of less
well-paid members of our community.

The result is a plan that imposes a serious financial burden on those
with chronic illness or who face medical emergencies for themselves or
their families. This plan is based on a flawed process, on a misguided
charge to the University Benefits Committee, on misinformation about our
peers, and on outdated research that is not relevant to the current
situation. It is unfair to the most vulnerable members of our community,
and not worthy of our great university.

Jerry R. Green, John Leverett Professor in the University and David A.
Wells Professor of Political Economy

Alison F. Johnson, Professor of History

Marc W. Kirschner, John Franklin Enders University Professor of Systems
Biology

Mark Kisin, Professor of Mathematics

Charles H. Langmuir '72, Professor of Geochemistry

Mary D. Lewis, Professor of History

James J. McCarthy, Alexander Agassiz Professor of Biological Oceanography

Lisa M. McGirr, Professor of History

Richard F. Thomas, George Martin Lane Professor of the Classics

Mary C. Waters, M.E. Zuckerman Professor of Sociology

Christopher Winship, Diker-Tishman Professor of Sociology

http://www.thecrimson.com/article/2014/11/12/harvards-health-benefits-unfairness/

****

The New York Times
January 5, 2015
Harvard Ideas on Health Care Hit Home, Hard
By Robert Pear

For years, Harvard's experts on health economics and policy have advised
presidents and Congress on how to provide health benefits to the nation
at a reasonable cost. But those remedies will now be applied to the
Harvard faculty, and the professors are in an uproar.

Members of the Faculty of Arts and Sciences, the heart of the
378-year-old university, voted overwhelmingly in November to oppose
changes that would require them and thousands of other Harvard employees
to pay more for health care. The university says the increases are in
part a result of the Obama administration's Affordable Care Act, which
many Harvard professors championed.

"Harvard is a microcosm of what's happening in health care in the
country," said David M. Cutler, a health economist at the university who
was an adviser to President Obama's 2008 campaign. But only up to a
point: Professors at Harvard have until now generally avoided the higher
expenses that other employers have been passing on to employees. That
makes the outrage among the faculty remarkable, Mr. Cutler said, because
"Harvard was and remains a very generous employer."

Richard F. Thomas, a Harvard professor of classics and one of the
world's leading authorities on Virgil, called the changes "deplorable,
deeply regressive, a sign of the corporatization of the university."

Mary D. Lewis, a professor who specializes in the history of modern
France and has led opposition to the benefit changes, said they were
tantamount to a pay cut. "Moreover," she said, "this pay cut will be
timed to come at precisely the moment when you are sick, stressed or
facing the challenges of being a new parent."

The university is adopting standard features of most employer-sponsored
health plans: Employees will now pay deductibles and a share of the
costs, known as coinsurance, for hospitalization, surgery and certain
advanced diagnostic tests. The plan has an annual deductible of $250 per
individual and $750 for a family. For a doctor's office visit, the
charge is $20. For most other services, patients will pay 10 percent of
the cost until they reach the out-of-pocket limit of $1,500 for an
individual and $4,500 for a family.

Harvard's new plan is far more generous than plans sold on public
insurance exchanges under the Affordable Care Act. Harvard says its plan
pays 91 percent of the cost of services for the covered population,
while the most popular plans on the exchanges, known as silver plans,
pay 70 percent, on average, reflecting their "actuarial value."

Michael E. Chernew, a health economist and the chairman of the
university benefits committee, which recommended the new approach,
acknowledged that "with these changes, employees will often pay more for
care at the point of service." In part, he said, "that is intended
because patient cost-sharing is proven to reduce overall spending."

"It seems that Harvard is trying to save money by shifting costs to sick
people," said Mary C. Waters, a professor of sociology. "I don't
understand why a university with Harvard's incredible resources would do
this. What is the crisis?"

http://www.nytimes.com/2015/01/06/us/health-care-fixes-backed-by-harvards-experts-now-roil-its-faculty.html

****


Comment by Don McCanne

Peering into Harvard's academic cocoon, there are two lessons we can
take home. One has to do with the insularity of the Harvard academic
staff as they consider their own health benefit program, but the more
important lesson has to do with the insularity of the health policy
academics at Harvard and other institutions regarding the design of
optimal systems of health care financing.

When we have a new national standard for health insurance that has an
actuarial value of 70 percent (patients pay an average of 30 percent of
their health care costs) based on the benchmark silver plans offered in
the insurance exchanges established by the Affordable Care Act, it is
astonishing to hear the outrage expressed by the Harvard academic
community over the reduction of the actuarial value of their plans to
the almost unheard of level of 91 percent! They would pay on average
only 9 percent of their health care costs.

That said, they are right. They should be able to receive all essential
health care services without paying anything out-of-pocket at the time
they receive care. Other nations have proven that you can provide first
dollar coverage at a per capita cost that averages half of what we spend
in the United States. Placing financial barriers in the way of health
care access is not only unnecessary, it is frequently harmful.

The first lesson here is that the insularity of these academics did not
allow them to think beyond the needs of themselves and the needs of the
"less well-paid members of our community" - the Harvard community, that
is. It is difficult to watch the expression of their outrage over their
comparatively modest reduction in benefits, leaving them with
platinum-level plans, when they remain silent on the deficient plans
that most of the nation has to deal with. From their academic towers,
they have the luxury of being able to sound off about the health care
injustices that so many in the nation face. But they didn't do it. They
merely whined about the injustices of their own solid-platinum insurance.

But then there is the academic health policy community. They are still
fixated on the misinterpretations and extrapolations of the RAND Health
Insurance Experiment (see the Harvard Crimson excerpts above). They
continue to insist that when patients have health care needs, they must
buy a ticket to enter the health care arena, partially invalidating
their prepayment arrangements (i.e., health insurance). That there are
better ways to improve value without erecting financial barriers to care
seems to be lost not only behind the blinders that these health policy
academics are wearing, but also behind the earplugs that they must be
wearing as well. They see and hear no evil, but they sure do speak evil!

When are those of us outside of the moat protecting Harvard's insular
compound finally going to take over the policy reins? Soon, I hope.