Thursday, July 30, 2015
The Commonwealth Fund
July 8, 2015
Modernizing Medicare's Benefit Design and Low-Income Subsidies to Ensure
Access and Affordability
By Cathy Schoen, Karen Davis, Christine Buttorff, and Martin Andersen
Insurance coverage through the traditional Medicare program is complex,
fragmented, and incomplete. Beneficiaries must purchase supplemental
private insurance to fill in the gaps. While impoverished beneficiaries
may receive supplemental coverage through Medicaid and subsidies for
prescription drugs, help is limited for people with incomes above the
poverty level. This patchwork quilt leads to confusion for beneficiaries
and high administrative costs, while also undermining coverage and care
coordination. Most important, Medicare's benefits fail to limit
out-of-pocket costs or ensure adequate financial protection, especially
for beneficiaries with low incomes and serious health problems.
There is a pressing need for reform. An estimated 20 million of
Medicare's 52 million beneficiaries live on incomes below 200 percent of
the federal poverty level. Nine million beneficiaries have complex care
needs with serious functional limitations that hinder their ability to
carry out daily activities. Although the poorest are eligible for
Medicaid to supplement Medicare, under current policies beneficiaries
with low or modest incomes are eligible for only limited help with
paying for premiums or medical care expenses.
The absence of a ceiling on out-of-pocket costs can undermine the
financial security and exhaust the resources of even higher-income
beneficiaries. That's why most beneficiaries supplement Medicare's core
benefits with coverage sold by private insurers, often purchasing
multiple plans. This fragmented coverage is inefficient, generates high
administrative costs, and undermines efforts to improve coordination of
patient care and prevent avoidable hospitalizations.
Current Medicare Benefits and Low-Income Provisions
Medicare has separate deductibles and cost-sharing provisions for Part A
hospital, skilled nursing facility, and home health services and for
Part B physician, lab, and diagnostic benefits, with no limit on annual
out-of-pocket spending for covered services. Part A includes a $1,216
deductible per hospital episode and substantial cost-sharing for
longer-term hospitalization or skilled nursing stays after a
hospitalization. Part B has a $104.90 monthly premium ($1,259 per year
per person), a separate $147 annual deductible, and open-ended
coinsurance of 20 percent for physician services (including surgeons and
other hospital inpatient physicians), therapy, durable medical
equipment, and outpatient services with no limit on out-of-pocket spending.
For prescription drug coverage, beneficiaries must buy a Part D plan
with a separate premium that averages around $440 a year plus a
deductible and cost-sharing that varies across private plans. The
Affordable Care Act (ACA) is phasing out Medicare's gap in drug
coverage—the "doughnut hole"—but beneficiaries requiring specialty drugs
or multiple medications can still face substantial costs.
Supplemental private coverage to fill in Medicare's deductibles and
cost-sharing is costly, with Medigap premiums adding over $2,000 a year,
depending on geographic area. It is also inefficient, with 20 percent of
the premium, on average, going toward administrative costs.
Some low-income beneficiaries are eligible for assistance paying their
Parts A and B cost-sharing and Part B premiums. Medicaid covers Medicare
cost-sharing up to 100 percent of the poverty level and provides
subsidies for Part B premiums up to 135 percent of poverty for those
meeting income and asset tests.6 Personal asset limits for beneficiaries
seeking extra help with Medicare premiums or cost-sharing are $7,160 for
an individual and $10,750 for a couple (in 2014).
In contrast to Medicare, the ACA eliminates asset tests and provides
substantial premium and cost-sharing subsidies up to 200 percent of
poverty for the under-65 population and expands Medicaid to 138 percent
of poverty for participating states.7 ACA provisions exclude Medicare
beneficiaries. As a result, lower-income older adults who age into
Medicare will face increased financial burdens for coverage and care.
Underprotected and Underinsured Medicare Beneficiaries
Facing gaps in benefits and premium costs, an estimated 25 percent of
all beneficiaries and 40 percent with incomes below twice the poverty
level spent 20 percent or more of their income for premiums plus medical
care costs in 2014.
An estimated one of five beneficiaries—11 million people—spent at least
10 percent of their income on medical care alone in 2014, not including
premiums. Despite having Medicare, they were underinsured, spending a
high share of their income on medical care. The risk of being
underinsured was highest for low-income beneficiaries: an estimated
one-third of those with incomes up to 150 percent of poverty, and 30
percent of those with incomes between 150 percent and 200 percent of
poverty were underinsured.
Such high financial burdens undermine access to care, deplete incomes,
and drain resources. Notably, a recent study found that the elderly in
the United States are far more likely to go without care because of the
cost and face problems paying medical bills than their counterparts in
10 other high-income countries. Beneficiaries with complex care needs
are particularly at risk.
Policy Options to Modernize Benefits and Improve Low-Income Protections
To modernize Medicare's core benefits and update policies related to
low-income beneficiaries, the brief discusses two complementary options.
The first would offer a new Medicare-sponsored plan choice. Available
for an extra premium, it would provide an integrated design with
prescription coverage, more-affordable cost-sharing, and a limit on
out-of-pocket costs—making supplemental coverage unnecessary. The second
option would expand subsidies for Medicare's premiums and reduce
cost-sharing for beneficiaries with incomes up to 200 percent of the
federal poverty level in ways that align with the Affordable Care Act's
policies for the under-65 population.
Comment by Don McCanne
At the 50th anniversary of Medicare we can be thankful for the
assistance it has provided to our seniors and those with long term
disabilities in improving access to care and in making health care more
affordable for them. However, Medicare does have significant
deficiencies and this is a good time to look at them and see what we can
do to improve the program.
Probably the most glaring defect is that the coverage is inadequate,
especially for those with modest incomes. Premiums for Parts B and D,
deductibles for Parts A, B and D, 20% coinsurance for Part B, other
forms of cost sharing, and the lack of a ceiling on out-of-pocket costs
all combined can create severe financial hardships for far too many.
Medicare should be structured to ensure health security without
threatening exposure to financial insecurity.
To cover these high out-of-pocket costs, some purchase Medigap plans.
But these plans are overpriced, partly because they consume 20% of the
premiums for administration. Plus they add administrative complexity for
the providers because of having to interact with two payers - Medicare
plus the Medigap plan. Employer-sponsored retiree health plans may
provide wraparound coverage for Medicare, but this is administratively
inefficient as well. More comprehensive coverage by Medicare would
relieve employers of their responsibilities for their retiree health
plans for the Medicare-eligible population, plus it would free up funds
that could be added to retiree pensions. Very low income individuals may
qualify for Medicaid coverage, though these dual-eligible individuals,
to their dismay, are now often being forced into managed care plans
designed for the welfare population. Others select private Medicare
Advantage plans, but the government unfairly pays the private plans more
- two-thirds of which is kept by the insurers instead of going toward
patient benefits. Although Medicare Advantage plans reduce spending for
the beneficiaries, they do so by wasting an inordinate amount of
taxpayer dollars on non-medical administrative excesses and insurer profits.
The authors of this brief do recommend creating a new Medicare option -
"Medicare Essential" - available for an extra premium, which would
integrate more benefits and place a ceiling on out-of-pocket costs,
obviating the need for supplemental coverage. They would also protect
low-income individuals by adding premium subsidies and cost sharing
reductions, based on income, much like the subsidies for the plans in
the ACA exchanges. These changes would certainly reduce the financial
burden that Medicare beneficiaries face, but their analysis of the
impact of these two policies shows that 15 percent of Medicare
beneficiaries would still be paying over 20 percent of their income on
care and premiums.
A better solution would be to go ahead and roll the benefits of these
various supplemental or complementary programs into the traditional
Medicare program so that it could be administered as one single program,
but to also achieve greater efficiency by eliminating all of the
premiums, deductibles, coinsurance and other cost sharing, and instead
funding all care through a single, equitably-funded Medicare risk pool.
Carrying that one step further, the maximum efficiency would be attained
by expanding that risk pool to cover absolutely everyone so that we
would all have prepaid health care whenever we needed it.
After 50 years, it is clear that Medicare needs improvement, though it
still has strong support of the public. The time is ripe for not only
improving it, but also expanding it to cover everyone. Let us hope that
we do not have to wait another 50 years to get it right.
at 9:30 AM
Wednesday, July 29, 2015
U.S. House of Representatives
July 28, 2015
Rep. Jim McDermott
Statement Introducing the State-Based Universal Health Care Act of 2015
Mr. Speaker, I rise today to introduce legislation that will give states
the tools they need to guarantee the health security of their citizens.
The State-Based Universal Health Care Act of 2015 establishes a new
procedure through which states may apply for a waiver of federal law in
order to design and implement single-payer health care systems. This
will allow states to achieve universal coverage and control costs by
removing greed and inefficiency from the system.
One of the many achievements of the Affordable Care Act is its
provisions that grant states the authority to innovate in their health
care systems. Under Section 1332 of the law, a state may apply for a
State Innovation Waiver that will provide it with control of federal
dollars that otherwise would have been spent on premium tax credits and
cost-sharing reductions for its residents. Through this waiver, a state
may design a system to cover its residents, so long as benefits are at
least as comprehensive and affordable as those offered by Qualified
Health Plans available on the Exchanges.
However, even with this flexibility, numerous barriers limit states'
ability to design true single-payer systems. Existing waivers are narrow
in scope, requiring states to seek out imperfect and convoluted
solutions to circumvent federal limitations. A sweeping preemption
provision in the Employee Retirement Income Security Act (ERISA) denies
states authority to regulate employer-sponsored health plans. And, due
to the complexities of our existing federal health programs, it is
essentially impossible for a state to design a single benefit package
that can be administered simply and efficiently on behalf of all of its
The State-Based Universal Health Care Act removes these barriers. It
builds upon the ACA's State Innovation Waiver by offering states new
tools that will allow them to truly innovate in health care. Under this
legislation, a state may apply for a Universal Health Care Waiver that
will grant it authority over federal health care dollars that otherwise
would have been spent on the state's residents. To the extent necessary
to design a universal system, a state may waive provisions of federal
law relating to the following:
* The rules governing premium tax credits and cost-sharing reductions,
as provided for in existing waiver authority under Section 1332 of the ACA.
* Provisions necessary for states to pool funds that otherwise would be
spent on behalf of residents enrolled in Medicare, Medicaid, CHIP,
TRICARE, and the Federal Employee Health Benefits Program.
* ERISA's preemption clause, which currently forbids states from
enacting legislation relating to employee health benefit programs.
Any state seeking a Universal Health Care Waiver must design a system
that covers substantially all of its residents. The benefits that each
citizen receives must be at least as comprehensive and no less
affordable than what would have been provided under any federal health
programs for which its residents otherwise would have been eligible.
Once enacted, the state plan must be publicly administered, and it may
not add to the federal deficit.
The Affordable Care Act was a landmark achievement and a strong first
step toward achieving health security in this country. However, we still
have a tremendous amount of work left to do. The United States spends by
far the most per capita on health care, yet we fail to achieve superior
outcomes or even guarantee coverage as a basic human right. Insurance
companies are a powerful force in our economy, enjoying billions in
profits and growing power in the marketplace. Meanwhile, hospitals are
consolidating at an astonishing rate, raising new questions about the
quality of patient care and the future of medicine. What's more, we have
failed to make meaningful efforts to combat the skyrocketing costs of
prescription drugs, threatening patient access to treatments and the
financial sustainability of the entire system.
As we explore ways to build upon the successes of the ACA, it is
critical that we look for creative solutions to the challenges that
still exist. Granting states tools to design single-payer systems will
help spur necessary innovation, achieve universal coverage, and control
costs. It is time to take this next step as we continue to move forward
in our historic effort to guarantee the health security of every American.
H.R.3241: State-Based Universal Health Care Act of 2015
Comment by Don McCanne
State efforts to establish single payer systems have had difficulties
because the existing waiver processes for use of federal funds have been
quite limited in their scope, and ERISA restrains state regulation of
employer-sponsored health plans. The workarounds have been difficult and
are a major reason that several states with promising proposals have
backed off on their efforts.
Rep. Jim McDermott has now introduced H.R.3241, the State-Based
Universal Health Care Act of 2015, which would allow states to include
in a universal health insurance risk pool all funds that are currently
used for federal health programs, including Medicare, Medicaid, CHIP,
TRICARE, FEHBP, and the subsidies for plans in the ACA exchanges, plus,
by eliminating ERISA restrictions, states could establish a more
equitable method of financing in replacing funds currently paid into
employer-sponsored plans. Those crafting state single payer legislation
would have a field day if H.R.3241 were to become law, though they would
face many other technical issues which will not be addressed here.
What could be wrong with this proposal? Conservatives are dreaming of
the day that they can receive Medicaid funds as block grants to the
states. It does not take much imagination to think what they would do
with those block grants, especially when you look at their current
behavior. The Medicaid waivers they are requesting both privatize the
program and shift more costs to the patients, and some governors are
even refusing federal funds, calling instead for block grants over which
they would have much greater control. Under H.R.3241, essentially all
federal health program funds would granted to the states in what would
be, in essence, block grants. Although the Act calls for universality,
comprehensiveness, affordability, and public administration, clearly the
conservatives would game the system, much to the detriment of patients.
We really do need a national single-payer health program, and that is
why we cannot allow ourselves to be diverted from supporting legislation
such as H.R.676, the Expanded & Improved Medicare for All Act,
introduced by Rep. John Conyers, now with 63 cosponsors. Whatever else
we do, our advocacy for a national program must be steadfast.
As we work on trying to change the politics on the national scene, it
certainly would be reasonable for state reform advocates to continue
their efforts. Some in the trenches hope that conservatives would be
attracted to shifting more control to the states through legislation
such as this. But keep in mind the risk of this as we watch the
suffering of low-income individuals and families in those states that
already refuse to collaborate with Medicaid, in spite of the gift of
Another risk is that if H.R.3241 gains traction, single payer supporters
may abandon national efforts, just as they abandoned single payer
support when the "public option" was under consideration. Abandoning a
national effort in deference to your own state increases the risk that
our brothers and sisters in other states would be left out.
Everybody in, nobody out.
at 2:13 PM
Tuesday, July 28, 2015
Los Angeles Times
July 27, 2015
Op-Ed Obamacare works in California. Here's why.
By Peter V. Lee, James C. Robinson
Early reports that 2016 health insurance premiums would increase in
double digits brought out the usual cadre of critics to claim — once
again — that Obamacare is not financially sustainable.
We now have the full picture in California, where we are proving that
health insurance exchanges can keep prices in check. Residents who
enroll through Covered California, our statewide exchange, will see only
modest 4% increases in 2016. Those selecting the lowest-priced plans
actually will save 4.5%.
These low premiums were made possible because California law gave
Covered California the power to actively negotiate on behalf of its 1.3
million consumers. The board and staff of Covered California have used
this authority. That's helping the Affordable Care Act work as intended
— using market forces to hold down costs.
So how exactly is California getting such good results? First, Covered
California selects which plans can be sold through the exchange. This
gives it leverage with the insurers, which want to reach this source of
new customers. Those insurers then are able to negotiate better deals
from hospitals and doctors. In contrast, the federal health insurance
marketplace and other state exchanges take all comers and do not force
insurers to improve plans to get their products onto the exchanges.
In 2014 and 2015, Covered California turned away several plans because
of serious concerns about high prices, inadequate physician networks or
weak administrative capabilities.
Covered California also negotiates directly with health insurers on
prices. We pressure carriers to keep premiums as low as possible and
offer robust networks of doctors and hospitals. Passive insurance
exchanges, including the 37 states that are part of the federal
marketplace, allow insurers to charge whichever rates pass regulatory
muster and cover however many doctors they want.
Equally important, Covered California standardizes the deductibles and
other characteristics of plans offered. That empowers consumers, who can
make apples-to-apples comparisons. Standardization also allays fears
that low-premium plans might be complicated or rife with coverage
exclusions. Californians can rest assured that their coverage means they
can get the treatment they need without first paying a deductible that
can be thousands of dollars.
Moreover, the benefit of standard plans and negotiated prices accrue to
anyone who buys individual health insurance. Again, because of how
California law implemented the ACA, the rates Covered California
negotiates must also apply to policies those plans sell outside the
Covered California is using its heft to improve patient care and
outcomes too. Contracts with insurers require that they participate in
quality improvement programs, reduce ethnic and geographic disparities
in access to care, and provide patients with access to doctors and
hospitals that meet their needs.
Taken together, this process generates a better set of insurance options
than do the federal and state insurance exchanges that adopt a passive
Free market forces can be a powerful tool to contain health costs. But
for that tool to work, consumers need the support of an active purchaser
that can go toe-to-toe with the insurers. Other states and the federal
exchange would be wise to look at what's working in California.
(Peter V. Lee is the executive director of Covered California. James C.
Robinson is a professor of health economics at UC Berkeley.)
Los Angeles Times
July 28, 2015
Covered California's good news on premium hikes comes with trade-offs
By The Times Editorial Board
The 2010 federal healthcare reform law made it easier for millions of
Americans to obtain insurance coverage, but it didn't stop the cost of
that coverage from rising considerably faster than inflation. So it was
a welcome surprise Monday when officials at Covered California, the
state's health insurance exchange, announced that the average premiums
for individual policies in 2016 would be only about 4% higher than they
are this year, and only about 2% higher in Los Angeles County. Mixed in
with the good news for consumers, though, were some trade-offs that
won't make everyone happy. The announcement offers lessons for consumers
and policymakers, not all of which are easy to stomach.
Monday's announcement illustrates how competition among doctors and
hospitals in Southern California is helping to hold down premiums.
Consumers in remote or rural areas, and even in some parts of Northern
California, who do not have such competitive marketplaces but are
dominated by one or two hospital systems may face double-digit increases
in their premiums in 2016. They can cut their costs significantly by
switching insurers, but doing so may require them to find a new set of
doctors — Covered California has encouraged insurers to compete by
assembling different lineups of doctors and hospitals. That's a
potentially huge barrier to people with chronic conditions and those who
don't have the time or inclination to get into the details of their
Here's another trade-off. Close to 90% of those insured through Covered
California receive subsidies for their premiums, which makes premiums
less of a problem for many than their policy's out-of-pocket costs. To
hold down those costs in 2016, the exchange is introducing a new
standard "benefit design," or common set of policy features. This design
eliminates deductibles for more basic services and caps the costs of
expensive prescription drugs. At the same time, though, it makes
emergency services and hospitalizations more expensive, especially for
those choosing the tier of coverage with the least expensive premiums.
That should help many consumers, but not those in cheaper plans who are
hit with a major illness or injury.
Unlike the exchanges in most states, Covered California actively
negotiates with insurers over rates and plan designs. There's a
trade-off here too: Some insurers aren't offering plans through the
exchange to consumers in all or part of the state because they didn't
meet the exchange's demands.
That's not to give short shrift to what Covered California has been
doing. It's simply to acknowledge that the changes wrought by the 2010
law have yielded a market for individual policies that demands not just
an active exchange but attentive consumers aware of the trade-offs
implicit in their choices.
Comment by Don McCanne
Peter Lee and James Robinson tell us that the Affordable Care Act (ACA)
is working as intended - "using market forces to hold down costs," and
that California proves it by holding average premium increases down to
4% for the second consecutive year. But Covered California functions as
an "active purchaser." Does that mean it is functioning as an agent
facilitating a free market between buyers and sellers of insurance, or
is it functioning as a bureaucratic regulator dictating which insurers
and which products are allowed in the exchange markets?
The last half century has confirmed that free markets in health
insurance are highly dysfunctional. The reason that Covered California
is working is that it is very highly regulated, dictating which insurers
can participate, what benefits their plans must offer beyond those
mandated by ACA, while aggressively negotiating with insurers on prices,
rejecting those that are too high.
By requiring more rigid standardization of negotiated prices, benefits,
and lower deductibles, plan selection for buyers is less difficult.
Although this standardization defeats the free market principles wherein
choice would be between plans with much greater variability in these
parameters, it reduces the risk for the individual that a given selected
plan would be grossly inadequate in the face of significant medical need.
Thus given the limitations of ACA, the strong arm tactics of these
bureaucrats benefit patients compared to simply turning them loose in a
free market of unregulated health plans.
But there are important trade-offs. Because the exchange plans are
supposed to compete, they are requiring plans to have different
compositions of provider networks so that patients would have a choice
of which restricted list of providers they could use. That could be
difficult for patients with chronic problems whose professionals were
scattered amongst different networks. Also yearly premium adjustments
can leave patients with a choice of paying a higher, less affordable
premium or changing to another plan with a different provider network,
disrupting continuity of care.
The administrators of Covered California have recognized the financial
barriers created by the very high deductibles that have become
commonplace today. They rightfully established a new standard benefit
design that eliminates the deductibles for basic services. But to avoid
the necessity of premium increases they have had to allow greater cost
sharing for emergencies and hospitalizations - creating financial
hardships for those with the greatest needs for adequate coverage.
Trying to do the best with what ACA allows, they have crafted plans that
limit choices of providers, expose the most vulnerable patients to high
out-of-pocket costs, while keeping insurance premiums only modestly
above the level they were before ACA was enacted.
What is missing here? They have failed to recover the profound
administrative waste inherent in our dysfunctional financing system -
waste that goes away simply by changing to single payer financing. Also
they could be more effective negotiators if they were a single public
monopsony - a single-payer purchaser - instead of trying to negotiate
with only a portion of the multiple players in our fragmented financing
system. The efficiencies would free up enough funds to provide all
essential services for everyone in a system with free choice of health
care professionals that is affordable for all through equitable public
The honorable administrators of Covered California have shown us what
can be done under ACA. Their efforts are admirable, but their results
fall tragically short of what we need simply because they were limited
by the fundamental defects in our financing infrastructure. Just think
of what they could do for us if we gave them an improved Medicare for
all with which to work.
at 4:39 PM
Monday, July 27, 2015
July 23, 2015
Priceless safety net reaches Golden Anniversary
Medicare's impressive milestone is reason to celebrate the safety net
and time for supporters to wake up to threat of increased privatization
By Wendell Potter
Happy birthday, Medicare! Happy Golden Anniversary!
The fact that we have such a special milestone to celebrate means that
the opposition of wealthy, entrenched special interests can be overcome.
But, as we will see, an entirely different group of special interests is
now profiting as a result of a very favorable financial arrangement with
what has become an immense federal program. They are making such rapid
inroads that the original Medicare program may all but cease to exist
over the next decade if the program's supporters don't wake up to what
is a real existential threat.
Public program increasingly becoming private
Republican lawmakers whose goal was to privatize the program succeeded
in passing legislation to enable insurance companies to provide coverage
to Medicare beneficiaries – on the government's dime. To entice them to
get in the game, the government agreed to pay them considerably more
than what it would cost to provide benefits to Medicare-eligible folks
if they stayed in the original program. This not only enabled the
insurers to make a tidy profit, it also allowed what are now called
Medicare Advantage plans to offer a drug benefit before the traditional
program was authorized to do so and to cover all medical costs, not just
80 percent. In exchange, beneficiaries could only get care provided by
doctors, hospitals and other facilities that were in their insurance
company's provider network.
Insurance companies have spent billions of dollars over the past few
years on sales and marketing campaigns to persuade beneficiaries to
enroll in or switch to their Medicare Advantage plans. They've been so
successful that a third of Medicare beneficiaries – 16.6 million at last
count – are now enrolled in Medicare Advantage plans, most of which are
operated as HMOs and PPOs.
Medicare's growing value to insurers
If Medicare Advantage enrollment trends continue – and there is no
reason to believe they won't – within a few years, possibly before the
end of this decade, we will reach a tipping point in which more people
will be enrolled in private plans than in the original program.
That very real possibility should be of great concern to health care
reform advocates who think Americans would be much better off if all of
us – not just senior citizens and the disabled – were enrolled in an
improved, "Medicare for All" program.
The word "improved" in that last sentence is essential. As medical costs
continue to go through the roof, the 20 percent coinsurance obligation
in the traditional program will make the Medicare Advantage plans
increasingly attractive. If I were leading the strategy for the
"Medicare for All crowd," I would focus a lot of attention on
strengthening the traditional program to make it every bit as
comprehensive and attractive as a Medicare Advantage plan.
If that doesn't happen, Medicare's next significant birthday will be
celebrated most enthusiastically by the shareholders and executives of
private insurance companies.
Comment by Don McCanne
Mark Wendell Potter's words. If we want an improved Medicare for all, we
need to focus on strengthening the traditional program "to make it every
bit as comprehensive and attractive as a Medicare Advantage plan." Yes,
but even more than that.
If benefits of the traditional Medicare program, especially the
deductibles and coinsurance, were even better than the Medicare
Advantage plans, then there would be no reason that Medicare
beneficiaries would want the restrictions of the private plans, such as
limiting their choices of physicians and hospitals to the networks
selected by the private plans.
For those who say that we cannot afford to improve Medicare's benefits,
they will have to explain to us why it is then acceptable to give the
private Medicare Advantage plans more taxpayer funds than are spent on
comparable patients in the traditional program. Aren't those in the
traditional program worthy of the same level of spending? Then we need
to explain to them how we could increase benefits without increasing
total spending, by putting in place the substantial efficiencies of a
single payer version of an improved Medicare for all.
With the release of the Medicare Trustees report, the conversation has
returned to the need to control spending. The privatizers are out with
their schemes to control government spending (but not total spending).
Jeb Bush says that we need to "phase out" Medicare and "move to a new
system" - presumably premium support vouchers which shift costs from the
government to the beneficiaries.
We need to control total health care costs, not control only government
spending while allowing total costs to escalate. So let's change the
conversation from that of cutting Medicare to that of improving Medicare
while making it affordable - a feat which we can accomplish only if we
convert it to a single payer system.
at 3:55 PM
Saturday, July 25, 2015
The failed promise of the Affordable Care Act
By Trudy Lieberman
It's bad enough that the A.C.A. is fattening up the health-care industry
and hollowing out coverage for the middle class. Even worse, the law is
accelerating what I call the Great Cost Shift, which transfers the
growing price of medical care to patients themselves through high
deductibles, coinsurance (the patient's share of the cost for a specific
service, calculated as a percentage), copayments (a set fee paid for a
specific service), and limited provider networks (which sometimes offer
so little choice that patients end up seeking out-of-network care and
paying on their own). What was once good, comprehensive insurance for a
sizable number of Americans is being reduced to coverage for only the
most serious, and most expensive, of illnesses.
The A.C.A.'s greatest legacy may finally be the fulfillment of a
conservative vision laid out three decades ago, which sought to
transform American health care into a market-driven system. The idea was
to turn patients into shoppers, who would naturally look for the best
deal on care — while shifting much of the cost onto those very consumers.
Comment by Don McCanne
Harper's Magazine has now moved Trudy Lieberman's "Wrong Prescription?"
out from behind the paywall, making it available for free.
It is an extraordinary article that explains the what, why and how we
ended up with the wrong prescription for our sick health care financing
system. Though a fairly long article, reading it and sharing it with
others is an imperative.
The article does not dwell on what is the right prescription, but there
are basically three options:
1. Live with ACA, and try to patch the the defects. The problem with
this is that the fundamental infrastructure cannot be repaired. Patches
are inadequate in that the same basic structural flaws would be perpetuated.
2. Although the Republicans keep telling us that they have a replacement
plan, after five years they have been unable to agree within themselves
on the specifics. That said, they have telegraphed their ideas, and,
combined, they are basically a weaker version of the market-driven
principles already incorporated in the Affordable Care Act. They would
merely weaken oversight of the plans and shift even more responsibility
to the patient-consumer. Being uninsured, underinsurance, and lack of
affordability of adequate coverage would all worsen under their proposals.
3. A single payer national health program - an improved Medicare for all
- would finally achieve our goals of universality, affordability and
accessibility while removing financial barriers through an equitable
system of financing. It is the prescription we desperately need.
Take a moment this weekend to read this article and then share it with
others. At the 50th anniversary of Medicare, this article is very
timely. We have to fix this system once and for all, but that means that
everyone must understand why ACA was the wrong prescription.
at 12:52 PM
Friday, July 24, 2015
Carleton University, School of Public Policy and Administration
July 23, 2015
Mirror, Mirror on the Wall:
Medicare Part D pays needlessly high brand-name drug prices compared
with other OECD countries and with U.S. government programs
By Marc-André Gagnon, PhD. and Sidney Wolfe, MD.
With $69.3 billion in prescription drug spending in 2013, Medicare Part
D alone represents approximately 7% of the $993 billion global
prescription drug market. Around 58% of Medicare Part D spending on
prescription drugs is paid to brand-name manufacturers.
Despite its size, Medicare Part D is not allowed to "interfere with the
negotiations between drug manufacturers and pharmacies and [Part D plan]
sponsors" (P.L. 108-73, Section 1860D-11). Plan sponsors can obtain
substantial rebates from both drug manufacturers and pharmacies, but the
federal program is prohibited from leveraging its purchasing power to
realize economies of scale due to this non- interference clause.
As this policy brief will show, by using previously unavailable data
comparing U.S. brand-name drug prices with those of all other countries
members of the Organization for Economic Co-operation and Development
(OECD), Medicare Part D needlessly pays significantly higher prices than
any other comparator countries. Moreover, even in comparison to other
U.S. government programs such as Medicaid and the Veterans' Benefits
Administration (VBA), significantly higher prices are paid by Medicare
1. After including rebates, brand-name drugs cost Medicare Part D 198%
of the median costs for the same brand-name drugs in the 31 OECD countries.
2. Medicare Part D pays on average 73% more than Medicaid and 80% more
than the Veterans Benefits Administration (VBA) for brand-name drugs.
3. Medicare Part D would save from $15.2 billion to $16 billion a year
if it could secure the same prices that Medicaid or VBA, respectively,
receives on the same brand-name drugs.
4. While Medicaid and VBA often are used as benchmarks because of the
rebates or discounts they secure, even these organizations pay higher
prices than many OECD countries.
5. Under current Medicare Part D pricing, non-innovative "me-too" drugs
are priced as much or more than older, equally effective versions. By
currently paying inflated prices for drugs that do not provide value for
money, Medicare Part D artificially increases the returns and incentives
for non-innovative "me-too" drugs to the detriment of new innovative
medicines for unmet needs.
6. Reducing brand-name drug prices would reduce the high level of
cost-related non-adherence (people not filling their prescription for
financial reasons) found in Part D, by reducing beneficiaries' premiums
and co-pays. In addition, since the government pays for the majority of
Medicare Part D, taxpayers' contribution would decrease by at least $11
billion every year.
From the Conclusions and Policy Considerations
The after-rebate prices Medicare Part D plan sponsors pay for brand-name
drugs remain significantly higher than the current market prices found
in other countries or in other programs such as Medicaid or VBA.
Medicare Part D would save between $15.2 billion and $16 billion a year
if it could obtain the same manufacturer prices that Medicaid or VBA,
respectively, obtains for the same brand-name drugs. Lower brand-name
drug prices for Medicare Part D not only would generate savings, but, by
increasing patient access to prescribed drugs, it also could improve
adherence to treatments by reducing the high level of cost-related
non-adherence found in Medicare Part D.
While Medicaid and VBA obtain almost equivalent brand-name price levels,
they create completely different incentives for pharmaceutical R&D. The
unconditional "basic rebates" of Medicaid foster the current business of
developing me-too drugs while creating an incentive to artificially
inflate official prices. The proactive drug formulary management of VBA
maximizes therapeutic value for every dollar spent and thus provides
greater incentives for producing more innovative products.
The main argument against managed formularies is that such formularies
restrict patients' choices. Indeed, managed formularies do not reimburse
all new drugs, only those that provide value for money. However, freedom
of choice is never at stake, since patients can decide to pay out of
pocket for the drugs or treatments they desire, even if clinical
evidence shows that these treatments do not provide therapeutic value
for money. A managed formulary for prescription drugs does not reduce
freedom of choice; it only reduces the freedom to needlessly waste
Policy Brief (19 pages):
Comment by Don McCanne
This report compares drug spending in the United States with other OECD
nations and contrasts the higher prices in Medicare Part D with the
lower prices in the Veterans' Benefits Administration (VBA) and the
Medicaid programs. Although supporters of the Medicare Part D drug
program continue to tout the savings from the plans, this report shows
us how we would be far better off if we used a public purchasing program
such as that of the VBA instead of depending on competition of private
pharmacy benefit managers wherein the government is prohibited from
interfering in negotiations.
This report provides data that can be used to refute PhRMA's contention
that "fundamentally alter(ing) the structure of the successful Medicare
Part D program would hurt both taxpayers and beneficiaries" (WSJ
Pharmalot, July 23). To the contrary, it would help both taxpayers and
at 2:28 PM
Tuesday, July 21, 2015
The New York Times
July 20, 2015
'Illegal Activity' Fine Print Leaves Some Insured, but Uncovered
By Roni Caryn Rabin
There's no video of the altercation between Monroe Bird III, a
21-year-old sitting in a car with a friend, and Ricky Leroy Stone, 56, a
security guard who found them one night in the parking lot of an
apartment complex in Tulsa, Okla.
Mr. Stone, the security guard, told police he approached the car because
he had been instructed to look out for couples having sex in the parking
But the tragic culmination of their encounter is not disputed: Mr. Stone
drew his gun and shot Mr. Bird, leaving him paralyzed from the neck down.
Three months later, as he lay in the hospital hooked to a ventilator,
Mr. Bird's insurance company declined to cover his medical bills. The
reason? His injuries resulted from "illegal activity."
Yet Mr. Bird was not convicted of any crime in connection with the
incident. He was not even charged.
Without insurance, Mr. Bird's family could not move him to a
rehabilitation center specializing in spinal cord injuries. He was
discharged from the hospital and died at home last month from a
preventable complication often seen in paralyzed patients.
But Mr. Bird's story comes with a particularly bitter sequel relevant to
Americans of any background: The plan's refusal to pay has left his
family owing as much as $1 million in medical bills and, experts say,
shines a light on a little-known loophole buried in the fine print of
many health plans.
There are no firm numbers on how often insurers deny medical coverage
based on allegations of illegal activity. But cases like Mr. Bird's "are
more common than people think," said Crystal Patterson, an attorney in
Minneapolis and chairwoman of the American Bar Association's committee
on fiduciary litigation.
Insurers have long relied on allegations of illegal activity to deny
coverage to patients injured in a variety of contexts, from traffic
infractions to gun accidents. The judicial rationale is that "we don't
want to reward illegal activity," she said.
Insurance exclusions for illegal activity have been outlawed in some
states, but state laws do not apply to health plans administered under
the federal Employee Retirement Income Security Act, which sets
standards for most pension and health plans in private industry.
Even after passage of the Affordable Care Act, self-insured plans
regulated under Erisa maintain wide latitude to determine coverage.
These plans "can do pretty much what they want to do," said Robert
Laszewski, an insurance industry consultant in Washington.
Comment by Don McCanne
If a person is insured and needs medical care, is there any circumstance
under which the health plan should not pay for that care when it is
covered by the plan?
Insurers have always used loopholes to avoid paying for appropriate
care. Some of these loopholes, such as rescissions, were patched by the
Affordable Care Act. But as long as private insurance is based on a
business model rather than a patient service model, insurers will
continue to stealthily approach patients in need as being the enemy.
Health financing policies supported by conservatives often factor in
blame-the-victim as an excuse to limit or deny private coverage, or at
least to assess penalties. Examples include being overweight, smoking,
drug dependency, or failure to achieve treatment goals in hypertension,
diabetes, and other chronic conditions.
The tragic case of Monroe Bird III adds to this list injuries that
result from illegal activity - an exclusion often found in the fine
print of employer-sponsored health plans. In Monroe's case, the illegal
activity proved to be equivocal - shot in the back while fleeing a
security guard (who had cannabinoids in his system) investigating him to
see if he and a young lady were having sex in his car. The claim of
"illegal activity" was so flimsy that, on appeal, the insurance
administrator claimed that it was "hazardous activity," another
blame-the-victim reason for denial.
There is absolutely no question that Monroe Bird was insured and that he
desperately needed medical care. The question came down to whether or
not the health plan could get away with not paying for that care, based
on a blame-the-victim clause in the fine print of his health plan.
We are often accused of challenging the ethics of the private insurance
industry when they are simply businesses following standard business
practices. But on the face of it, the refusal by the health plan
administrator to pay the million dollar medical tab for Monroe's injury
is a contemptible act. It proves that the private insurance industry
will commit evil acts if it furthers their own business interests.
If we close this blame-the-victim loophole the plans will find other
innovative measures to chisel away at patient health care benefits.
Narrow networks and unaffordable deductibles are only the beginning.
What we need is a universal system, serving the public, designed to
remove financial barriers to care for patients in need - a single payer
national health program, an improved Medicare for all. What we do not
need are private administrators who deny us our plan benefits through
the non sequitur that having sex in a car is a hazardous activity.
at 2:49 PM
Monday, July 20, 2015
U.S. News & World Report
July 17, 2015
Will Hospitals Lose Money Under Obamacare?
By Kimberly Leonard
The portion of President Barack Obama's health care law aimed at
lowering the number of uninsured in the country has largely rolled out,
leaving the administration increasingly turning its attention to another
goal of the Affordable Care Act: controlling health care costs. It
doesn't appear, however, that the proposals will make a significant dent
in government spending, and questions remain over whether providers –
particularly hospitals – could see any benefit from the initiatives.
In recent months, Obama and Sylvia Burwell, the secretary for Health and
Human Services, have touted a move toward payment models that reward
better quality of care, rather than the current model that compensates
health care providers for the number of medical services they provide.
The government has been testing several initiatives aimed at slowing or
reducing health care spending, which grows faster than the rest of the
economy and makes up one-fifth of the country's expenditures. By 2018,
the administration plans to place half of payments on Medicare – the
government's program for adults 65 and older – under new models.
Attempts at changing payment models in the past, however, have yielded
only modest savings at best. Also, what remains unclear is why hospitals
would buy into a payment system voluntarily that likely would reduce
their bottom lines.
"The answer is: They wouldn't," says Gerard Anderson, director of the
Center for Hospital Finance and Management at the Johns Hopkins
Bloomberg School of Public Health.
Hospitals do participate in different payment models, he says, so they
can be prepared if there is a change in the way payments are delivered.
There has been scant evidence that accountable care organizations can
significantly reduce health care costs. Anderson points out that
hospitals may not want to partake because the more they save, the less
they ultimately make. "If I'm a hospital, why would I cut anything,
because I'd rather have all of it? Most of them don't, and that's why
it's not working well," he says.
Not everyone is optimistic that these various experiments can bring
about significant savings. These alternative payment models are far from
the norm. "There is a lot of confidence, and most of it is not
warranted," Anderson says. "There is nobody with significant power [in
the health care industry] who wants to control health care costs. Until
we have that, we will muddle along in terms of coming up with good
ideas, implementing them and getting lukewarm results."
Still, it's difficult to say how much the country will suffer as a
result of health care spending. Government officials warn decade after
decade, year after year, that the country cannot sustain anymore
spending on medical services. "We keep addressing the goal line of
what's acceptable as we reach it and pass it," Anderson says. "It is
cannibalizing other budgets, causing us to spend less on programs like
education and housing."
"The Affordable Care Act was really about coverage," Anderson says. "It
wasn't about affordable care."
'It's the Prices, Stupid': An Interview with Health Policy Expert Gerard
By Gerard Anderson, Elizabeth Palmberg
Sojourners: What are some of the most important causes for why the U.S.
is paying a lot more than other wealthy countries [in the OECD] for
health care without getting improved results?
Anderson: A higher health-care cost is pretty much because of what I
call, "It's prices, stupid." We just pay approximately twice as much for
each good and service that we utilize in the U.S. vis-a-vis other
industrial countries. In fact, for a hospital visit it's about three
times more than other industrialized countries for a similar visit — in
a shorter period of time that you're in the hospital, we still spend
about three times more. So it seems to be that we just pay more for
identical services compared to other industrialized countries.
Anderson: Because, in most other countries they have a single purchaser,
which is a very tough negotiator, whereas in the United States we have
so many different purchasers that nobody has a lot of power.
Sojourners: If you didn't have to think about political realities at
all, what health-care policies would you suggest the U.S. adopt?
Anderson: Basically, that everybody has the same health care and access
to the same health care.
Sojourners: Through a single-payer system?
Anderson: Well, that's the payment side. And then access to the same
delivery system as well.
Sojourners: So, both single-payer and a standardized quality of care?
Comment by Don McCanne
Gerard Anderson is a professor of health policy and management and
professor of international health at the Johns Hopkins University
Bloomberg School Public Health, and professor of medicine at the Johns
Hopkins University School of Medicine. He may be most famous as
co-author of the 2003 landmark Health Affairs article, "It's the Prices,
Stupid," demonstrating that prices are much more important than quantity
of services in explaining why health care spending is so high in the
United States. He is as qualified as anyone to comment on the
anticipated impact of the new payment models in health care.
The new models will pay for quality rather than quantity, thus
supposedly controlling health care spending while maintaining quality.
What does Professor Anderson have to say about this? "There is a lot of
confidence, and most of it is not warranted. There is nobody with
significant power [in the health care industry] who wants to control
health care costs. Until we have that, we will muddle along in terms of
coming up with good ideas, implementing them and getting lukewarm results."
As Anderson says, "The Affordable Care Act was really about coverage. It
wasn't about affordable care."
What could we do? In an interview a year after the Affordable Care Act
was signed into law, he indicated that the United States needed a single
purchaser that could negotiate prices, providing everyone with the same
health care and health care access - a single payer on the payment side,
with ensured access on the delivery side.
These new models that attempt to convince providers that they need to
reduce the volume of services, when the greater problem is prices,
simply are not going to gain traction, other than token participation.
Providers may be willing to work less, but they are not going to give up
Under single payer, we would receive the right volume, at the right
prices. As long as the prices are fair, providers will participate.
at 2:37 PM
Friday, July 17, 2015
The Commonwealth Fund
July 13, 2015
Predictable Unpredictability: The Problem with Basing Medicare Policy on
Long-Term Financial Forecasting
By Sherry A. Glied, and Abigail Zaylor
Conclusion: Uncertainty Is Inherent in Medicare Policymaking
Predicting health care costs 20 or 30 — let alone 50 or 75 — years into
the future is an inexact science, at best. The costs of providing care
depend on future innovations in technology, the value of such
innovations to beneficiaries and to taxpayers, and the supply of and
demand for health care services. As the Part D experience and the recent
cost slowdown suggest, projections of the rate of future technological
change are hard to make even in the short run.
The aging of the baby boomers and rising health care costs will
plausibly increase the share of GDP devoted to Medicare, but nothing is
certain. As we have shown, changes made in the program over the past
decade meant that despite substantial expansions of benefits, the
financial outlook for the program remained quite stable. The experience
of the past 15 years suggests that there is room for considerable
optimism about the ability of our nation to afford the Medicare program
into the future.
Long-term forecasting uncertainty should make policymakers and
beneficiaries cautious about dramatic changes to the program in the near
term. The range of error around forecasts of Medicare costs rises as the
forecast window lengthens. This suggests that policymakers should focus
on the immediate policy window, taking steps to reduce the current
burden of Medicare costs by containing spending today. Medicare
expenditure policy changes, such as changes in payment rates or methods,
can and have taken effect very quickly. Similarly, revenue changes to
pay these expenditures occur in real time. Future policymakers are
likely to have as much opportunity and much more information than
current policymakers to make optimal decisions about Medicare's future
The challenges of forecasting Medicare costs provide an additional
rationale for paying retiree costs through social insurance rather than
a defined-contribution system. Individuals simply cannot anticipate what
health care is likely to cost after they retire, and they cannot know
how much to save against the prospect of these costs. If talented
professional actuaries have difficulty making forecasts, then
individuals will surely struggle to project what services they will need
in the future. As a society, we can decide through the political process
to alter policy or payment practices—and we have done so in the past—but
such alterations are well beyond the power of any beneficiary.
Comment by Don McCanne
For decades we have been hearing from politicians that Medicare is going
broke, especially when looking at long-term predictions. Yet as the
years roll by, the predictions are continually revised downward in the
short term, demonstrating that the doom and gloom of past predictions
were not warranted. Yet since long-term forecasting is uncertain, should
we be considering major policy changes in Medicare financing?
Specifically, should we consider converting Medicare from a social
insurance program to a defined-contribution program as politicians are
Well, no. What we want is is for people to be able to access health care
without impairing their personal financial security. The
defined-contribution, premium support (voucher) model being proposed is
designed to slow federal contributions to the Medicare program by
shifting more costs to the beneficiaries. That may help politicians
balance the federal budget, but it would increase the risk of financial
insecurity for the beneficiaries - the opposite of our goal. Also it
would add to the administrative waste that already characterizes our
system since it would shift us from the administratively-efficient
traditional Medicare program to a system of a market of private plans
with all of their wasteful administrative excesses and inequities.
The uncertainty of long-term predictions does not mean that we should
ignore the future. In fact, this uncertainty should provide us with
greater motivation to establish a more stable infrastructure for health
care financing. The obvious would be to establish our own public
monopsony - a single payer national health program, an improved Medicare
that covers everyone. Although unpredictability is predictable, at least
a single payer infrastructure would ensure all of us access and
affordability as future needs and resources are confronted.
at 3:51 PM
Thursday, July 16, 2015
The New York Times
July 15, 2015
Head of Obama's Health Care Rollout to Lobby for Insurers
By Robert Pear
Marilyn B. Tavenner, the former Obama administration official in charge
of the rollout of HealthCare.gov, was chosen on Wednesday to be the top
lobbyist for the nation's health insurance industry.
Ms. Tavenner, who stepped down from her federal job in February, will
become president and chief executive of America's Health Insurance
Plans, the trade group whose members include Aetna, Anthem, Humana,
Kaiser Permanente and many Blue Cross and Blue Shield companies.
On Aug. 24, she will succeed Karen M. Ignagni, a former health policy
specialist at the A.F.L.-C.I.O., who has led the industry's lobbying arm
for 22 years.
Most recently, Ms. Tavenner was the administrator of the Centers for
Medicare and Medicaid Services, the federal agency that insures one in
three Americans and has an annual budget of more than $800 billion. As
administrator, she was in charge of HealthCare.gov.
Her selection as chief lobbyist for the industry highlights how federal
health programs have become a priority for insurers, which increasingly
depend on revenues from Medicare and Medicaid and the new public
Asked about her priorities, Ms. Tavenner said she wanted to protect
Medicare Advantage, the program under which private insurers manage care
for more than 30 percent of the 55 million beneficiaries of Medicare.
The Daily Caller
July 12, 2015
Obamacare Chief Nominee Pounded On Conflicts Of Interest
By Richard Pollock
Liberals and conservative have grave ethical concerns about Andy
Slavitt, a former health care executive President Barack Obama nominated
as his top administrator at the U.S. Centers for Medicare and Medicaid
Of greatest concern to Congress is the apparent conflict of interest
Slavitt poses as a top administrator at an agency that will set the
rules for his old boss and the nation's largest insurance company,
United Health Group.
Slavitt has been acting CMS administrator since his former boss, Marilyn
Tavenner, resigned earlier this year over repeated Obamacare failures.
CMS also is the largest single purchaser of health care in the United
States, paying for almost one-third of the country's health expenditures.
On the other hand, United Health Group is the largest health insurance
company in revenues. It reported $122 million in operating revenues in
2013, about one-third which came from government coffers.
Then there are the profits United Health enjoys from CMS. The company
sold insurance on many Obamacare's state exchanges last year. United
Health Group's major profit centers also are based with Medicare and
Medicaid. About 40 percent of the company's operating revenue comes from
administering Medicare and Medicaid.
Comment by Don McCanne
Although the Affordable Care Act included provisions to reduce the
overpayment of private Medicare Advantage plans, each year HHS/CMS has
used innovative measures to offset these reductions to ensure the
viability of these plans. Now former CMS administrator Marilyn Tavenner
has been selected to be president and CEO of the insurance lobbying
organization, AHIP, the most influential outside organization during the
health reform process. When asked about her priorities would be as head
of AHIP, Ms. Tavenner said she "wanted to protect Medicare Advantage."
Selected to replace her at CMS is Andy Slavitt, a former executive of
United Health Group, the largest insurer in the nation, a dominant
player in the market of private Medicare Advantage plans, not to mention
being the provider of AARP Medigap plans and a major provider of
administrative services for Medicare and Medicaid.
Karen Ignagni, AHIP's previous president and CEO, essentially had carte
blanche in the White House as ACA was being crafted. She also was very
influential in obtaining the concessions that protected the excess
payments to the Medicare Advantage plans, measures which greatly benefit
United Health Group and others. It seems more than a coincidence that
United Health Group dropped out of AHIP shortly after the resignation of
So what is happening? Without insider information, it is very difficult
to determine the degree of control held by each of the players, but
there is no question that HHS/CMS, AHIP, and UnitedHealth and the other
insurers are all participating in advancing the privatization of
Medicare by enhancing the private Medicare Advantage plans with our
taxpayer dollars. It is particularly disconcerting that this agenda is
supported by Congress and the Obama administration.
Imagine what those excess funds could do for our traditional Medicare
program, especially in reducing out-of-pocket expenses for premiums,
deductibles, coinsurance and catastrophic losses. That would be far
better than wasting them on the administrative excesses of the private
insurers and on the dishonest activities they engage in to increase
their profits by measures such as upcoding or gaming risk adjustment.
Why is there no public outcry? It is simply because the Medicare
Advantage plans are able to use about one-third of the extra funds to
reduce deductibles and coinsurance, making them appear to be superior
products, plus there is no need to purchase supplemental Medigap plans.
Most of the beneficiaries who are satisfied with their private plans
would not be inclined to support increased taxpayer funding of the
traditional Medicare program since it doesn't concern them anymore. And
efforts to reduce Medicare Advantage funding to the same levels as
traditional Medicare are met with loud protests orchestrated by AHIP.
Those in the traditional Medicare program usually have supplemental
retiree or Medigap plans with which they are satisfied, and thus they
are not advocates for change either.
It is really difficult to explain to people that what is a good deal for
them is a bad deal for all of us together since it perpetuates high
costs and extraordinary administrative waste. If their programs seem to
be working for them, they don't want change.
We need to improve the traditional Medicare program so that it is more
comprehensive and provides greater value, and then use it to cover
everyone. Our task is made much more difficult by the powerful forces
that support corporate control of our health care system. After all,
they are the ones with the money. And Tavenner and Slavitt will be there
as their agents, working inside and outside of the government. And most
people won't care.
at 2:25 PM
Wednesday, July 15, 2015
The Consumer Finance of Health Savings Accounts
By Jake Spiegel
Health Savings Accounts are a rapidly growing savings vehicle that
accompanies High-Deductible Health Plans and allows the account holder
to pay for qualified medical expenses tax free. Today, little is
understood about how HSA account holders use their accounts. For our
study, we used data collected from more than 400,000 accounts by UMB
Bank, one of the largest HSA recordkeepers in the country.
From the Findings
On average, older and higher-income employees contribute over 200
percent more than younger and lower-income employees. We observed that
the median account holder in the highest income quartile contributed
about three times as much to their HSA as the median account holder in
the lowest income quartile.
Among account holders who made a contribution to their HSA, the median
contribution was almost $700, while the mean contribution was more than
twice as large at $1,550. The skewed mean is largely driven by
contributions from wealthier and older account holders. The mean
contribution from an account holder in the top income quartile was three
times the mean contribution from an account holder in the lowest income
This is a disconcerting trend, as it indicates that the tax advantages
offered by HSAs are disproportionately used by older and wealthier
No matter the underlying reasons for the differences in contribution
behavior, tax benefits arising from HSA use are flowing
disproportionately to higher-income households.
No matter the cause, one thing is clear; lower deferrals to HSAs leaves
less-well-off employees with lower HSA balances, and therefore less
prepared to deal with future medical expenses.
Low-income employees are at risk of having insufficient funds to cover
large medical expenses. In this case, low-income employees may be forced
to pay for medical expenditures out of pocket, thereby forfeiting the
tax advantages associated with HSAs. Or worse, they may pay for medical
expenditures with revolving credit or money withdrawn from their
401(k)s… or payday loans.
About 5 percent of account holders contributed the maximum amount
allowed by the IRS to their HSAs, which was $3,250 for single coverage
and $6,500 for family coverage in 2013. Many employees may be deferring
insufficient amounts to their HSAs to cover medical expenses. This
behavior is suboptimal from a tax-efficiency standpoint, reduces buying
power for health care, and is potentially dangerous if the account
holder faces large medical bills.
The sample that contributes the maximum skews wealthier and older than
the portion of the sample that does not. Almost 67 percent of the
households that contribute the maximum earn more than $100,000.
Only 4 percent of account holders eligible to invest their HSA balances
actually chose to invest.
The small proportion of account holders who contribute the IRS maximum
could be a reflection of several factors, both mathematical and
behavioral. Any addition of an account for an employee to contribute to
and maintain adds a level of complexity to that individual's personal
finances. HSAs compete for employees' limited pretax dollars with
defined - contribution retirement plans and, to a lesser extent, FSAs
and transit benefits. Many employees simply do not have the extra money
or will not commensurately cut back on discretionary spending to fully
fund their HSA.
On the behavioral side, saving for health care lacks saliency. It is
difficult enough to project health-care expenditures, and especially so
if one has not previously incurred a large medical bill. HSAs are still
a relatively new instrument, and the task of projecting one's out-
of-pocket health-care expenditures is an unfamiliar one for many
employees. Without guidance for how much money an employee ought to set
aside, it can be difficult to effect change and encourage individuals to
Comment by Don McCanne
With the rapid increase in the prevalence of high-deductible health
plans (HDHPs), many patients are finding that their out-of-pocket
expenses when they need to access health are excessively burdensome,
resulting in financial hardship, and often resulting in forgoing
beneficial health care. Supporters of HDHPs say that health savings
accounts (HSAs) are the answer - simply use your own HSA to pay for the
care you need before the deductible kicks in. How well is that working?
This study confirms what we have said all along - HSAs work just fine
for the healthy and wealthy, but the accounts are not adequately funded
and may not even exist for individuals with lower incomes and greater
health care needs.
The other feature of HSAs is that, for those who remain healthy, the
account can be used as a supplementary, tax-advantaged retirement
account. Apparently this concept is not driving the increase in
enrollment in HSAs since 96 percent of those with accounts large enough
to qualify for investing are not bothering to use the investment
vehicles designed for HSAs. Besides, retirement savings should not be
based on a game of chance - being lucky enough to have not faced
We already have more than enough studies to show that consumer-directed
health care - HDHPs with or without HSAs - impair access and
affordability precisely for those with the greatest health care needs.
That's the opposite of what we need. It's time for a single payer
national health program - an improved Medicare, with first dollar
coverage, that covers everyone.
at 2:47 PM
Tuesday, July 14, 2015
World Health Organization
June 30, 2015
WHO validates elimination of mother-to-child transmission of HIV and
syphilis in Cuba
Cuba today became the first country in the world to receive validation
from WHO that it has eliminated mother-to-child transmission of HIV and
"Eliminating transmission of a virus is one of the greatest public
health achievements possible," said Dr Margaret Chan, WHO
Director-General. "This is a major victory in our long fight against HIV
and sexually transmitted infections, and an important step towards
having an AIDS-free generation" she added.
WHO/PAHO (World Health Organization/Pan American Health Organization)
has been working with partners in Cuba and other countries in the
Americas since 2010 to implement a regional initiative to eliminate
mother-to-child transmission of HIV and syphilis.
As part of the initiative, the country has worked to ensure early access
to prenatal care, HIV and syphilis testing for both pregnant women and
their partners, treatment for women who test positive and their babies,
caesarean deliveries and substitution of breastfeeding. These services
are provided as part of an equitable, accessible and universal health
system in which maternal and child health programs are integrated with
programs for HIV and sexually transmitted infections.
"Cuba's success demonstrates that universal access and universal health
coverage are feasible and indeed are the key to success, even against
challenges as daunting as HIV," said PAHO Director, Dr Carissa F. Etienne.
(As treatment for prevention of mother-to-child-transmission is not 100%
effective, elimination of transmission is defined as a reduction of
transmission to such a low level that it no longer constitutes a public
health problem. In 2013, only two babies were born with HIV in Cuba, and
only 3 babies were born with congenital syphilis.)
Centers for Disease Control and Prevention
June 23, 2015
HIV Among Pregnant Women, Infants, and Children
At the end of 2009, an estimated 10,834 persons who were diagnosed with
HIV when they were younger than 13 years were living in the 46 states
with long-term, confidential name-based HIV reporting. Of the total,
9,522 (88%) of these persons acquired HIV perinatally.
In 2010, an estimated 217 children younger than the age of 13 years were
diagnosed with HIV in the 46 states with long-term, confidential
name-based HIV infection reporting since at least 2007; 162 (75%) of
those children were perinatally infected.
Comment by Don McCanne
Cuba is the first nation to be validated by the World Health
Organization as having reduced maternal-fetal transmission of HIV to
such a low level that it no longer constitutes a public health problem.
Their success is attributed in part to "an equitable, accessible and
universal health system in which maternal and child health programs are
integrated with programs for HIV and sexually transmitted infections."
Do you suppose that if the United States adopted an equitable,
accessible and universal health system that it would help further reduce
our rate of maternal-fetal HIV transmission? Can we try?
at 4:32 PM
Friday, July 10, 2015
Medical Care Research and Review
New Evidence on the Persistence of Health Spending
By Richard A. Hirth, Teresa B. Gibson, Helen G. Levy, Jeffrey A. Smith,
Sebastian Calónico, Anup Das
Surprisingly little is known about long-term spending patterns in the
under-65 population. Such information could inform efforts to improve
coverage and control costs. Using the MarketScan claims database, we
characterize the persistence of health care spending in the privately
insured, under-65 population. Over a 6-year period, 69.8% of enrollees
never had annual spending in the top 10% of the distribution and the
bottom 50% of spenders accounted for less than 10% of spending. Those in
the top 10% in 2003 were almost as likely (34.4%) to be in the top 10%
five years later as one year later (43.4%). Many comorbid conditions
retained much of their predictive power even 5 years later. The
persistence at both ends of the spending distribution indicates the
potential for adverse selection and cream skimming and supports the use
of disease management, particularly for those with the conditions that
remained strong predictors of high spending throughout the follow-up period.
July 9, 2015
High health spending is more persistent than you might think
By Austin B. Frakt, PhD
You get hit with a major health condition and your health care needs and
spending spikes. A lot. Welcome to the 10% club, whose members spend at
least $30,000 on health care in a year. Yeah, most of it is covered by
insurance, but selecting the plan with the $2,500 deductible you blew
through (not to mention the thousands more in copayments) looks like a
bad idea in hindsight.
It could be worse. It could happen to you next year, and the year after,
and the year after that, and so on. Will it?
This is a question of health spending persistence. And, as surprising as
it may sound, we don't know a lot about it, at least for the working age
Richard Hirth and colleagues recently were able to take an analysis of
persistence for workers and their dependents a lot further, and using
recent data. They looked at six years of health spending data
(2003-2008) for a sample of millions of individuals with coverage from
over 100 medium and large employers. One of their findings is that at
least one in every three high spenders in a given year will be a high
spender in any of the next five years. (Here, high spender is defined as
in the top 10% of the annual spending distribution.) I don't know what
your prior is, but this is a much higher level of persistence than I
If you're unlucky enough to get hit with a very costly health condition,
consider yourself relatively lucky if it's not highly persistent. The
new work by Hirth and colleagues shows that such persistence is
surprisingly common and remarkably long. This is how sickness saps
savings, for those with coverage that comes with high enough deductibles
and copayments. Today, we call that "insurance." Is it?
Comment by Don McCanne
We already know that high deductibles and other cost sharing can result
in financial hardships for individuals who develop major medical
problems. But how many face the additional burden of having to pay the
high deductibles in the years following? This study provides an answer.
Of health plan members or their family members who were in the top 10
percent of spending in a given year, 43 percent were still in the top 10
percent the following year, and an astonishing 34 percent were still in
the top 10 percent five years later.
These are workers and their family members - largely middle-income
Americans - who had employer-sponsored health plans. These are the plans
that the Affordable Care Act was designed to protect. Now that employers
are are switching to "consumer-directed" high-deductible health plans,
these plans are devastating to the personal finances of these families
that must meet the high-deductibles and other cost sharing year after
year. Forget retirement funds, college funds, vacations, and the like
and plan to spend time with bill collectors and bankruptcy referees.
When you think about the financial protection that you should be
receiving from your health plan, it is deplorable that one-third of
those who have the greatest needs for health care are exposed to years
of recurrent, persisting financial burdens simply because of the
fundamentally flawed design of our private health plans. Austin Frakt is
right to question if this is even "insurance."
The authors of the study suggest that the solution is found in disease
management. What? Disease management only tweaks spending on major
medical problems and would have no impact on the high-deductibles that
patients would have to pay before their coverage kicks in. Let's get real.
A single payer system with first dollar coverage would eliminate the
burden of high medical bills that these unfortunate individuals face
under our current, dysfunctional health care financing system. Yes, they
need qualified health professionals to help them manage their diseases,
but that's a function of the health care delivery system. Intrusive,
private, third-party money managers need to get out of the way.
at 1:45 PM
Thursday, July 9, 2015
Journal of Health Politics, Policy and Law
The Affordable Care Act versus Medicare for All
By Laurence Seidman
Many problems facing the Affordable Care Act would disappear if the
nation were instead implementing Medicare for All — the extension of
Medicare to every age-group. Every American would be automatically
covered for life. Premiums would be replaced with a set of Medicare
taxes. There would be no patient cost sharing. Individuals would have
free choice of doctors. Medicare's single-payer bargaining power would
slow price increases and reduce medical cost as a percentage of gross
domestic product (GDP). Taxes as a percentage of GDP would rise from
below average to average for economically advanced nations. Medicare for
All would be phased in by age.
Medicare for All — If It Were Politically Possible — Would Necessarily
Replicate the Defects of Our Current System
By Harold Pollack
Medicare for All, ideally implemented, could offer powerful advantages
over our current health care financial system. Unfortunately, the
political obstacles to such a system are formidable and are likely to
remain so for decades. More to the point, a politically viable
single-payer system would not replace our currently dysfunctional health
care politics. It would be a product of that same legislative process
and political economy and thus be disfigured by the same interest group
politics, path dependence, and fragmentation that Laurence Seidman
From the text
Laurence Seidman's brief for single payer will be congenial to many
JHPPL readers, and for good reasons. As someone who has spent the past
seven years advocating for the Affordable Care Act (ACA), I must concede
that a well-conceived, well-implemented Medicare for All system would
offer powerful advantages over our current health care financing system.
Medicare for All would be fundamentally more disruptive for tens of
millions of people. As a matter of basic accounting, a huge reform that
creates millions of winners creates millions of losers, too: affluent
workers receiving generous tax expenditures, too many constituencies to
count across the supply side of the medical economy who are likely to be
squeezed in a new system, individuals subject to small or large tax
increases, to name a few. This list includes some of the most powerful
and organized constituencies in American politics. They would have to be
accommodated in complex, sometimes unappetizing, ways.
Medicare for All cannot offer itself as the replacement of our
depressing health politics. It would have to arise as another product of
that very same process, passing through the very same legislative choke
points, constrained by the very same path dependencies that bedevil the ACA.
For the foreseeable future, the main health policy challenge is to make
the ACA work.
I hope that the public option returns in some form as a viable choice
within the new marketplaces. One possibility would be to allow
individuals over the age of sixty the option of purchasing public
insurance coverage. Many Americans would welcome this option, which
would also provide needed competition and market discipline of providers.
Policies like this may someday pave the way to a Medicare for All
system. More likely, these would allow the possibility of public
insurance carving out a complicated coexistence with private coverage.
This may be the best outcome. If we keep our shoulder to the wheel in
pursuing the messy, frustratingly incremental process of health reform,
we can create a more humane and disciplined health system. That's no
small accomplishment. I'm not sure what else we can do either.
The New Republic
Will Doctors Be An Impediment To Reform?
By Harold Pollack
On the left, there are Physicians for a National Health Care Program. (I
happen to dislike PNHP leaders' unhelpful stance in the current debate,
but that is another story.)
The Incidental Economist
December 3, 2011
How not to argue about health policy
By Harold Pollack
One can make a principled decision to withdraw from the incremental
politics of American health policy. I understand why single-payer
advocates are tempted to take this course. Most do so with greater
awareness of the attendant tensions and costs. PNHP was a sideline, not
always very civil participant in the political fight to enact and
preserve health care reform. Indeed its leaders denigrate important
provisions of ACA that expand access for 32 million people and protect
millions against catastrophic financial risks. I wish the group would
talk and act rather differently in this debate.
Comment by Don McCanne
This pair of Point-Counterpoint articles from the Journal of Health
Politics, Policy and Law renew the debate over the Affordable Care Act
versus Medicare for All. Laurence Seidman presents the solid case for
the policy superiority of the single payer Medicare for All model while
Harold Pollack also acknowledges the superior policies of single payer,
yet rejects it based on our dysfunctional health care politics.
Policy is not the issue in this particular debate; it is the politics.
You do not compromise clearly superior policy to conform with the
dysfunctional politics, but rather you change the politics in order to
support optimal policy.
PNHP's mission is to educate the public on the single payer model - an
essential step in changing the politics. Harold Pollack instead supports
incremental changes, such as those of ACA, as a means of negotiating the
politics. Both approaches are reasonable and neither should be
completely rejected in deference to the other one. The ultimate goal
should always be the utopian version of single payer, and every effort
must be made to achieve that goal. In the interim, incremental measures
that improve health care should be supported. But it is important to
continue to inform the public on the inadequacies of these interim
measures that perpetuate hardship and suffering, lest inertia set in.
Harold Pollack writes about "pursuing the messy, frustratingly
incremental process of health reform," and says, "I'm not sure what else
we can do." Yet he concedes that "a well-conceived, well-implemented
Medicare for All system would offer powerful advantages over our current
health care financing system." He says that he wishes PNHP "would talk
and act rather differently in this debate." This defies any
interpretation other than that PNHP should abandon their mission of
single payer and join him in supporting his incremental pathway to
reform. Yet he suggests that "the best outcome" may be "the possibility
of public insurance carving out a complicated coexistence with private
coverage." PNHP emphatically disagrees that this would be the best outcome.
Recognizing that policy goals must not be compromised and that the
politics must change, we wish the incrementalists "would talk and act
rather differently in this debate." After all, we do share the ultimate
goal of health care justice for all.
at 4:15 PM
Wednesday, July 8, 2015
JAMA Internal Medicine
The Veiled Economics of Employee Cost Sharing
By Katherine Baicker, PhD; Amitabh Chandra, PhD
This year, once again, millions of people in the United States who get
health insurance through their employers received the unwelcome news
that cost sharing would increase.
At first blush, it might seem that cost sharing is just a way of
dividing up whether employers or employees pay the bills, but decades of
evidence show that lower cost sharing leads patients to consume more
care of limited health value—such as unnecessary tests—and that this
consumption leads to higher health insurance premiums. Cost sharing can
thus mitigate the premium increases that would be needed to expand
coverage to new services—many of which may particularly benefit patients
with serious illnesses.
The potential usefulness of cost sharing does not, however, mean that we
would all be better off with across-the-board increases in cost sharing.
First, insurance provides crucial financial protection against
potentially catastrophically high health expenditures. Patient cost
sharing erodes the value of the risk protection that health insurance
provides. The benefit of reducing the overuse of medical services that
is inherent in subsidizing health care must be balanced against the cost
of losing financial protection when it really matters. A
disproportionate share of health spending is for a relatively small
number of people requiring very expensive care. Any insurance plan with
adequate protection against catastrophic out-of-pocket spending (such as
an annual out-of-pocket maximum of $10 000) will leave a substantial
share of health care expenditures in excess of that maximum, and thus
not subject to cost sharing. Second, as we have discussed, a given
dollar amount of cost sharing has different implications for people with
different incomes, suggesting that optimal cost sharing might increase
with income. At present, this feature is seen more in cost-sharing
subsidies for low-income enrollees in some public plans than in
employer-sponsored health insurance. Third, patients facing higher
deductibles and copays may reduce care of high value (such as adherence
to effective medications) along with the care of low value (such as
tests that are not recommended). The evidence suggests that more
sophisticated cost sharing, such as higher copays for care of
questionable health benefit, might encourage higher-value health care
spending and stem the growth of health insurance premiums. Examples are
"carve-outs" that protect preventive care from copayments and
"value-based" insurance plans that subsidize medications that help keep
patients out of the hospital.
These caveats do not mean that cost sharing should be eschewed as a tool
to improve value—but rather that cost sharing should be deployed in a
more nuanced way than it is now. If enabled by regulatory changes and
health care system reforms, cost sharing based on the value of care and
scaled by income could improve health, slow increases in health
insurance premiums, and increase take-home pay.
Tracking Trends In Provider Reimbursements And Patient Obligations
By Katherine Hempstead, Iyue Sung, Joshua Gray and Stewart Richardson
ACAView attempts to capture how health reform affects the day-to-day
practice of community-based medicine. The project has collected data on
more than seventeen million visits to nearly 15,000 providers in 2013
Patients' payment obligations rose for all specialties, and deductibles
were the largest category of increased patient spending.
From the Conclusion
Coverage expansion in the United States has benefited millions of
people. However, the high out-of-pocket expenses that many people are
facing may cause some to forgo nonurgent care. The overall implications
for providers are unclear. Increased bad debt is one potential outcome.
It will be important to monitor changes in patient obligation and
provider reimbursement as the effects of coverage expansion, risk
contracting, and narrow networks continue to unfold. The degree to which
these changes may affect access to care for low-income insured patients
and debt levels for providers in particular deserves close scrutiny.
Comment by Don McCanne
Can we balance the benefit of spending reductions associated with high
deductibles and other cost sharing with the potential reduction in
beneficial health care services that can result from patient exposure to
out-of-pocket expenses as a prerequisite for health care access? Perhaps
a better question is, should we?
Although Katherine Baicker and Amitabh Chandra support high deductibles
and other cost sharing as a means to slow the increase in health care
spending, they do recognize the problems with this approach to cost
containment, for example: 1) the erosion of protection against the
financial risk of essential health care services, 2) the ineffectiveness
of cost sharing for most of health care spending - the catastrophic
costs of the minority who have major health care problems, 3) the
negative impact of cost sharing on those with lower incomes, and 4) the
decrease in the use of high value care because of the financial barriers
of cost sharing.
Rather than abandoning their support of the consumer-directed approach
of increasing patient sensitivity to health care costs through
out-of-pocket cost sharing, Baicker and Chandra recommend improving cost
sharing by taking into consideration income levels, chronic disease
status, and the relative value of the health care services provided. As
if applying cost sharing was not already administratively burdensome,
imagine applying these three adjustments to each patent's cost sharing.
Even then, the benefits of these adjustments would be only relative
since you cannot eliminate 100 percent of the financial hardships, nor
ensure that patients would receive 100 percent of the essential health
care services that they need.
When you consider that most health care spending (about 80 percent) is
not subject to cost sharing, you really have to give more thought as to
whether this decades-long experiment in cost sharing is worth continuing.
It is not as if we don't have a far better option. With a single payer
system, monopsonistic price setting would obviate the need for patient
price shopping. So then the only purpose for cost sharing would be to
reduce the use of "low value" services. Beneficial services that some
may consider to be of low value, but not of no value, are commonplace
today, and who is to say that we should establish policies that impair
access to that care? On the other hand, services that clearly have
absolutely no diagnostic nor therapeutic benefit would simply be
excluded from coverage.
The system would be 100 percent effective in preventing financial
hardship due to medical bills and 100 percent effective in removing
financial access barriers, while slowing the rate of increases in health
care spending down to that of other industrialized nations. You would
have the cost containment that we need without the injustices and
profound administrative waste of our fragmented, multi-payer system.
Perhaps Harvard's Baicker and Chandra, with their PhDs, should sit down
with Himmelstein and Woolhandler, with their MDs, and have a frank
discussion of priorities in reform - like placing the patient first, as
a single payer system would.
at 5:25 PM