Monday, October 3, 2016

qotd: Ask Minnesota if the individual insurance market is stable

September 30, 2016
Individual health plan premiums to jump at least 50 percent in Minn.
By Christopher Snowbeck

Health insurers are hiking premiums and limiting enrollment in Minnesota's individual market next year, with regulators saying the emergency measures were needed to avert a market collapse.

The moves are a clear sign that the market for some 250,000 people who buy coverage for themselves is dysfunctional and needs reform, said Commerce Commissioner Mike Rothman during a Friday news conference.

While rate increases of more than 50 percent aren't fair to consumers, Rothman said, things could have been worse. He described a period this summer when all health insurers in the state seemed prepared to abandon that segment of the market.

The premium jumps and enrollment caps are confined to the individual market, where about 5 percent of state residents buy coverage. The market includes the MNsure exchange and has undergone significant changes with the federal Affordable Care Act.

Premiums will jump by an average of 50 percent to 67 percent, depending on the insurer. Regulators also are taking the unusual step of letting most health plans limit the number of enrollees they'll cover.

The caps will pressure consumers to shop early during the coming open enrollment period, since some plan options could disappear once insurers hit their limits. And regulators say the policies being sold for next year will feature tighter controls on the doctors and hospitals that enrollees can use.

The premium hikes and enrollment caps amount to a "finger in the dike" that's meant to buy time while the state figures out what to do, said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers.

"What I think no one really appreciated until today was the trouble that the insurance market is in," Schowalter said. "This announcement is another sign that how people are getting their own insurance isn't working."

"These rising insurance rates are unsustainable and unfair," Rothman said. "Middle-class Minnesotans, in particular, are being crushed by the heavy burden of shouldering these costs."


Comment by Don McCanne

We keep hearing that ACA is working as intended, that all we need to do is enroll more younger, healthier individuals in the plans and all will be well. Ask the people in Minnesota how it is going. And they certainly are not the only state with problems.

Our politicians on the one hand tell us that all we need is a couple of patches, and on the other hand tell us that we should dump the system and let the markets work. Well, the system is not amenable to patches - we need comprehensive reform of the financing infrastructure - and the market cannot possibly work when prices far exceed the discretionary income of most of those who need health care.

The current patches in Minnesota include large premium hikes, and allowing the insurers to put limits on the total number of enrollees. Those patches might help the insurers, but for patients they make insurance less affordable and less accessible. Wasn't reform supposed to take care of patients?

Regular readers know what would work - a well designed single payer national health program. Everyone would be covered by a system that would be affordable for each one of us. Minnesota should be leading the way on this.

Friday, September 30, 2016

qotd: How would a Medicare buy-in and a public option be designed?

Urban Institute
September 2016
Designing a Medicare Buy-In and a Public Plan Marketplace Option
By Linda J. Blumberg and John Holahan

Medicare is an attractive basis for developing an insurance alternative (either a direct buy-in or a public option based in some way on Medicare rates) because the program generally has lower provider payment rates and lower administrative costs than private insurers. However, Medicare's structure and cost-sharing requirements are different from private insurers' as well. A Medicare-related proposal could provide more plan choice for those eligible, which would have a significant effect where few or even only one insurer offers coverage in the nongroup insurance market. Depending upon how the proposal is structured, it could reduce costs for younger adults in the private insurance market as older adults leave the risk pool. However, designing such programs raises myriad issues, each with specific implications for costs and benefits to different age groups.

Medicare Buy-In for 55- to 64-Year-Olds

We assume that a Medicare buy-in option would offer enrollees the same covered benefits and cost-sharing structures offered to current Medicare beneficiaries. Even so, a buy-in directly into the existing Medicare options would lead to questions necessitating policy decisions:

*  Would potential enrollees have the choice of traditional Medicare, Medicare Advantage, or both?
*  Would eligibles be able to choose between a Medicare option and Marketplace-qualified health plans for which they are currently eligible, or would Medicare be their only option outside of employer-sponsored insurance?

*  Would enrollees be allowed to make separate purchase decisions for Medicare Parts A, B, and D, or would they have to purchase all if they purchase any? How will consumers respond to offers of coverage that, unlike private insurance options, have no out-of-pocket maximum? Would Medigap or some other supplemental plans be available to the 55- to 64-year-olds?

*  How would the unsubsidized cost of coverage be determined? For example, what premium would be charged to individuals with high incomes? Would 55- to 64-year-olds be charged the same premiums as those age 65 and older, even though the premiums would not reflect the cost of coverage for those enrolled? Or would actuaries set premiums based on the benefits provided and cost-sharing requirements for each component? Would the high income surcharges in the current Medicare program apply to the buy-in population?

*  Assuming that 55- to 64-year-old enrollees would not pay the same premiums as current-law Medicare enrollees, would premiums reflect the health care costs of only the 55- to 64-year- olds enrolling? Or would premiums be set to reflect enrollees' health care costs being shared by others? For example, their costs could be shared with other nongroup market enrollees or perhaps with current-law Medicare enrollees, but that would require the development of a mechanism for achieving it.

*  Would the 55- to 64-year-olds buying in to Medicare be eligible for financial assistance similar to that for Medicare beneficiaries today (e.g., 75 percent of Medicare Part B costs for all but the high-income beneficiaries? Would they be eligible for ACA-like financial assistance, advanced premium tax credits and cost-sharing reductions? Or would no financial assistance be offered at all? If subsidies are provided, how would they be structured? Would actuarial differences between Medicare and Marketplace silver coverage be taken into account, affecting both advanced premium tax credits and cost-sharing reductions?

*  Would 55 to 64 year olds with access to an affordable employer insurance plan be permitted to enroll in a Medicare buy-in option?

A Public Option for All Age Groups

A public option is a qualified health plan that would be sold through the ACA's government-created Marketplaces (either federal or state). The public option would bear health insurance risk like other insurers, complying with the ACA's insurance reforms (e.g., modified community rating, guaranteed issue, and essential health benefits) and offering coverage in the same actuarial value tiers.

A public option avoids complexities associated with a Medicare buy-in for 55- to 64-year-olds. Because the option would be structured and operated in much the same way as any other Marketplace-qualified health plan, it would not have different actuarial values, cost-sharing structures, or premium structures than other Marketplace options. The appropriateness of applying a Marketplace subsidy structure to a Medicare product would not be an issue, and risk-sharing questions across different age groups would not arise. Yet several design decisions would remain:

*  How would provider payment rates be set? Would they be set consistent with Medicare rates, set consistent with Medicare rates plus some percentage, or based on some other fee schedule? Many states have self-insured plans for their employees; this is another potential platform for creating a public option offered in a state Marketplace.

*  If rates are set at the Medicare level (or at some other level that falls below those paid by private insurers), what leverage would the plan have to ensure sufficient provider participation? How does a state's leverage compare with that of the federal government in this respect?

*  Should public options be set up in all geographic areas or only those with high premiums, high premium growth, or otherwise weak insurer or provider competition? If the latter, who will judge appropriate locales, and by what metric will an area's appropriateness be assessed?

From the Summary

Regardless of the approach taken, providers are likely to resist new insurance options that may move more patients into plans paying lower rates. While this is to be expected, it highlights the perpetual quandary of health care cost containment. Health care spending and its growth cannot be reduced without either paying less, on average, per unit of service rendered or reducing the quantity of services provided. No matter the strategy for containing costs, achieving that goal will take money out of the pockets of providers. To protect providers financially means abdicating cost-containment efforts of any type.


Comment by Don McCanne

There is considerable enthusiasm for expanding on the advances of the Affordable Care Act by adding a Medicare buy-in for those 55 to 64, and by adding a public option - an insurance program run by the government competing with private health plans. What is lacking in this discussion is a precise description of either proposal considering that there are a multitude of policy options that must be decided on in order to construct these programs.

In this Urban Institute paper, Linda Blumberg and John Holahan discuss some of the design options, and there are many more. Each option has its own advantages and disadvantages, so it is inevitable that the eventual design would forge a compromise between benefits and deficiencies. Building these two programs on top of our highly fragmented financing infrastructure inevitably perpetuates inefficiencies.

Each program would require an act of Congress. We need only to look at the insurance industry influence in the legislative process that developed the designs for the private insurance exchanges under ACA, for the Part D Medicare drug program, for the private Medicare Advantage plans, for the privatization  of the Medicaid programs, for the previous public option proposals that never got off the ground, and for the co-op model that is failing in the marketplaces, and it will be obvious that the Medicare buy-in and public option will be designed to maximize the leverage of the private insurance industry at a cost to potential enrollees and taxpayers. The insurers will introduce features that are designed to make public programs noncompetitive or even cause them to fail.

When you hear people advocate for a Medicare buy-in or for the public option - and those people are everywhere - demand that they show you their model that was distilled from the multitude of policy options. (Be sure to read the Blumberg and Holahan paper so that you understand at least some of the issues.) Without such a model, the design will default to the private insurers.

Once advocates present their definitive model then analyze it to see how well it meets our reform goals. Will it ensure that everyone is covered? (No) Will it slow the increase in health care costs? (No) Will it ensure that everyone has free choice of health care professionals and institutions? (No) Will it remove financial barriers to care? (No) Will it fill in all of the gaps in coverage of our traditional Medicare program? (No)

Efforts to enact a single payer national health program are rejected because the program supposedly is not politically feasible. Does anyone really believe that a Medicare buy-in and a public option would be politically feasible in a Congress dominated by conservatives and neoliberals? It's not the goal of a single payer model that needs to be changed; it's the politics. That takes work. A lot of it.

Thursday, September 29, 2016

qotd: Gerald Kominski discusses the politicians' proposals and the future of U.S. health care

The UCLA Center for Health Policy Research
The Center's Health Policy Seminar Series
September 27, 2016
"The Presidential Candidates: Their Health Plans"
By Dr. Gerald Kominski, Director, UCLA Center for Health Policy Research
 and Professor, UCLA Fielding School of Public Health

Excerpt at 0:52:24 of the video:

Question: Will the U.S. move to universal health care in the next ten years or so.

Gerald Kominski:  Wow! I've spent my entire career talking about the history of the effort to get universal health care in the United States. And, again, I'm looking at Mark Peterson whose written about this extensively as well and knows the history. Our history is that we have been trying to do this now for 120 years in the United States. We've made progress, but the progress is glacial. Having said that, we never stop fighting for that. First of all, that's why we're in Public Health. It's why this center - The Center for Health Policy Research - does what it does, and it's why thousands of people across the country, across the state… millions of people are working towards this goal. But the next ten years are very difficult… we are so divided politically right now, it is very, very difficult to imagine the scenarios that lead us to true universal access through, say, a single payer system in the next ten years. But I'm an optimist, and I believe that there are people in this room who will one day see a single payer system in this country. Now I may not be around, but some of you will be. And we're getting there. It just takes a long time.

Video, with PowerPoint:


Comment by Don McCanne

In this seminar Gerald Kominski discusses the health care proposals of presidential candidates Democrat Hillary Clinton and Republican Donald Trump plus those of Libertarian Gary Johnson and Green Party candidate Jill Stein.

Health policy wonks and others certainly understand the complexity of the proposals of the two leading candidates and even that of Libertarian Gary Johnson, as described by Professor Kominski. But he was able to describe Jill Stein's proposal in full in one brief, elegant sentence. Here is his full description of her plan (at 0:41:12 of the video): 

"Jill Stein, the Green Party candidate, is for a Medicare for All plan, basically a single payer plan with no copayments, no deductibles, basically free health care for all Americans."

That's it! 


Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

Wednesday, September 28, 2016

qotd: Wellmark Blue Cross and Blue Shield placing greater squeeze on patients

September 28, 2016
Wellmark announces individual ACA market changes in Iowa and South Dakota

Wellmark Blue Cross and Blue Shield announced today it will make changes in the individual Affordable Care Act (ACA) market in Iowa and South Dakota.

For the past two years, Wellmark members with individual ACA plans have endured double-digit increases. In addition, Wellmark has lost approximately $99 million over the same time period in the individual market in Iowa and South Dakota.

"Wellmark's mission is to create affordable health insurance for people to access quality health care. And, for the majority of the past 75 years, we've been able to achieve that," said Wellmark Chairman and CEO John Forsyth. "However, it's apparent that continuing to offer plans with broad networks, combined with the rich benefits of the ACA, is not consistent with managing continually rising costs. While we could seek additional premium increases to mitigate rising costs, this is not sustainable for our members' pocketbook."

Iowa changes

In Iowa, Wellmark will narrow its product choices to offer plans that are lower priced and encourage health care delivery by Iowa providers. Specifically, Wellmark will no longer offer gold tier plans nor will the company promote individual under 65 plans that use its Preferred Provider Organization (PPO) network in Iowa.

Wellmark will also continue its plans to introduce a new, simplified HMO plan called Blue Simplicity℠. This plan is like no other on the market today and is designed to help consumers understand the true value of care through simple copay plans – providing members with transparency and predictability of cost as they seek and use medical services.

South Dakota changes

In South Dakota, Wellmark will no longer offer individual Affordable Care Act (ACA) plans effective Jan. 1, 2017.

"Although the ACA has done many positive things, it has also had its challenges and those challenges vary by state," said Forsyth. "Fortunately, in 2017, the ACA gives states the ability to begin addressing those challenges with the goal of stabilizing the individual under 65 health insurance market. We look forward to working with Iowa and South Dakota policymakers on those solutions in the near future."


Comment by Don McCanne

The largest health insurer in Iowa, Wellmark Blue Cross and Blue Shield, is discontinuing their more comprehensive gold tier plans and is discontinuing the promotion of its PPO plans with wider provider networks. They are also introducing a new HMO plan "designed to help consumers understand the true value of care through simple copay plans" (i.e., making them better shoppers by having to bear more of the costs). These changes are compounding the two problems plaguing insurance purchasers today: requiring higher out-of-pocket spending for health care, and narrowing the selection of health care providers covered by the plans.

This is a one-way path designed to keep insurance premiums as competitive as possible. As Chairman and CEO Forsyth states, "continuing to offer plans with broad networks, combined with the rich benefits of the ACA, is not consistent with managing continually rising costs." Insurers are not going to cover more out-of-pocket costs by increasing the actuarial value of their plans (percent of costs they will pay), and they are not going to expand their networks when they can negotiate lower prices by promising provider exclusivity.

Look, as long as we leave these people in charge, we can anticipate that they will engage in strategies that will protect and improve their own market advantage. If we had our own public program, our stewards who work for us would be engaging in strategies that would ensure our access to the health care that we need. There really is a difference. If only for selfish reasons, we should prefer the latter. The fact that it helps everyone else is a bonus.

Tuesday, September 27, 2016

qotd: Employee health deteriorated under award-winning wellness program

September 27, 2016
Top wellness award goes to workplace where many health measures got worse
By Sharon Begley

When Idaho's Boise School District receives the workplace wellness industry's highest award Wednesday at a celebration in Atlanta, it is expected to be applauded for helping its 3,000-plus employees and their families improve their health and reduce their risk of illness.

It is "an exemplary program," said Dr. James Fries, an emeritus professor of medicine at Stanford University and member of The Health Project, an industry-sponsored group that makes the annual award. Program participants, he said in an announcement this month, "showed improvements in health behavior," helping Boise save money on medical costs.

Data collected by the company that sold Boise the wellness program and trumpeted the "Koop Award," however, cast doubt on that claim. More key measures of health deteriorated than improved. Self-reported quality of health got worse. And health care costs jumped around in a way that suggests any changes were due at least in part to random fluctuations and possibly employee turnover, not any benefits of the wellness program.

This would not be the first time the Koop Award, named for the late US Surgeon General Dr. C. Everett Koop, stirred controversy. Employees in the wellness program that won in 2015, for instance, collectively achieved a lower reduction in smoking than the national average. More gained weight than lost, more raised their total cholesterol level than lowered it, and more had higher blood glucose levels after participating in the wellness program than before.

Such cases reinforce a growing recognition among experts that wellness programs — which constitute an $8 billion a year industry — "don't lead to any visible results," Stanford's Emma Seppala recently wrote in Harvard Business Review. "At best, these initiatives are nothing more than lip service or PR. But at worst, they actually cause more stress."


Comment by Don McCanne

We still hear that employers are adopting wellness programs in order to reduce the future costs of their health benefit programs by making their employees healthier. There could be no better evidence that these programs do not work than the fact that the top award for a workplace wellness program went to an employer whose employees' health deteriorated.

If employers really want to do something about controlling health care costs, they should get on the single payer bandwagon. Not only would that eliminate the hassle and expense of administering their health benefit programs, all of their employees would have health care automatically, and future increases in health care costs would be reduced to sustainable levels.

Any employers reading this who are not yet convinced about single payer would benefit by watching a movie developed by and for the business community, "FIX IT - Healthcare at The Tipping Point":

Monday, September 26, 2016

qotd: What should the candidates tell us about controlling costs?

Modern Healthcare
September 24, 2016
Editorial: Thank you for that question, Lester
By Merrill Goozner

(Question for candidates, proposed by the New York Times): "Health insurance premiums and out-of-pocket costs are rising rapidly. What would you do to control them?"

If I were advising a candidate on how to respond to that question, here's what I'd recommend he or she say:


"Thank you for that question, Lester. I understand why many Americans think their insurance premiums are rising rapidly. There's been a lot of attention paid to next year's increases for the individual policies sold on the Obamacare insurance exchanges, which will rise about 9% on average, according to the latest Kaiser Family Foundation survey."

"Employers are forcing individuals to pick up more of the cost of their plans."

"The employer portion of your health insurance is going up just 4% next year on average. That means the family share has to go up more than 5.5% to make up the difference."

"Employers are doing that by putting more of us in high-deductible plans. They're asking more of us to pay higher co-pays and deductibles. They are raising our portion of the premiums."

"So what can we do about it? First, we have to recognize this is a big experiment that has been endorsed by economists associated with both political parties. They say by forcing patients and consumers to have more skin in the game, they will become wiser healthcare shoppers."

"I say, to make that work, we have to have total transparency — in healthcare prices, in insurance prices, in which doctors and hospitals are in health plan networks, in quality ratings, and with good, easy-to-understand information about what constitutes the most effective and cost-effective care. I pledge to work night and day to give consumers the information they need to make smarter choices in the healthcare marketplace."

"And if some people simply can't afford to put money into the health savings accounts accompanying these plans, let's remove some of the tax subsidies given high-income people for their health insurance so we can finance a generous federal match for what lower-income people contribute."

"Let me now turn to what can we do about those rising individual rates for plans sold on the exchanges. The bottom line is we need more people to sign up. The No. 1 reason why rates are rising is that not enough healthy uninsured people signed up for coverage."

"We need everyone who is uninsured to jump into the individual insurance pool."


Comment by Don McCanne

Merrill Goozner certainly understands the political realities about health policy. To a question on health costs that could be part of tonight's presidential debate, he suggests an answer for the candidates that aligns with the current financing system under the Affordable Care Act. Unfortunately, because of the restrictions he apparently placed on himself, it's a terribly deficient answer.

For the problem of high-deductibles he suggests making patients better shoppers through greater transparency in prices, in network composition and in quality ratings. But that would have almost no impact on making the deductibles and other cost sharing more affordable.

He accepts the dubious concept that health savings accounts should accompany these high-deductible plans, and further suggests that the accounts for lower-income individuals be subsidized. Health savings accounts are strictly an administrative tool that increases the complexity and waste in health care financing. When the accounts are depleted, beneficial health care services are forgone - not a desirable outcome. If you are going to have first dollar coverage built into the HSAs, why not instead save administrative hassles and expenses by building first dollar coverage into the insurance program itself?

For the high premiums of the exchange plans, he suggests enrolling more of the healthy to dilute the risk pool. But the low-lying fruit has been picked. The policy community is beside itself in trying to figure out how to bring more into the exchange plans, while having only negligible success in doing so.

Goozner is certainly highly respected by me and others, but we wish that he and others like him would move beyond feeble patchwork solutions and support a program that would make health care accessible and permanently affordable for all. Of course that would be a single payer national health program - an improved Medicare for all. Goozner understands that we won't hear that from either candidate tonight, but that doesn't mean that we shouldn't be asking for that response.

Friday, September 23, 2016

qotd: Valeant’s 9.9% price increase doesn’t fool anyone

September 22, 2016
Valeant avoids double-digit price hikes with 9.9 percent increases
By Ed Silverman

In response to intensifying criticism over drug prices, Allergan chief executive Brent Saunders promised not to raise prices by more than single-digit percentage points. So far, no other head of a large drug maker has spoken publicly about this notion or agreed to do the same thing.

Yet some companies may adopt this approach quietly — and push the envelope in the process.

How so? One way is to raise prices on drugs by 9.9 percent. And this is what Valeant Pharmaceuticals did last week.

The drug maker, which has been widely vilified for buying older medicines and then jacking up the prices to sky-high levels, increased list prices for three eye medicines by exactly 9.9 percent, according to Wells Fargo analyst David Maris.

The "9.9 percent increase versus an even 10 percent seems very odd and may be an attempt to stay under the radar of managed care plans and states looking out for double-digit price increases," Maris wrote in an investor note.

The 10 percent threshold has taken on more than symbolic weight, though.

A bipartisan group of congressional lawmakers last week introduced a bill that would require drug makers to justify their pricing and provide a breakdown of their costs before raising prices on certain products by more than 10 percent. The legislation largely mimics bills that have been introduced in more than a dozen states, although only Vermont has passed such a law.


Comment by Don McCanne

For a pharmaceutical firm infamous for abusive pricing of their products, a 9.9% increase is an obvious attempt to keep under the radar by avoiding a double digit increase, but nobody is fooled by this. Valeant could have had a 9.8% increase, but, no, it had to be 9.9%.

In spite of the extensive adverse publicity, the industry continues to gouge. It's time for our government to represent us by introducing publicly-administered pricing - paying legitimate costs plus fair profits. The industry will not walk if we are giving them a fair deal.

Thursday, September 22, 2016

qotd: Doubling down by insuring against losses from insurance gaps

Kaiser Health News
September 21, 2016
Would You Like Some Insurance With Your Insurance?
By Bram Sable-Smith

Gap plans, used to cover out-of-pocket expenses like high deductibles, are becoming increasingly popular among consumers and businesses.

Gap insurance is in a category of insurance known as "limited benefit." No matter how bad a person's situation, the plan will pay out only a certain amount of money.

Now, there's renewed interest in gap plans. With monthly premiums on health insurance going up, more people are choosing cheaper, high-deductible options. In 2016, more than 90 percent of people buying insurance under the ACA chose plans with an average deductible of $3,000 or higher.

"The cost of health insurance is going up, and businesses have been forced to deal with that by raising their deductibles or increasing out-of-pocket costs for their employees," said (Alex Forrest, an insurance broker in South Carolina).

With a gap plan, he said, companies can offer a package of health benefits that keeps out-of-pocket-expenses for employees down.

"That's actually just insurance for my insurance," said freelance designer Susannah Lohr.

Health economist Deborah Chollet of Mathematica Policy Research, an independent research firm, said the insurance reforms in the ACA were designed "basically to drive these kinds of creative insurance arrangements out of the market."

Because gap plans aren't major medical insurance, Chollet explained, they're not regulated by the health care law and can avoid complying with consumer protections built into the law. So the companies providing gap insurance, she said, "can ask you about your health status, they can deny you coverage, they can do all of the kinds of things that the Affordable Care Act prohibits."


Patient Protection and Affordable Care Act

Sec. 3210. Development of New Standards for Certain Medigap Plans

(a) (1) IN GENERAL.—The Secretary shall request the National Association of Insurance Commissioners to review and revise the standards for benefit packages described in paragraph (2) under subsection (p)(1), to otherwise update standards to include requirements for nominal cost sharing to encourage the use of appropriate physicians' services under part B. Such revisions shall be based on evidence published in peer-reviewed journals or current examples used by integrated delivery systems and made consistent with the rules applicable under subsection (p)(1)(E) with the reference to the '1991 NAIC Model Regulation'… To the extent practicable, such revision shall provide for the implementation of revised standards for benefit packages as of January 1, 2015.


National Association of Insurance Commissioners (NAIC)
Letter Re: PPACA Sec. 3210
December 19, 2012

Dear Secretary Sebelius,

Pursuant to section 3210 of the Patient Protection and Affordable Care Act (ACA) you have requested the National Association of Insurance Commissioners (NAIC) to review and revise the NAIC Medicare supplement insurance (Medigap) model regulation to include nominal cost sharing in Medigap Plans C and F to encourage the use of appropriate physicians' services under Medicare Part B. Section 3210 directs the NAIC to base these revisions on evidence published in peer-reviewed journals or current examples used by integrated delivery systems.

Consistent with the process established by the Social Security Act for changes to Medigap standards, the NAIC appointed the Medigap PPACA (B) Subgroup (Subgroup) comprised of state insurance regulators, representatives from the Centers for Medicare and Medicaid Services (CMS), insurers and trade associations, consumer advocates, and other experts in the areas of Medicare and Medigap.

The NAIC has performed its requested review of the standards for Plans C and F under Section 3210 of the ACA. We were unable to find evidence in peer-reviewed studies or managed care practices that would be the basis of nominal cost sharing designed to encourage the use of appropriate physicians' services. Therefore, our recommendation is that no nominal cost sharing be introduced to Plans C and F. We hope that you will agree with this determination.

Medigap is a product that has served our country's Medicare eligible consumers well for many years, offering them security and financial predictability with regard to their Medicare costs. Medigap's protections are now inappropriately being held responsible for encouraging the overuse of covered services and increasing costs in the Medicare program.

We do not agree with the assertion being made by some parties that Medigap is the driver of unnecessary medical care by Medicare beneficiaries. As you are aware, Medigap plans pay benefits only after Medicare has determined that the services are medically necessary and has paid benefits. Medigap cannot alter Medicare's coverage determination and the assertion that Medigap coverage causes overuse of Medicare services fails to recognize that Medigap coverage is secondary and that only Medicare determines the necessity and appropriateness of medical care utilization and services.

The statute requires the NAIC to base nominal cost sharing revisions on "peer-reviewed journals or current examples of integrated delivery systems". However, the Subgroup discovered that there is a limited amount of relevant peer-reviewed material on this topic. None of the studies provided a basis for the design of nominal cost sharing that would encourage the use of appropriate physicians' services. Many of the studies caution that added cost sharing would result in delayed treatments that could increase Medicare program costs later (e.g., increased expenditures for emergency room visits and hospitalizations) and result in adverse health outcomes for vulnerable populations (i.e., elderly, chronically ill and low-income). Most of the studies do not consider the same population of health insurance beneficiaries as those that purchase Medigap products.


Kaiser Family Foundation
January 13, 2014
Medigap Reform: Setting the Context for Understanding Recent Proposals

This issue brief contextualizes recent proposals to change Medigap plans in order to understand how they may affect Medicare beneficiaries, using recently available data.

Many proposals and recommendations would prohibit Medigap plans from providing first-dollar coverage by requiring plans to include deductibles for Part A and Part B services.  Such proposals are designed to discourage utilization (and reduce spending) by exposing beneficiaries to greater costs when they seek medical care.

Table 1 at this link lists proposals:


Comment by Don McCanne

It is really a sad commentary on the dysfunctional state of our health care financing system when insurance deductibles - supposedly designed to make patients better health care shoppers - have caused such great financial burdens that a market of plans has been generated to insure against deductibles and other cost-sharing losses that frequently are no longer affordable.

Let's take a closer look at gap plans that are designed to fill in the deficiencies in traditional coverage.

It is the high deductibles that have brought this issue into the forefront. There are two primary reasons for the growth in the prevalence and in the dollar amount of the deductibles. One is that health insurance premiums have continued to become less and less affordable. Both individuals and employers who purchase plans are looking for relief, and high-deductible plans do have lower premiums.

The other reason is that the policy community is dominated by a partnership of right-wing ideologues who insist that patients must feel financial pain when they access health care services, and centrist policymakers who worry more about premiums, figuring that public insurance subsidies (ACA) and public welfare programs (Medicaid) will protect those who are less able to afford care, while accepting, with regret, the increasing burden placed on middle-income Americans.

So is gap insurance designed to help pay deductibles a reasonable solution? If the gap policy is adequate to increase the actuarial value of the combined coverage of gap plus high-deductible plans to the levels of more traditional health plans then the combined premiums must be higher since the administrative costs of two insurers would be greater than those of one comprehensive insurer alone. Besides, under the gap plans patients could face other coverage problems since the plans do not have to comply with the regulatory and benefit requirements of qualified health plans as defined by the Affordable Care Act.

Let's turn to a gap program with which we have considerable experience - the Medigap plans that cover some of the coverage gaps in the traditional Medicare program.

The stand-alone traditional Medicare program leaves individuals vulnerable to high out-of-pocket costs if they have significant medical problems. Many are protected with additional coverage such as retiree health benefit plans, VA health benefits, Medicare Advantage plans, or dual coverage with Medicaid. Most individuals not eligible for these plans purchase Medigap plans to avoid losses from significant gaps in the Medicare coverage. But, once again, being covered with multiple plans increases administrative costs and complexity. It would be much more efficient and less costly to have an improved Medicare program for everyone that did not necessitate additional coverage. Medigap, particularly, is a wasteful intrusion that should be eliminated by folding the Plan F Medigap benefits into the traditional Medicare program (while making other improvements in Medicare while we're at it).

Yet the right-wing ideologues and the wimpy moderate policy wonks that follow them have been insisting that we need to reduce the benefits of the Medigap plans. Specifically they would mandate deductibles under their consumer-directed ideology - making patients more thrifty health care shoppers. Innumerable studies have show that deductibles cause patients to forgo beneficial health care services - not a policy position we should be supporting.

How pervasive this concept is was demonstrated by Sec. 3210 of the Affordable Care Act. That section required the National Association of Insurance Commissioners (NAIC) to come up with a recommendation based on evidence published in peer-reviewed journals or current examples used by integrated delivery systems to support requiring cost-sharing to be included in the Medigap plans, in order to make patients better health care shoppers, and that the recommendations would be implemented by January 1, 2015.

Why didn't this happen? NAIC reported that they were "unable to find evidence in peer-reviewed studies or managed care practices that would be the basis of nominal cost sharing designed to encourage the use of appropriate physicians' services. Therefore, our recommendation is that no nominal cost sharing be introduced to Plans C and F."

Further, "None of the studies provided a basis for the design of nominal cost sharing that would encourage the use of appropriate physicians' services. Many of the studies caution that added cost sharing would result in delayed treatments that could increase Medicare program costs later (e.g., increased expenditures for emergency room visits and hospitalizations) and result in adverse health outcomes for vulnerable populations (i.e., elderly, chronically ill and low-income)."

Unfortunately, their take-home message has been ignored by the policy community who continue to clamor for more cost sharing. Specifically, NAIC stated, "We do not agree with the assertion being made by some parties that Medigap is the driver of unnecessary medical care by Medicare beneficiaries. As you are aware, Medigap plans pay benefits only after Medicare has determined that the services are medically necessary and has paid benefits. Medigap cannot alter Medicare's coverage determination and the assertion that Medigap coverage causes overuse of Medicare services fails to recognize that Medigap coverage is secondary and that only Medicare determines the necessity and appropriateness of medical care utilization and services."

Yet the Kaiser Family Foundation report on Medigap reform includes a table with a dozen different proposals from across the political spectrum calling for controlling Medicare costs by increasing the financial burden placed on Medicare beneficiaries with Medigp plans.

We don't need insurance to insure our insurance. We need a national health program that would ensure that everyone has affordable access to all essential health care services. That will never happen with our current system; ACA patches cannot possibly accomplish that. Single payer Medicare for all, without gaps, is what we need.

Wednesday, September 21, 2016

qotd: Who benefits from direct primary care?

Family Practice Management
Sep-Oct 2016
Is Direct Primary Care the Solution to Our Health Care Crisis?
By Edmond S. Weisbart, MD, CPE, FAAFP

Direct primary care (DPC), a reformulation of concierge medicine, has intrinsic appeal to overburdened physicians. Its advocates promise a competitive income at a fraction of the volume of patient responsibilities, and they claim it as a patient-friendly, consumer-driven strategy that can meet the needs of patients across the economic spectrum.

However, there are potential downsides to DPC, which this article will discuss.

1. DPCs exacerbate the growing physician shortage.

Retainer practices such as DPC practices commonly close their panels when they reach about 900 patients, which is much lower than the typical practice panel size of around 2,300 patients.

2. DPCs are essentially unregulated insurance, capitating physicians and removing vital patient protections.

Paying a monthly fee for a specific range of services is one definition of an insurance model. Despite that, DPCs often fall outside of insurance regulation.

3. DPC relies on an erosion of medical benefits.

Much of a patient's health care requires services beyond primary care. High-deductible health plans can expose patients to full retail pricing for these additional services and medications unless their plans have negotiated discounted rates. These health care costs can quickly become a hardship for many patients.

4. DPCs exacerbate disparities in care.

Although the evidence is still emerging, DPCs may be choosing to locate in areas most able to financially support the model. Studies have suggested that DPC physicians have smaller proportions of African-American, Hispanic, and Medicaid patients and see smaller proportions of people with diabetes.

The wrong solution to a real problem

U.S. physicians are among the least satisfied in the modern world.5 Much of this dissatisfaction is related to the amount of time spent on non-clinical administrative functions, particularly tasks related to insurance companies. Physicians' desire to reduce frustrating administrative work is understandable, but DPC is not the solution. Physicians considering a transition to DPC need to consider the impact on physician shortages, disparities in health care, and patient access to health care services outside the DPC.


Comment by Don McCanne

What problem is being addressed by the establishment of direct primary care practices (DPC)? The administrative hassle in dealing with a multitude of payers is replaced with a single retainer fee paid by the patients. That benefits physicians by reducing overhead expenses and freeing up time for a more relaxed clinical work environment.

Patients enrolled in DPC practices benefit from improved accessibility and more personal attention for their routine primary care needs. DPC physicians are not included in insurer provider networks thus their patients pay not only the retainer fee but they are also responsible for the full deductible of their catastrophic plans. Thus DPC practices cater to the carriage trade whereas less affluent individuals find the arrangement to be truly unaffordable should they develop problems requiring specialized care or hospitalization.

Do physicians have an obligation beyond the patients in their own practices? Should they be supporting policies to ensure that adequate affordable care is available to all members of the community at large? DPC reduces both access and affordability. In spite of implementation of ACA we still have intolerable disparities in care, and DPC will only exacerbate those disparities.

DPC is designed to allow physicians to retreat to their cosy practices while escaping from their moral obligation to meet the health care needs of the community at large. They are supported by their wealthy clients, or customers, or patrons, or whatever they're called.

If these physicians really supported the positions they held when interviewed by the medical school admissions committees, instead of fleeing to DPC practices, they would be advocating for reform that would bring essential, affordable care to everyone - an improved Medicare for all. It is painful to listen to their curt dismissal of reform that would bring health care justice to all.

Tuesday, September 20, 2016

qotd: Are exchange premiums really that high?

Urban Institute
September 2016
Are Nongroup Marketplace Premiums Really High? Not in Comparison with Employer Insurance
By Linda J. Blumberg, John Holahan, and Erik Wengle


We compare unsubsidized 2016 nongroup marketplace premiums to the average employer sponsored insurance premiums in all 50 states and 73 metropolitan areas. We adjust second lowest cost nongroup marketplace premiums to account for the differences in actuarial value, induced utilization, and age distribution of enrollees. We find that nationally, nongroup marketplace premiums are 10 percent lower than the average employer sponsored insurance premium, after the adjustments. There is variation at across states and metropolitan areas, but more than ¾ of states and more than 80 percent of metropolitan areas having lower marketplace than employer premiums.


Premiums in the nongroup insurance Marketplaces attract considerable attention, with some concerned that average growth rates since 2014 are high in some areas and that this might signal a fundamental weakness with the new nongroup insurance markets. This analysis places nongroup Marketplace premiums in a context where we can compare them, apples to apples, with employer-based insurance. Our findings show that in more than 75 percent of states and more than 80 percent of the metropolitan areas we can study, nongroup premiums are actually lower than employer premiums in the same area, even though nongroup insurance tends to have higher administrative costs per enrollee than does average employer coverage. In fact, once adjusting for year, actuarial, and associated utilization differences, half of states' nongroup Marketplace premiums are lower than their average employer premiums by double-digit percentages. Metropolitan-area findings are similar.

In a previous analysis, we found that Marketplace nongroup insurance premiums tend to be lower in rating areas with more participating insurers and in those with Medicaid insurers or provider-sponsored insurers participating (Blumberg et al. 2016). Nongroup Marketplace premiums may tend to be lower because Marketplace insurers are more aggressive in offering narrower provider network plans than their group market counterparts. Other market characteristics may play roles, such as premium transparency and plan comparability. The large differentials between nongroup and employer premiums in many areas also may indicate that nongroup premiums continue to be underpriced in some areas; the large premium increases seen in several states may be part of the process through which these markets will reach a stable equilibrium.

Thus, with few exceptions, the level and growth of nongroup premiums in the Marketplaces should not be interpreted as evidence that these new markets are weak. Nongroup insurance, when adjusted to make its premiums comparable to employer premiums, is much more often than not lower cost than the average coverage offered through employers. But the persistent, uncomfortable truth is that health care is an expensive commodity, regardless of the market in which one purchases it.


Comment by Don McCanne

Much has been written about the anticipated large increases in premiums for the nongroup health plans being offered through the ACA exchanges (Marketplaces) compared to the more modest increases in premiums of employer-sponsored group plans. This new Urban Institute report shows that premiums adjusted for plan equivalence for the nongroup exchange plans have actually been lower than those of employer plans. So what is the significance of this?

Although numerous factors no doubt contributed to this difference, it is likely that the most important was the strategy of insurers to initially offer lower premiums to gain market share with the intent of later adjusting premiums upward once competitors were reduced or eliminated. The miscalculation resulted from the fact that most employers did not drop their plans and thus there was not a large influx of healthy workers into the exchanges. There also was a component of adverse selection since many younger, healthier individuals stayed out completely, increasing the costs of covering the less healthy enrollees. Higher administrative costs of the nongroup plans compared to the employer plans were largely offset by lower negotiated rates for the narrower plan networks.

So the higher premium increases in the exchanges were necessitated primarily by initial lowballing and also by higher spending than anticipated. The insurers, with all of their actuarial talent, fell short, and some of the nation's largest insurers are withdrawing.

So what is the lesson here? This is simply one more example of why supposed marketplace competition is is a cumbersome and wasteful way to finance a health care system. An equitably-funded universal risk pool is not only more efficient, it is more equitable as well - including everyone, at a cost they can afford.

Monday, September 19, 2016

qotd: Australians concerned about ‘Americanization’ of their health insurance

The Sydney Morning Herald
September 17, 2016
Crisis looms as Australians look to ditch private health insurance
By Adam Gartrell

Almost 70 per cent of Australians with private health insurance have considered ditching or downgrading their cover in the last year in the face of relentless price rises and diminishing value for money, polling has found.

Close to 80 per cent of people believe health insurance companies put profits before patients and more than 90 per cent are concerned they're trying to "Americanise" the health system to boost their bottom line.

Asked for their opinion on the statement "private health insurers put profits before patients", 53.5 strongly agreed and 24.4 per cent agreed. Fewer than 10 per cent of people disagreed with the statement.

A whopping 73 per cent said they were "very concerned" about the creeping Americanisation of the Australian health care system and a further 18.6 per cent said they were "somewhat concerned".


Comment by Don McCanne

Under their conservative government, Australia seems to be creeping toward American-style privatization of their health insurance. Over 90 percent of Australians are concerned about this "Americanization" of their system. Can't we learn something from them?

Friday, September 16, 2016

qotd: The public option is back

U.S. Senate
Committee on Health, Education, Labor & Pensions
September 15, 2016
Senators Introduce Resolution Calling for Health Care Public Option

Today, Oregon's Senator Jeff Merkley and Senators Charles E. Schumer (D-NY), Patty Murray (D-WA), Dick Durbin (D-IL) and Bernie Sanders (I-VT), along with 22 of their colleagues, introduced a Senate resolution calling for a public option in the health insurance market.

Senate Resolution

Supporting efforts to increase competition and accountability in the health insurance marketplace, and extend accessible, quality, affordable health care coverage to every American through the choice of a public insurance plan.

After nine whereases:

Resolved, that the Senate supports efforts—

 to build on the Affordable Care Act by ensuring that, in addition to the coverage options provided by private insurers, every American has access to a public health insurance option which, when established, will strengthen competition, improve affordability for families by reducing premiums and increasing choices, and save American taxpayers billions of dollars.


Comment by Don McCanne

This week an intensive campaign is being initiated in support of a "public option" - offering the choice of a public, nonprofit insurance plan which competes with private health plans. Our enthusiasm should be tempered.

Following are a couple of points to keep in mind, especially when you hear promises that the public option is a giant step towards single payer:

*  A public option will be only one more player in our costly, fragmented system of funding health care. It alone will bring us none of the important features of a single payer system such as efficiency, equity, systemic cost savings, and universality. The profoundly wasteful administrative complexity will remain.

*  Previous efforts by Congress, heavily influenced by the insurance industry, to design a public option led to a highly flawed model that would prevent the "unfair" competitive advantage that a government program would otherwise have over the private insurance industry. This same insurance industry influence is precisely why the co-op models authorized by ACA are now failing. And there is absolutely no reason to believe that the insurance industry might change its tune now.

*  The public option has been characterized as a Medicare buy-in. But Medicare is an equitably funded social insurance program covering everyone who is eligible, whereas the public option would be just another individual plan in a market of private plans, likely with higher premiums because of adverse selection.

*  If a public option were to be enacted some believe that it would be only a matter of time before everyone would want in once it demonstrates its superiority, and then we would have a de facto single payer system. You need look only at the experience with the conspiracy between Congress and the private insurance industry in the establishment of the private Medicare Advantage plans that compete with traditional Medicare. Congress has given the private plans an unfair advantage so Medicare beneficiaries are moving from the public program to the private plans in ever greater numbers - the exact opposite of what the public option supporters visualize.

*  The Affordable Care Act drew support of much of the progressive community as it seemed to them to be the only politically feasible approach at the time. Thus the clamor for comprehensive reform died down. We are hearing again that single payer is not feasible, but the public option is. When the public option is enacted, it will be mislabeled as single payer, and then it will be exposed for the miserable failure that it will be because it was designed by the private insurance industry to fail (like the co-ops). The single payer concept will have been tarnished, and it could be decades before our nation would recover and be ready for reform that really works. In the meantime, millions would have gone broke, suffered, and died merely because we didn't think single payer was feasible.

Many look to Jacob Hacker for inspiration on enacting and implementing a public option. But he has identified the greatest barrier to moving forward. In a recent Vox article, he wrote, "Private plans lobbied aggressively against the public option in 2009 on the grounds that it would amount to unfair competition. But insurers don't want a level playing field; they want the field tilted in their favor."

Now see if you can find a Congress that doesn't tilt the field in favor of the private insurers. Not even on the horizon.

Thursday, September 15, 2016

qotd: Out-of-pocket expenses drag 11 million people into poverty

United Census Bureau
September 2016
The Supplemental Poverty Measure: 2015
By Trudi Renwick and Liana Fox

This is the sixth report describing the Supplemental Poverty Measure (SPM) released by the U.S. Census Bureau, with support from the Bureau of Labor Statistics (BLS). The SPM extends the official poverty measure by taking account of many of the government programs designed to assist low-income families and individuals that are not included in the current official poverty measure.

In 2015, 45.7 million people were poor using the SPM definition of poverty, more than the 43.5 million using the official definition of poverty with the adjusted universe.

The SPM and the Effect of Cash and Noncash Transfers, Taxes, and Other Nondiscretionary Expenses

(Excerpt):  Without subtracting MOOP (Medical Out-of-Pocket) expenses from income, the SPM rate would have been 3.5 percentage points lower. In numbers, 11.2 million fewer people would have been classified as poor.


Modern Healthcare
September 13, 2016
Uninsured rate drops, but medical expenses still drag millions into poverty
By Bob Herman

However, separate census data showed that medical out-of-pocket expenses dragged 11.2 million people into poverty in 2015, a potential symptom of the shift of moving employees and individuals into health plans that have higher deductibles, copays and coinsurance rates.


Comment by Don McCanne

We read repeatedly about how out-of-pocket health care spending is exposing patients to financial hardship. Yet our policymakers are continuing to expand that exposure under the screwball concept that spending out of pocket makes patients better health care shoppers, which we know is not true. It only makes them forgo beneficial care. Today's number should be an awakening call: in 2015, out-of-pocket health care expenses shoved 11 million individuals into poverty!

At a time when we need to improve our anti-poverty programs, we are pushing more people into poverty through policies inherent in our dysfunctional health care financing system. With a well-designed single payer system, nobody would be forced into poverty because of medical bills.

Or should we continue with policies that prevent people from getting the care they should have, while forcing millions into poverty? How could anyone think that we really have a choice here?

Wednesday, September 14, 2016

qotd: Deductibles soar in employer health plans

Kaiser Health News
September 14, 2016
Studies: Employer Costs Slow As Consumers Use Less Care, Deductibles Soar
By Jay Hancock and Shefali Luthra 

Employer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.

Average premiums for employer-sponsored family coverage rose 3.4 percent for 2016, down from annual increases of nearly twice that much before 2011.

But 3.4 percent is still faster than recent economic growth, which determines the country's long-run ability to afford health care.

And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.

Since 2011, the average deductible for single coverage has soared 63 percent, according to the survey, while workers' earnings have gone up by only 11 percent.

Change from 2011 to 2016 (from graph available at KHN link below):

6%   Overall inflation
11%  Workers earnings
19%  Single coverage premiums
63%  Single coverage deductibles, all workers

Members of high-deductible plans paid nearly a fourth of their total medical costs out of pocket versus only 14 percent for members of conventional plans.

Average annual 2016 premiums for single coverage were $6,435 for single coverage and $18,142 for family coverage, according to the Kaiser report.

KFF 2016 Employer Health Benefits Survey:


Comment by Don McCanne

Although most media attention has been directed toward health plans offered by the ACA exchanges, most individuals actually obtain their insurance through their employment, so it is important to observe what is happening there, and the news is not so good.

In the past five years, inflation has remained low and wage increases have almost doubled the rate of inflation, and that's the good news. Medical costs have continued to increase at a rate greater than inflation, and that has contributed to the tripling of insurance premiums. But what is really disturbing is that the rate of increase in plan deductibles is ten times the rate of inflation. Ten times!

Many enrollees in the ACA exchange plans receive government subsidies to help pay for their premiums and deductibles, but those those subsidies are not available for the majority who receive their coverage from their employer (though higher-income employees unfairly benefit from tax expenditures that help pay their premiums).

Fortunately, the majority of workers and their families are quite healthy and have little need for health care. It is those families that have greater medical needs that are now facing these high deductibles. Precisely those individuals who need help paying their medical bills are the ones being punished with financial penalties for being sick (the financial penalties being high deductibles and other cost sharing).

Our geniuses in the policy community came up with the concept of incentivizing enrollment in low actuarial value plans in the ACA exchanges - the ones that require high deductibles to reduce the pressure to increase premiums. Employers have quickly latched onto that concept and are now increasing the deductibles in their plans to levels that will cause financial hardship for too many families.

Did you catch that line above? The one that says that we are assessing financial penalties against those unfortunate enough to have significant medical needs. Isn't just suffering from medical problems enough punishment for the unfortunate? Or maybe we don't even want them to be punished. Maybe we would prefer to help them, as other civilized societies do.

Let's fix this system. A single payer national health program with first dollar coverage would be a great start.

Tuesday, September 13, 2016

qotd: Health insurance gains fall short of what we could have had

United States Census Bureau
September 2016

Health Insurance Coverage in the United States: 2015
By Jessica C. Barnett and Marina Vornovitsky

Highlights (excerpts)

*  The uninsured rate decreased between 2014 and 2015 by 1.3 percentage points as measured by the CPS ASEC. In 2015, the percentage of people without health insurance coverage for the entire calendar year was 9.1 percent, or 29.0 million, lower than the rate and number of uninsured in 2014 (10.4 percent or 33.0 million).

*  The percentage of people with health insurance coverage for all or part of 2015 was 90.9 percent, higher than the rate in 2014 (89.6 percent).

*  In 2015, private health insurance coverage continued to be more prevalent than public coverage, at 67.2 percent and 37.1 percent, respectively. Of the subtypes of health insurance, employer-based insurance covered 55.7 percent of the population for some or all of the calendar year, followed by Medicaid (19.6 percent), Medicare (16.3 percent), direct-purchase (16.3 percent), and military cover- age (4.7 percent).

*  In 2015, the percentage of uninsured children under age 19 was 5.3 percent. This was a decrease from 6.2 percent in 2014.

*  In 2015, the uninsured rate for children under age 19 in poverty, 7.5 percent, was higher than the uninsured rate for children not in poverty, 4.8 percent.

*  In 2015, non-Hispanic Whites had the lowest uninsured rate among race and Hispanic origin groups, at 6.7 percent. The uninsured rates for Blacks and Asians were higher than for non-Hispanic Whites, at 11.1 percent and 7.5 percent, respectively. Hispanics had the highest uninsured rate in 2015, at 16.2 percent.


Income and Poverty in the United States: 2015
By Bernadette D. Proctor, Jessica L. Semega, and Melissa A. Kollar

Highlights (excerpts)

*  Median household income was $56,516 in 2015, an increase in real terms of 5.2 percent from the 2014 median of $53,718.

*  The 2015 real median earnings of men ($51,212) and women ($40,742) who worked full time, year round increased 1.5 percent and 2.7 percent, respectively, between 2014 and 2015.

*  In 2015 there were 43.1 million people in poverty, 3.5 million less than in 2014.

*  The 2015 poverty rate was 1.0 percentage point higher than in 2007, the year before the most recent recession.

*  The income deficit for families in poverty (the difference in dollars between a family's income and its poverty threshold) averaged $10,118 in 2015, which was not statistically different from the inflation-adjusted 2014 estimate.

Income Inequality

Since 1993, the earliest year available for comparable measures of income inequality, the Gini index was up 5.5 percent. Comparing changes in household income at selected percentiles shows that income inequality has increased from 1999 (the year that household income peaked before the 2001 recession) to 2015 (Table A-2). Incomes at the 50th and 10th percentiles declined 2.4 percent and 9.9 percent, respectively, while income at the 90th percentile increased 5.7 percent between 1999 and 2015. Since 1999, the 90th to 10th percentile income ratio (10.42 in 1999 and 12.23 in 2015) has increased 17.4 percent.


PNHP release on Census health insurance report:


Comment by Don McCanne

The good news is that more people than ever now have health insurance. The bad news is that 29 million people remain uninsured with little hope that this number will decrease significantly because of our flawed model of health care financing. The other bad news, which does not appear in this report, is that costs are up, out-of-pocket spending is less affordable, and patients are losing choice of their health care professionals.

Great news is that median household income is up, and there are 3.5 million fewer people living in poverty. The terrible news is that we still have 43 million people in poverty. Further, the increase in median income was not enough to reverse the trend in income inequality which has prevented low- and middle-income workers from getting ahead.

It must be disappointing for many of those with income gains to have the additional funds consumed by higher insurance premiums, larger deductibles, and costs of unavoidable out-of-network care. It is particularly a shame when we know that we can improve health care equity by simply changing to a single payer national health program.

Providing the 29 million uninsured with health care should be the easy step. Then we can intensify our efforts in addressing the more difficult problem of improving the living standards for the 43 million still living in poverty. But charity alone won't do it. We need efficacious public policies and a government that will enact and implement them.

Monday, September 12, 2016

qotd: Dartmouth devises ACO concept, but then abandons its own

The New York Times
September 10, 2016
Dropout by Dartmouth Raises Questions on Health Law Cost-Savings Effort
By Robert Pear

In its quest to remake the nation's health care system, the Obama administration has urged doctors and hospitals to band together to improve care and cut costs, using a model devised by researchers at Dartmouth College.

But Dartmouth itself, facing mounting financial losses in the federal program, has dropped out, raising questions about the future of the new entities known as accountable care organizations, created under the Affordable Care Act.

The entities are in the vanguard of efforts under the health law to move Medicare away from a disjointed fee-for-service system to a new model that rewards doctors who collaborate and coordinate care.

"There's little in the way of analysis or data about how A.C.O.s did in 2015," said Dr. Ashish K. Jha, a professor at the Harvard School of Public Health. "The results have not been a home run."

In addition, he said, "there is little reason to think that A.C.O.s will bend the cost curve in a meaningful way" unless they bear more financial risk, sharing losses as well as savings with the government.

An evaluation for the federal government found that Dartmouth's accountable care organization had reduced Medicare spending on hospital stays, medical procedures, imaging and tests. And it achieved goals for the quality of care. But it was still subject to financial penalties because it did not meet money-saving benchmarks set by federal officials.

"We were cutting costs and saving money and then paying a penalty on top of that," said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. "We would have loved to stay in the federal program, but it was just not sustainable."

Dr. Elliott S. Fisher, the director of the Dartmouth Institute for Health Policy and Clinical Practice, said: "It's hard to achieve savings if, like Dartmouth, you are a low-cost provider to begin with. I helped design the model of accountable care organizations. So it's sad that we could not make it work here."

Dartmouth-Hitchcock is the main teaching hospital for Dartmouth's medical school, of which the Dartmouth Institute is part.


Health Affairs
January 2007 (online December 2006)
Creating Accountable Care Organizations: The Extended Hospital Medical Staff
By Elliott S. Fisher, Douglas O. Staiger, Julie P.W. Bynum and Daniel J. Gottlieb


Many current policies and approaches to performance measurement and payment reform focus on individual providers; they risk reinforcing the fragmented care and lack of coordination experienced by patients with serious illness. In this paper we show that Medicare beneficiaries receive most of their care from relatively coherent local delivery systems comprising physicians and the hospitals where they work or admit their patients. Efforts to create accountable care organizations at this level — the extended hospital medical staff — deserve consideration as a potential means of improving the quality and lowering the cost of care.


Quote of the Day
October 28, 2010
How does the Affordable Care Act define ACOs?
Comment by Don McCanne


So how do ACOs achieve higher quality and lower cost?

The ACOs are not rewarded monetarily for meeting the quality standards. Their motivation to comply is to avoid being suspended from the program.

Costs are reduced by the shared savings program. A benchmark is established for each ACO "using the most recent available 3 years of per-beneficiary expenditures for parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO." If the ACO can provide care for costs below the benchmark, the ACO then shares those savings with HHS. The benchmark is reset at the beginning of each 3 year agreement.

If the costs are above the benchmark, then the fees are still paid as usual, with no adjustments.

Think about this. The incentives continue to promote greater volume. There is no penalty for running the charges up. Is the reward for reducing the volume and intensity of services enough? Since fixed costs for the ACO are relatively unchanged, the reductions in marginal overhead expenses due to reduced volume must be greater than the amount of savings that HHS shares with the ACO in order to come out ahead. Since this is the opposite of "making it up in volume," it is more likely that net income will be reduced. Further, since the benchmarks are reset every 3 years based on lower utilization, it is very unlikely that that the ACO could continue to ratchet down services to qualify for shared savings.

(A later iteration included penalties for failure to meet savings targets.)


Quote of the Day
March 28, 2011
Elliott Fisher questions whether ACOs will work
Comment by Don McCanne


Accountable care organizations (ACOs) began as an abstract concept of integrating health care providers into a not-yet-defined entity that would be rewarded for improving quality and reducing costs. Without knowing what they were, Congress included them in the Affordable Care Act (ACA). Dartmouth's Elliott Fisher, who was one of the first to promote the concept, now says that "there are some really important questions about whether this will work."


Comment by Don McCanne

Elliott Fisher and his colleagues at the Dartmouth Institute are generally credited with introducing in 2006 the concept of the accountable care organization (ACO) - coordinated organizations of hospitals and their extended medical staffs that would improve quality and lower costs (HMO 2.0?). The concept was incorporated into the Affordable Care Act. But by 2011, we should have been concerned when Elliott Fisher said, "there are some really important questions about whether this will work."

Many doubts have been expressed about this model, and after a decade of fooling around with it, the record can be summed up by Ashish Jha's understatement, "The results have not been a home run."

Well it did not work for Dartmouth-Hitchcock in spite of Elliott Fisher's presence. They dropped out of the program a year ago (though Robert Pear's article provides much needed transparency on the ACO concept). Fisher said that he helped design the model so it is sad that they couldn't make it work there. He said that it was hard for Dartmouth-Hitchcock to achieve savings since they were already "a low cost provider."

But it should not have been a surprise. In a Quote of the Day in 2010 (excerpt above) we explained why, in a "think about this" comment, that the basic concept was fundamentally flawed - the reward for participation being that you would have to give a major portion of your savings to Medicare instead of keeping them as profits (Medicare shared savings).

It's too bad that Congress didn't listen to those of us expressing concerns when they included the concept in the Affordable Care Act. Yet acting CMS administrator Andrew Slavitt is moving forward, saying that the current iteration is "like the iPhone 2." If you read the thousands of pages of rules that CMS is generating, it is clear that this will be a godsend - for those profiting from administrative services, that is.

Abstractions of higher quality and lower costs sound great, but you need proven policy to carry them out. The single payer experiments have already been done, and they work! Even Gail Wilensky says, "Enough demonstrations, already."

Friday, September 9, 2016

qotd: Lower-income workers get less health care with HSA-eligible health plans

Employee Benefit Research Institute
Issue Brief
August 2016
The Impact of an HSA-Eligible Health Plan on Health Care Services Use and Spending by Worker Income
By Paul Fronstin, Ph.D. and M. Christopher Roebuck, Ph.D.

This study examines whether there is variation by worker income on how an HSA-eligible health plan affects health care services use and spending. Does the typically flat-dollar gap between a health plan's deductible and the employer contribution to a health savings account (HSA) have a bigger impact on the use of health care services among lower- income workers than it does for higher-income workers?

The data for this study come from a large employer that offered an HSA-eligible health plan alongside a preferred provider organization (PPO), includes between 150,000 and 200,000 individuals, and covers health care services use and spending over the six-year period from 2009‒2014.

*  The HSA-eligible health plan was associated with a decline in (non-preventive) outpatient office visits for workers at all income levels, but the decline was over twice as large for workers and their dependents with incomes less than $50,000 as compared with those with incomes of at least $100,000. The decline in specialist visits accounted for most of the decline in outpatient office visits among the group of workers with less than $50,000 in income.

*  There was an across-the-board decline in prescription drug fills regardless of worker income.

*  The HSA-eligible health plan was associated with a reduction in various preventive services by worker income.


Comment by Don McCanne

Yes, this is yet another report that confirms that enrolling in HSA-eligible high-deductible health plans is associated with a decline in physician visits and in high-value preventive services. This negative impact occurs across all income levels but is twice as great amongst lower-income individuals than it is for those with higher incomes.

Yet we continue to see a significant increase in enrollment in high-deductible plans whether or not they are associated with a health savings account. Slowing health care spending by reducing the use of beneficial health care services is not the type of health care policy we should be supporting.

Our current policies are creating more financial barriers to care; they are reducing our choices in our health care professionals; they are increasing administrative waste, and they have have inflamed an epidemic of physician burnout. Yet we continue to let the medical-industrial wonks lead us down this path to the everlasting bonfire.

Hey, aren't we wonks too? We know a far better path - one that leads to health care nirvana. Why aren't we doing the leading?

Thursday, September 8, 2016

qotd: Is it true that 85% do not have to worry about premium increases?
September 6, 2016
Steve Davis & Robert Laszewski confirm what I've been saying all along: Appx. 40% of ACA indy market is OFF EXCHANGE.
By Charles Gaba

For 2 1/2 years, dating back to around February 2014, I've been trying to hammer home the importance of the OFF-exchange individual market. Time and time again I've been stunned at the seeming blind spot that people who should know better (such as Avik Roy) have regarding the millions of people who are enrolled in fully ACA-compliant policies, but are doing so directly through the carriers themselves. There are a few reasons why people buying individual/family policies would do this, but the most obvious one is simple: If you earn more than 400% of the Federal Poverty Level (around 97,000/year for a family of 4), there's no reason to jump through the extra hoops of enrolling through HealthCare.Gov or the other various ACA exchanges...because you don't qualify for federal financial assistance anyway. For whatever reason, however, numerous reporters, pundits and even the HHS Dept. itself keep acting as though this market doesn't exist.

How many people are we talking about here? Well, back in 2014 I estimated that roughly 8 million people had signed up as of mid-April...almost exactly the same as the 8.02 million who selected QHPs on the ACA exchanges, or about 50% of the total. That 8 million included several million transitional and grandfathered policy enrollees, however, though I wasn't sure what the breakout was.

By this year, the exchange-based number had grown to around 11.1 million as of March 2016, of course...but the off-exchange number has been tougher to estimate. I've generally estimated the total off-exchange indy market at around 8-9 million, with roughly 7-8 million of that consisting of people enrolling in ACA-compliant plans at full price, and another 1-2 million or so enrolled in ACA-noncompliant "grandfathered" or "transitional" policies.

This estimate has been strongly supported by Mark Farrah Associates, which pegs the total individual market in 2016 at around 20.5 million.

Well, today, Robert Laszewski stumbled upon an excellent piece of data diving by a reporter named Steve Davis, in which Davis dug up the broken-out enrollment numbers for a whole mess of Blue Cross carriers nationwide.

The overall picture is quite clear: Roughly 48% (2.3 million) of all individual policies sold by these carriers (Blue Cross only) are subsidized, while another 48% are ACA-compliant but unsubsidized (8% on exchange, 40% off exchange). The remaining 4% or so are grandfathered/transitional enrollees.

It's important to note that in the states where there's no Grandfathered/Transitional (GR/TR) numbers listed, some chunk of the "Off Exchange Unsubsidized" tally likely belongs in the GR/TR column. Even so, the above hard data is remarkably close to my own assumptions:

9.4 million on-exchange subsidized (47%)
1.7 million on-exchange unsubsidized (8%)
7.1 million off-exchange unsubsidized (ACA-compliant) (35%)
2.0 million off-exchange unsubsidized (NON-ACA compliant) (10%)
= 20.2 million total


Comment by Don McCanne

More numbers. Moving directly to the point, HHS and others keep assuring us that the anticipated greater increase in ACA insurance premiums will not be a problem for the 85 percent of individuals who receive premium subsidies through the ACA exchanges. Well it is a problem not only for the 15 percent of individuals in the exchanges who do not receive subsidies but also for those who buy their individual plans outside of the exchanges.

Charles Gaba makes the point that the individual plans sold by the insurers both within and outside of the exchanges share a common risk pool.

So roughly 47 percent of plans sold by insurers servicing the exchanges are subsidized, but another 53 percent (10 percent of total are not ACA compliant) sold on and off the exchanges are not subsidized so the insured individual bears the full premium increase. So it is not 85 percent who do not have to worry, but rather it is closer to half of those with ACA compliant plans.

Middle-income individuals not only bear the brunt of the premium increases, but they also pay taxes that will be used to provide the subsidies for the higher premiums in the exchanges. This is one more example of why middle-income individuals have fared poorly under ACA.

Single payer would have been simpler, more equitable, and would have had better control of increases in health care spending that are contributing to higher premiums. We can still make the change.

Wednesday, September 7, 2016

qotd: Fewer are uninsured, but…

National Center for Health Statistics
September 2016
Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January–March 2016
By Robin A. Cohen, Ph.D., Michael E. Martinez, M.P.H., M.H.S.A., and Emily P. Zammitti, M.P.H.

This report provides health insurance estimates from the first quarter of the 2016 National Health Interview Survey.

*  In the first 3 months of 2016, 27.3 million (8.6%) persons of all ages were uninsured at the time of interview — 1.3 million fewer persons than in 2015 and 21.3 million fewer persons than in 2010.

*  The percentage of persons under age 65 with private insurance enrolled in a high-deductible health plan (HDHP) increased, from 25.3% in 2010 and 36.7% in 2015 to 40.0% in the first 3 months of 2016.

*  In the first 3 months of 2016, among adults aged 18–64, 11.9% were uninsured at the time of interview, 19.5% had public coverage, and 70.2% had private health insurance coverage.

*  Among adults aged 18–64, the 12-month increase in the percentage with private coverage through the Health Insurance Marketplace or state-based exchanges — from 4.4% (8.6 million) in the first quarter of 2015 to 4.7% (9.2 million) in the first quarter of 2016 — was not statistically significant.

*  In the first 3 months of 2016, among adults aged 18–64, 24.7% of those who were poor, 23.6% of near poor, and 6.5% of not poor lacked health insurance coverage at the time of interview.

*  In the first 3 months of 2016, 24.5% of Hispanic, 13.0% of non-Hispanic black, 8.4% of non-Hispanic white, and 6.7% of non-Hispanic Asian adults aged 18–64 lacked health insurance coverage at the time of interview.


Comment by Don McCanne

Six years after the enactment of the Affordable Care Act, we have achieved less than half of the goal of covering all of the uninsured - a decline from 48.6 million in 2010 to 27.3 million earlier this year. Many are celebrating this as a great success, but others do not out of concern for the 27 million who remain uninsured. Besides, there are many other observations in this report that should concern advocates of health care justice for all.

Although 21.3 million uninsured gained coverage since 2010, the further reduction in the uninsured in the past year - 1.3 million - was not statistically significant. This suggests that we are close to the flat of the curve. The feasible patches to ACA are very unlikely to have much more than a negligible impact in further reducing the numbers of uninsured. We need a system that is designed to cover absolutely everyone, such as a single payer national health program.

For adults under 65, 70 percent are privately insured, predominantly through employer sponsored plans. Only 4.7% are insured through the exchanges. Those who dreamed that the nation would swarm to the exchanges because of their superior competitive markets of private plans (HHS even changed the name from exchange to marketplace) had better go back to their drawing boards, and think "improved Medicare for all".

Perhaps the most alarming trend is the increase in enrollment in high deductible health plans (HDHP). For those under age 65, the percentage has increased from 25.3% in 2010 to 40.0% earlier this year. This has been responsible for much of the financial hardship caused by medical bills for those who are insured. The system is not working well for them, and it is getting worse.

Some say that the answer to high deductible plans is to include health savings accounts (HSA), making them consumer-directed health plans (CDHP). But three-fifths of those with HDHPs do not even have an HSA, and for many of the other two-fifths, the HSAs are inadequately funded. Pretending that deductibles can be paid with empty or nonexistent savings accounts is not sound health policy.

Another concern is that the uninsured rates are higher amongst the poor, Hispanics, and non-Hispanic blacks. Although much still needs to be done to reduce inequities in health care, the task remains much more difficult without adopting an equitable health care financing system (single payer).

So when you see headlines this week stating that the number of uninsured is at an all time low, don't think, "a job well done." It wasn't.