qotd: Who isn’t insured, and how can we change that?

Robert Wood Johnson Foundation

Urban Institute

March 2016

Who Are the Remaining Uninsured, and What Do Their Characteristics Tell Us About How to Reach Them?

By Linda J. Blumberg, Michael Karpman, Matthew Buettgens, and Patricia Solleveld

From the Introduction

Although the ACA was not designed to eliminate uninsurance, a detailed assessment of those remaining uninsured after reform can provide insight into the potential to increase coverage further.

Main Findings

*  According to the CPS-ASEC, 32.9 million nonelderly residents of the United States remained uninsured as of March 2015, constituting 12.2 percent of the total non-elderly, civilian, non-institutionalized population of the country.

*  The rate of uninsurance is significantly higher in (Medicaid) nonexpansion states, where 15.4 percen t of the nonelderly are uninsured compared with only 10.1 percent in expansion states, a relative difference of over 50 percent.

*  About 28 percent of the uninsured are eligible for Medicaid or the Children's Health Insurance Program (Medicaid/CHIP), and 21 percent are eligible for marketplace tax credits.

*  Fully 66.5 percent of uninsured children are eligible for Medicaid/CHIP compared with only 20.6 percent of uninsured adults.

*  We posit that the uninsured who are eligible for the greatest amount of financial assistance under the ACA — 12.4 million uninsured in total — are those for whom additional outreach and enrollment efforts are likely to be most successful.

*  Absent further policy changes (e.g., more states expanding Medicaid, increased financial assistance, and expanded eligibility for assistance), we do not expect that a substantial share of the other uninsured — who constitute 20.6 million of the total — will gain coverage.

*  Targeting of resources to those 12.4 million uninsured with the greatest potential to enroll in either Medicaid/CHIP or marketplace coverage can be improved by understanding their characteristics.

From the Conclusion

Our analysis of the CPS-ASEC combined with past work on program participation rates and case studies on insurance enrollment behavior under the ACA suggests that two subpopulations of the uninsured have the most promise in further expanding coverage: the Medicaid eligible and the low-income marketplace tax credit eligible. These are the uninsured eligible for the most comprehensive coverage at the lowest direct cost under current law, and those eligible for this level of assistance have relatively high rates of participation in health insurance programs. Together, these subgroups account for 37.5 percent of the remaining unin sured, or approximately 12.4 million people.

Under current law, however, expectations of increasing coverage substantially among the other 62.5 percent of the remaining uninsured should be tempered. Although some additional coverage within these groups is likely as the individual mandate penalties increase and information on available coverage alternatives spread further, gains are likely to be quite modest unless further financial assistance is provided.

http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2016/rwjf427898

***

Comment by Don McCanne

Perhaps the most important statement in this report on the remaining uninsured is the following: "The ACA was not designed to eliminate uninsurance." It should be no surprise that we are left with trying to figure out why so many are uninsured and who they are when the architects of the Affordable Care Act abandoned, in advance, any effort to make health care insurance truly universal.

If there is good news in this report it is that there are two groups in which, with concerted effort, we can increase rates of enrollment: the uninsured eligible for Medicaid/CHIP, and the lower-income uninsured eligible for government subsidies for ACA exchange plans. These eligible individuals are more likely to accept coverage because government subsidies make it free or very low cost to them. But those eligible are still a minority of the uninsured - 12.4 million individuals.

The majority of the uninsured - 62.5 percent, 20.6 million individuals - have no publicly-supported programs available for them and are likely to remain uninsured. It has been suggested that we can expand coverage through incremental changes in ACA, but, because of political, logi stical and financial barriers, it would be very difficult to design add-on programs that would be effective in bringing these individuals under the coverage umbrella.

Another problem is that a static picture at one point in time does not lead to policies that would address the instability in coverage due to changes in income, employment, age, residency, and other requirements that determine the type of coverage for which an individual may or may not be eligible. As we work on the front end to expand coverage to the currently uninsured, people are falling off of the back end as they lose their coverage and may face new barriers to transitioning to other programs. This instability makes it virtually impossible to ever cover everyone simultaneously under our fragmented system that has been perpetuated by ACA.

So do we want everyone insured? I would say absolutely yes, but it is not going to happen under a system that was clearly not desig ned to do that. In contrast, an Improved Medicare for All would be designed to actually cover everyone, permanently, not to mention the multitude of other social and health benefits that it would bring to all of us.

qotd: IMPORTANT: ACA-compliant plans have been subjected to adverse selection

BlueCross BlueShield

March 2016

Newly Enrolled Members in the Individual Health Insurance Market After Health Care Reform: The Experience from 2014 and 2015

This report is a comprehensive, in-depth study of medical claims among those enrolled in BCBS individual coverage before and after the ACA took effect.

Comparing the health status and use of medical services among those who enrolled in individual coverage before and after the ACA took effect, as well as those with employer-based health insurance, the study finds that:

•  Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who already had BCBS individual coverage.

•  Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical services in their first year of coverage, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health coverage.

•  The new enrollees used more medical services across all sites of care—including inpatient hospital admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

•  Medical costs associated with caring for the new individual market enrollees were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending was $559 for individual enrollees versus $457 for employer-based group members in 2015.

http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf

***

Comment by Don McCanne

Compared with members previously enrolled in BlueCross BlueShield plans, those enrolling after the Affordable Care Act (ACA) took effect have higher rates of certain diseases, use more medical services across all sites of care, and have higher medical costs associated with care - 22 percent higher in 2015. Adverse selection - concentrating more costly patients in the ACA-compliant plans - was a consequence of the design selected for expanding health care coverage in the United States.

Although required benefits were increased by ACA, to keep premiums affordable patients were leveraged into lower actuarial value plans, especially plans like the silver plans that pay 70 percent of allowable charges. Outside of the exchanges, the other 30 percent is paid by patients, especially through much higher deductibles. Also some income is forgone by providers who contract for lower fees to serve in narrow networks that take away patients' choices in health care.

It was obvious that many people with modest incomes would not be able to afford their share of the costs of these plans so the politicians included income-based federal subsidies for both the premiums and the cost sharing of the silver plans purchased through the ACA insurance exchanges (marketplaces).

Fine, but what about the hard working middle-income individuals and families who have just enough income that they are disqualified from receiving the subsidies? They are hurting. The higher premiums, the higher deductibles, and the decrease in choices through narrower networks are a greater burden that has been placed on these individuals and families.

This new BCBS report is further bad ne ws for middle-income Americans. It shows that the ACA-compliant plans, both within and outside of the exchanges, have been subjected to adverse selection - the individuals pooled in these plans have greater medical needs and thus are more expensive - driving up premiums and increasing deductibles, with the full brunt borne by middle-income families that do not qualify for subsidies.

It does not have to be this way. We could improve Medicare, expand it to include everyone, and pay for it with equitable taxes based on ability to pay, wherein nobody suffers a financial hardship because of health care. Adverse selection would no longer exist because everyone would be included in the same universal risk pool.

qotd: Financing health care with consumer loans

Kaiser Health News
March 29, 2016
Mortgages For Expensive Health Care? Some Experts Think It Can Work.
By Michelle Andrews

A Massachusetts Institute of Technology economist and Harvard oncologist
have a proposal to get highly effective but prohibitively expensive
drugs into consumers' hands: health care installment loans.

Writing last month in the journal Science Translational Medicine, the
authors liken drug loans to mortgages, noting that both can enable
consumers to buy big-ticket items requiring a hefty up-front payment
that they could not otherwise afford.

Some consumer advocates and health insurance experts see it differently.

"Isn't this why we have health insurance?" asked Mark Rukavina, a
Boston-based health care consultant whose work has focused on
affordability and medical debt. "Insurance used to protect people from
financial ruin for these unpredictable, costly occurrences. Now, with
large deductibles, we've got coverage for preventive care but not for
treatment."

Andrew Lo, a financial economist at MIT's Sloan School of Management,
and Dr. David Weinstock, an oncologist at the Harvard-affiliated
Dana-Farber Cancer Institute, agree that insurance would be a better
option. But for many consumers that isn't enough protection these days.

"This is a private sector stopgap way to deal with something right now,"
said Lo.

Their proposal calls for the loans to be financed by a pool of investors
who would buy bonds and equities issued by an organization that makes
the loans to consumers.

While it's "distasteful" to talk about patients mortgaging their lives
for treatment, Lo said, they hope the proposal will spur change.

http://khn.org/news/mortgages-for-expensive-health-care-some-experts-think-it-can-work/

***

Science Translational Medicine
February 24, 2016
Buying cures versus renting health: Financing health care with consumer
loans
By Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo

Abstract

A crisis is building over the prices of new transformative therapies for
cancer, hepatitis C virus infection, and rare diseases. The clinical
imperative is to offer these therapies as broadly and rapidly as
possible. We propose a practical way to increase drug affordability
through health care loans (HCLs) — the equivalent of mortgages for large
health care expenses. HCLs allow patients in both multipayer and
single-payer markets to access a broader set of therapeutics, including
expensive short-duration treatments that are curative. HCLs also link
payment to clinical benefit and should help lower per-patient cost while
incentivizing the development of transformative therapies rather than
those that offer small incremental advances. Moreover, we propose the
use of securitization — a well-known financial engineering method — to
finance a large diversified pool of HCLs through both debt and equity.
Numerical simulations suggest that securitization is viable for a wide
range of economic environments and cost parameters, allowing a much
broader patient population to access transformative therapies while also
aligning the interests of patients, payers, and the pharmaceutical industry.

The Role of Health Insurance

Large copays are antithetical to the very purpose of health insurance.
Hence, our proposal for patients to cover these costs with HCLs is only
a short-run bridging solution. A more sustainable and economically more
efficient approach to address the high cost of transformative therapies
is for insurance companies to cover these costs, spread the amortized
costs across their policyholders, finance the upfront payments using
securitization, and set premiums at the appropriate levels to cover
these costs. In return for larger drug purchases, insurance companies
would wield substantial leverage to negotiate lower prices. Also,
insurers would presumably borrow at lower interest rates than would
individual patients, further reducing the overall financing cost of
these therapies.

Conclusion

The burden of upfront payment for curative therapies makes it
challenging for public and private payers to afford universal access to
potentially life-saving therapies. To address this issue, we considered
a new financing paradigm in which portfolio theory and securitization
techniques are used to finance HCLs whose repayment is linked to ongoing
value. By estimating the post-treatment mortality rates of the patients
and using statistical models to gauge the default characteristics of
these loans, we demonstrate viability under current practical
conditions. Securitization brings new participants (for example, pension
funds, mutual funds, and life insurance companies) into the financing
pool and helps transform a set of disjointed and sometimes competing
interests into a more cooperative system focused on improving care.
HCLs, not unlike student loans, auto loans, and home mortgages, can
improve access to the best health care for the less affluent.

Considering the extremely large burden of certain diseases, such as HCV,
for which cures already exist, and the many transformative therapies on
the horizon, developing more efficient financing methods is now a matter
of life and death. Taking action is no longer a choice but has become a
necessity.

http://stm.sciencemag.org/content/8/327/327ps6.full

***


Comment by Don McCanne

So the answer to outrageously priced drugs is to pay for them through
health care loans (HCLs) - the equivalent of mortgages - and then use
securitization "to finance a large diversified pool of HCLs through both
debt and equity." Did we not learn anything from the subprime mortgage
crisis? Just as securitization of subprime loans became a "necessity,"
securitization of HCLs is now not only supposedly necessary to prevent
personal insolvency, it is, according to Andrew Lo, et al, "a matter of
life and death."

In Lo's words, "While it's 'distasteful' to talk about patients
mortgaging their lives for treatment, they hope the proposal will spur
change."

Oh my.

An improved Medicare for all with first dollar coverage would eliminate
any need to consider such an inhumane concept.

qotd: Part D plans moving from copayments to coinsurance

Avalere

March 10, 2016

Majority of Drugs Now Subject to Coinsurance in Medicare Part D Plans

By Caroline F. Pearson

A new analysis from Avalere finds that a majority of prescription drugs covered by standalone Medicare Part D plans (PDPs) are subject to coinsurance, rather than copayments, in 2016. Coinsurance is when a beneficiary pays a percentage of the cost of the drug, rather than a fixed dollar amount, or copayment. Coinsurance often leads to patients paying more out of pocket compared to fixed dollar amount copayments. The average percentage of covered drugs facing coinsurance has risen sharply from 35 percent in 2014 to 58 percent in 2016 among PDPs. While most PDPs have historically applied coinsurance to high-cost drugs on the specialty tier, plans have extended coinsurance to drugs on lower tiers in recent years, including those covered on preferred and non-preferred brand tiers. 

"These very high rates of coinsurance have shifted our understanding of Part D formulary coverage," said Caroline Pearson, senior vice president at Avalere. "It will be important to monitor what drugs are being placed on various coinsurance tiers and how plans are using these tiers to manage cost and utilization in the program."

http://avalere.com/expertise/managed-care/insights/majority-of-drugs-now-subject-to-coinsurance-in-medicare-part-d-plans

***

Comment by Don McCanne

Medicare Part D drug plans are shifting more drugs from a copayment requirement - a fixed dollar amount to be paid for each prescription - to coinsurance - a percentage of the charge for each prescription. This is important because coinsurance payments tend to be higher than coinsurance - sometimes much higher - especially with the recent increases in drug prices.

Obviously this is simply one more method of shifting the costs of health care to the patient. Many are already finding out-of-pocket costs to be unaffordable, yet it keeps getting worse. This is a one way street. The insurers are not looking for ways to reduce out-of-pocket expenses since they would have to pick up the additional costs which would then make their premiums less affordable, and the last thing that they would want to do is risk losing market share through higher premiums.

Coinsurance is a method of reducing health spending by erecting financial barriers to the care that patients should have. Instead, we should be removing financial barriers to care. That is what an improved Medicare for all with first dollar coverage would do.

qotd: Should the insurer or the provider be in charge of integrating health care?

The Des Moines Register

March 24, 2016

Mayo rebuffs Iowa Medicaid managed-care contracts

By Tony Leys

Iowans with Medicaid health coverage will not be able to routinely use the Mayo Clinic after the state shifts the $4 billion program to private management next week.

The three managed-care companies that will run Iowa's Medicaid program told legislators this week they've been unable to negotiate contracts with Mayo's famed hospital system, which is just across the border in Rochester, Minn.

Cheryl Harding, Amerihealth's top executive in Iowa, told legislators that her managed-care firm has signed contracts with three Mayo-affiliated primary care clinics in Iowa, but not with Mayo's main medical center in Rochester. The other managed-care companies, UnitedHealth and Amerigroup, also said they have not obtained such contracts.

For the time being, they said, Mayo has agreed to consider single-case contracts for Iowa Medicaid recipients needing specific care that can't be provided elsewhere.

http://www.desmoinesregister.com/story/news/health/2016/03/24/mayo-rebuffs-iowa-medicaid-managed-care-contracts/82230958/

***

Comment by Don McCanne

There are so many issues here, but it really boils down to one, which we'll get to in a moment.

One of primary the goals of health care reform is to provide integrated health care services. The participants in an ideal health care delivery system work together as a team to ensure that the patient receives the right care, at the right time, at the right place. The care pyramid is built on a solid primary care infrastructure that serves, not as a gatekeeper, but as a facilitator.

Examples range from structurally integrated systems such as Kaiser Permanente, to loosely integrated services provided by the various health care resources in a community - hospitals, outpatient centers, community health centers, and independent primary care and specialty practices. In today's message, Mayo Clinic represents an integrated system with its mothership in Rochester and its affiliated primary care clinics serving patients in its neighboring state of Iowa.

Thus Mayo provides integrated services that would be paid for by private insurers or employer-sponsored plans, either through fee-for-service or capitated payment schedules. Low income patients would be covered by Iowa's Medicaid program.

But wait a minute. The insurers now profess to provide higher quality and lower costs through their own integrated managed c are services. Iowa is following the lead of other states and turning its Medicaid program over to private Medicaid managed care companies. Although they avow quality, early experience with other state Medicaid managed care programs indicate that it is all about saving money, as quality and access deteriorate.

So what is happening to Iowa's Medicaid patients who are currently obtaining their care from Mayo? It seems that Mayo is no longer in charge of integrating the health care of these patients; the private insurers are instead. For most of the patients, that means they lose access to their current care. One of the insurers will still allow patients to use the Mayo affiliated primary care clinics but not the Mayo mothership in Rochester, except by special arrangement on an individual basis. Instead of integrated care, these managed care companies are providing disintegrated care (double entendre intended).

The obvious conclusion is that integration of health care services should be a function of the health care delivery system based on patient service and not a function of an intermediary payer based on business goals.

A publicly administered and financed single payer monopsony would be designed to incentivize appropriate integration of our health care delivery system so that we really could have a higher quality health care system that brings greater value to all of us.

qotd: Valeant sells mercy, for a price

KQED

March 22, 2016

Pharmaceutical Companies Hiked Price on Aid in Dying Drug

By April Dembosky

When California's aid-in-dying law takes effect this June, terminally ill patients who decide to end their lives could be faced with a hefty bill for the lethal medication. It retails for more than $3,000.

Valeant Pharmaceuticals, the company that makes the drug most commonly used in physician-assisted suicide, doubled the drug's price last year, one month after California lawmakers proposed legalizing the practice.

"It's just pharmaceutical company greed," said David Grube, a family doctor in Oregon, where physician-assisted death has been legal for 20 years.

The drug is Seconal, or secobarbital, its generic name. Originally developed in the 1930s as a sleeping pill, it fell out of favor when people died from taking too much , or from taking it in combination with alcohol. But when intended as a lethal medication to hasten the death of someone suffering from a terminal disease, Seconal is the drug of choice.

In 2009, Grube remembers the price of a lethal dose of Seconal — 100 capsules — was less than $200. Over the next six years, it shot up to $1,500, according to drug price databases Medi-Span and First Databank. Then Valeant bought Seconal last February and immediately doubled the price to $3,000.

Most drug companies justify such hikes by pointing to high research costs. But Grube says that's not the case with Seconal. It's been around for 80 years.

"It's not a complicated thing to make, there's no research being done on it, there's no development,"  he says. "That to me is unconscionable."

http://ww2.kqed.org/stateofhealth/2016/03/22/pharmaceutical-companies-hiked-price-on-aid-in-dying-drug/

***

Comment by Don McCanne

One of my father's favorite phrases was, "There oughta be a law…" Whenever I heard that, I knew a bit of wisdom with a moral message would follow.

Dad's last three weeks of life was spent in a hospital and could not have been more miserable (this was in the 1970s, before hospice). He had multiple myeloma and had extensive pathological fractures. When the nurses had to turn him, the pain was intolerable. He did not tolerate the narcotics administered as they aggravated his vomiting and obstipation. As a physician, he understood well his status.

At the last relatively rational conversation I had with him, he said, "Don, there ough ta be a law. When the tiny bit of good that happens in a day cannot possibly even begin to compensate for the profound, unrelenting pain and suffering, your physician should be able to authorize the placement of a bottle of sleeping pills on the nightstand next to your bed."

No such bottle appeared. The agony persisted for several more days, without even any fleeting moments of contentment, before he slipped into his final coma. In spite of my reverence for life, I knew this wasn't right.

Today's message on Valeant's price gouging for Seconal - price gouging timed to capitalize on California's new aid-in-dying law - would normally lead to my usual diatribe on the evils of dysfunctional health market dynamics in the U.S. But this time, it led to tears - mine.

How can we leave our health care system under the control of the rentiers in the medical industrial complex? Dad would have said, "There ough ta be a law." And we know what that law would be - an improved Medicare for all that spends money exclusively for the benefit of patients.

Why am I not out there helping to organize the marches on Washington and our state capitols on behalf of health care justice for all? For that matter, why aren't you?

qotd: Can churning be eliminated with a patch?

The New York Times
March 23, 2016
How to Stop the Bouncing Between Insurance Plans Under Obamacare
By Dhruv Khullar

Millions of Americans are finding Obamacare to be unstable ground.

Consider a young construction worker, a patient of mine, whose hours are
cut during the winter. His income drops slightly, and now his family no
longer qualifies for financial assistance through marketplace subsidies
and must sign up for Medicaid. He had finally managed to control his
diabetes with his primary care doctor, but when scheduling his next
appointment, he is told his doctor doesn't accept Medicaid.

When the summer rolls around, he picks up more hours, and starts making
too much for Medicaid. He has to go back on a marketplace plan, a
different one from before. Meanwhile, providers and insurance plans rack
up administrative costs as they accommodate these changes.

Because of fluctuations in income, millions of Americans move back and
forth between Medicaid and the Affordable Care Act's insurance
marketplace, leading to significant health and financial costs for
individuals, states and insurance companies.

This cycling across different forms of insurance is called "churning."
Churning is not a new phenomenon. In the past, people who rolled off
Medicaid simply became uninsured. But now many who become ineligible for
Medicaid become eligible for marketplace subsidies, and vice versa.

The Affordable Care Act sets the eligibility divide between Medicaid and
the insurance marketplace at 138 percent of the federal poverty level,
or about $33,000 for a family of four — a threshold at which many people
experience substantial income fluctuation. Up to 28 million people may
move between plans annually, according to a 2011 study by Benjamin
Sommers at Harvard and Sara Rosenbaum at George Washington University.
Over the course of four years, only 19 percent of adults will remain
continuously eligible for Medicaid and 31 percent continuously eligible
for marketplace subsidies. Almost 40 percent will have churned more than
four times during this period.

Churning is also costly for taxpayers. Research suggests that average
monthly spending on individuals continuously enrolled in Medicaid is
two-thirds what it is for those enrolled for just half the year. And the
administrative costs can be considerable; one study found that it costs
$280 to enroll a child in Medicaid.

What can be done? One option is to require states to guarantee 12 months
of continuous eligibility when people sign up for Medicaid. Currently
fewer than half of states do this for children and pregnant women, and
only New York does it for all adults. An analysis by the Commonwealth
Fund found that offering 12 months of continuous Medicaid eligibility
would reduce churning by 30 percent. Guaranteeing coverage through the
end of the calendar year would reduce churning by nearly 80 percent.

Another approach is to smooth the transition between Medicaid and the
marketplace plans by aligning plans, benefits and networks of providers.
States are increasingly relying on managed-care companies to provide
Medicaid benefits; in 2015, the number of Medicaid beneficiaries using
private insurance plans reached 46 million. Making sure people can use
similar providers and services — regardless of which insurance they
technically qualify for at that time — could help.

Washington is helping insurers in the marketplaces develop Medicaid
managed-care plans. A more direct path is simply to allow
Medicaid-eligible populations to buy private plans on the marketplaces.

While the patchwork of health care in the United States may make some
amount of churning unavoidable, it is possible to create a less
wasteful, more unified system that works better for patients and providers.

/Dhruv Khullar is a resident physician at Massachusetts General Hospital
and Harvard Medical School./

**

Published Comment:

Don McCanne
San Juan Capistrano, CA

Tweaking the alignment of Medicaid and the private ACA exchange plans
still leaves in place a fragmented system of incongruous provider
networks, and unstable cost sharing depending on plan actuarial values
and sliding-scale subsidy qualifications. These efforts result in
wasteful administrative excesses, inefficiencies and inequities in care.

A well designed single payer system - an improved Medicare for all -
would provide stable health care coverage for life - totally eliminating
churning. The savings from the administrative efficiencies would be
enough to eliminate current financial barriers faced by the uninsured
and the underinsured, while reducing inequities and ensuring access for all.

Tweaking a highly dysfunctional system just won't get us there.

http://www.nytimes.com/2016/03/24/upshot/how-to-stop-the-bouncing-between-insurance-plans-under-obamacare.html

***


Comment by Don McCanne

Dhruv Khullar has provided us with an important policy lesson. He seems
to be amongst those who believe that we should accept Obamacare (ACA) as
a given and build on it through incremental reform. Amongst the
multitude of problems with ACA, he has selected as an example the issue
of churning in and out of Medicaid and the private ACA exchange plans.
What does he propose?

He suggests reducing churning by offering twelve-month eligibility for
Medicaid, and he suggests aligning benefits and provider networks
between Medicaid managed care and private ACA exchange plans - a
proposal with obvious profound administrative complexity. Further, when
these anti-churning measures are implemented, he concedes that "the
patchwork of health care in the United States may make some amount of
churning unavoidable."

This is the policy lesson. Our fragmented, dysfunctional financing
infrastructure is so highly flawed that patches to it will have very
little impact in moving us closer to the ideal of a quality health care
system that serves all of us well. In contrast, the patches themselves
lead to further administrative waste with associated higher costs.

The obvious answer to churning is to have a single, well-designed
Medicare for all program in which individuals are enrolled for life.
That would also take care of most of the multitude of other health care
financing problems that Dhruv Khullar nor I could address here.

qotd: The rent-seeking behavior of pharmacy benefit managers

USA TODAY
March 21, 2016
Secret deals may mean consumers pay more for drugs
By Jayne O'Donnell

Secret deals often prompt drug benefit companies to cover brand-name
prescriptions when equally effective generic or even over-the-counter
medications are available, several drug pricing experts say.

These companies, known as pharmacy benefit managers (PBMs), negotiate
deals with drug makers that include rebates and other compensation to
encourage certain drugs and come up with lists of drugs that their
insurance plans will cover. Employers and insurance companies then
determine which drugs to encourage on these formularies.

The process is so convoluted that even the United States' largest
insurer, Anthem, discovered what it said were $3 billion in overcharges
by Express Scripts and filed suit Monday against the PBM for damages.

In their deals with drugmakers, PBMs agree to favor the high-cost drugs
on the PBMs' formularies and agree that they won't place quantity limits
— or prior authorization programs — on the drugs, even though doing so
would help health plans save money and make medical sense, says Linda
Cahn, founder and president of Pharmacy Benefit Consultants, which
audits PBM contracts.

"What really gets me started is when PBMs sell their clients on programs
that increase costs by encouraging brands so that the PBM can collect
rebates," says Susan Hayes, a principal in Pharmacy Outcomes
Specialists, which represents plan sponsors and audits their PBM
contracts. "And many clients do not know the cost implications when
they sign off on these programs."

http://www.usatoday.com/story/news/nation/2016/03/21/pharmacy-benefit-firms-can-raise-drug-costs-despite-cheaper-choices/81767978/

***


Comment by Don McCanne

Pharmacy benefit managers (PBMs) are yet one more example of how
effective our policymakers have been in taking care of the medical
industrial complex while perpetuating the highest level of health care
spending of all nations. PBMs are superfluous pharmaceutical middlemen
who further compound our uniquely-American, highly wasteful
administrative excesses as a necessity to gain reward for their own
rent-seeking behavior.

Rent-seeking is the use of a company, organization or individual's
resources to obtain economic gain from others without reciprocating any
benefits to society through wealth creation. (Investopedia
<http://www.investopedia.com/terms/r/rentseeking.asp>)

Rent-seeking is a creature of the medical-industrial complex. It should
have no place in our health care system. If we established a single,
universal, publicly-funded and publicly-administered health care
financing infrastructure, it would function as a monopsony, representing
the people, that would work for us to dramatically reduce administrative
waste while preventing clandestine rent-seeking gains.

In the words of Nobel laureate Kenneth Arrow - the leading authority in
markets and health care - single payer is "better than any other system
<http://www.pnhp.org/news/2016/march/kenneth-arrow-says-single-page-is-better-than-any-other-system>."

qotd: It’s all about the risk pool

Health Affairs Blog

March 15, 2016

Don't Let The Talking Points Fool You: It's All About The Risk Pool

By Linda Blumberg and John Holahan

Most people are healthy most of the time, and as a consequence, health care expenditures are heavily concentrated in a small share of the population: about 50 percent of the health care spending in a given year by those below age 65 is attributable to just 5 percent of the nonelderly population. The lowest spending half of the population accounts for only about 3.5 percent of health care spending in a year.

Deciding how much of total health care expenditures should be shared across the population and how to share it is the fundamental conundrum of health care policy. There is more risk pooling the larger the share of health expenditures included in the insurance as covered expenses (i.e., the fewer benefits excluded and the lower the out-o f-pocket cost requirements), the larger the number of both the healthy and the sick insured, and the lower the variation in premiums across different enrollees. Sharing the costs of the sick across the broader population (a.k.a., risk pooling) increases costs for the healthy to the benefit of those with health problems; this creates more financial losers than winners at a point in time, since there are many more healthy people than sick in a given year. Segmenting risk pools has the opposite effect, savings for the currently healthy while increasing costs for those with health problems.

The health policies of the two political parties and their presidential candidates differentiate themselves clearly along the lines of pooling philosophies: the Democrats generally advocate broad-based pooling of health care risk and the Republicans generally advocate more individual responsibility and are willing to accept much greater segmentation of health care risk. These p ositions have dramatically different implications for individuals when they experience significant health problems, and they also have very different implications for low- and middle-income populations as compared to those with high incomes. As a consequence, each health care policy proposal should be evaluated as to its ramifications for risk pooling.

Left unchecked, people who perceive themselves healthy will tend, if they are pursuing their own near-term financial self-interests, to separate themselves from sick people—either by avoiding health insurance entirely, purchasing insurance products sold predominantly to other healthy people, or purchasing insurance products offering limited benefits that likely are not attractive to those requiring significant medical care. Those supporting public policies that allow or encourage this type of separating of health care risks often argue that they are placing greater personal responsibility on each individual, w ho will in turn make better decisions about the use of medical services. However, the burden of that increased responsibility falls most heavily on those with health problems, since it places larger financial costs on those with medical care needs at the time those needs arise, reducing costs for individuals while they are healthy.

Depending upon the extent of the risk segmentation created, these policies can effectively deny care to those that need it. Those who are well off financially can finance a considerable amount of necessary care out-of-pocket; a low- or middle-income individual experiencing a health crisis cannot. Thus, policies that separate risks will not only harm the sick, they will decrease access to care most heavily for the non-wealthy with health problems. Therefore, the amount of risk pooling versus risk segmentation is a fundamental choice.

**

The degree of risk sharing under current law var ies by the insurance market. Public insurance (e.g., Medicare, Medicaid) represents the most pooling of risk. All beneficiaries are eligible for the same health insurance benefits, and the cost of providing those benefits is largely financed by broad-based revenue sources (e.g., income or payroll taxes), completely separating enrollee health status from financing of the programs' benefits. Public programs that include deductibles, co-insurance, or co-payments or limit covered benefits reduce the sharing of risk to some extent, as these provisions increase financial burdens directly with medical care use.

**

Risk pooling approaches promote broad access to affordable medical care regardless of income or health status, while the risk segmenting approaches do not and would in fact reduce access relative to current law. Advocates of the latter generally employ terms such as individual responsibility, skin in the game, consumer choice, and market competition, but make no mistake about it: it is all about the risk pool.

http://healthaffairs.org/blog/2016/03/15/dont-let-the-talking-points-fool-you-its-all-about-the-risk-pool/

***

Comment by Don McCanne

Risk pooling is the most fundamental concept in health care financing. Funds are paid into a common pool to cover the health care needs of those insured by the pool. Although that is a simple, basic concept, this article explains the complexities of risk pooling, with special attention to policies that promote greater risk pooling and policies that decrease pooling, separating the risks. The consequences are immense.

The politicians are discussing various concepts of health care reform ranging from incremental change s to the Affordable Care Act (ACA), to various concepts of replacing ACA, to establishing a single payer national health program. The most important differences between these models are in how they pool risk. The least effective are the ACA replacement proposals, and the most effective is a universal single payer system (an improved Medicare for all).

Even though it is easy to explain risk pooling, it is important to be able to respond to each proposal for reform with a precise explanation of how that proposal impacts risk pooling. The reason is that it's all about the risk pool. A well designed universal risk pool ensures that health care will be affordable for each of us whenever we need it.

The full article by Linda Blumberg and John Holahan should be downloaded, studied, and saved as a reference to be used in health policy advocacy. We won't get risk pooling right until we have everybody in, nobody out! (Thanks, Quentin. )

qotd: Should poor-performing hospitals be expelled from exchange plans?

California Healthline
March 18, 2016
California Insurance Marketplace Wants To Kick Out Poor-Performing Hospitals
By Chad Terhune

California's insurance exchange is threatening to cut hospitals from its
networks for poor performance or high costs, a novel proposal that is
drawing heavy fire from medical providers and insurers.

The goal is to boost the overall quality of patient care and make
coverage more affordable, said Peter Lee, executive director of the
Covered California exchange.

"The first few years were about getting people in the door for
coverage," said Lee, a key figure in the roll-out of the federal health
law. "We are now shifting our attention to changing the underlying
delivery system to make it more cost effective and higher quality. We
don't want to throw anyone out, but we don't want to pay for bad quality
care either."

It appears to be the first proposal of its kind in the country. The
exchange's five-member board is slated to vote on it next month. If
approved, insurers would need to identify hospital "outliers" on cost
and quality starting in 2018. Medical groups and doctors would be rated
after that.

Providers who don't measure up stand to lose insured patients and suffer
a black eye that could sully their reputations with employers and other
big customers.

By 2019, health plans would be expected to expel poor performers from
their exchange networks.

The idea has already sparked fierce opposition. Doctors and hospitals
accuse the exchange of overstepping its authority and failing to spell
out the specific measures they would be judged on.

Health insurers, normally at odds with providers, have joined them in
the fight. The insurers are balking at the prospect of disclosing their
negotiated rates with providers. Health plans have long resisted efforts
that would let competitors or the public see the deals they make with
doctors and hospitals.

But scrutinizing the negotiated rates would help the exchange identify
high-cost providers and allow policyholders with high deductibles to see
the differences in price before undergoing a surgery or imaging test.

Lee said it's time for the exchange to move beyond enrollment and flex
its market power on behalf of its 1.5 million members. He said insurers
haven't been tough enough on hospitals and doctors.

"California is definitely ahead of the pack when it comes to taking an
active purchasing role, and exclusion is a pretty big threat," said
Sabrina Corlette, a research professor at Georgetown University's Center
on Health Insurance Reforms. "There may be a dominant hospital system
that's charging through the nose, but without them you don't have an
adequate network. It will be interesting to see how Covered California
threads that needle."

A study last year found that 75 percent of Covered California plans had
narrow physician networks, with more restricted choices than all but
three other states.

"I don't know of anyone even close to trying this," said Dan Polsky, the
study's author and executive director of the Leonard Davis Institute of
Health Economics at the University of Pennsylvania. "I applaud Covered
California for being bold to improve quality and reduce costs, but I
worry about the implementation."

Polsky said measuring quality can be complicated, and steps must be
taken to ensure hospitals and doctors aren't penalized for treating
sicker patients or serving lower-income areas. Most quality-boosting
efforts use financial bonuses and penalties rather than exclusion.

Under the Covered California plan, hospitals would be judged on a wide
range of performance and safety measures, from rates of readmission and
hospital-acquired infections to adverse drug events. The exchange said
it will draw on existing measures already tracked by Medicare and other
groups, and it will work with hospitals, consumer advocates and other
experts over the next 18 months to finalize the details.

California physicians warn that the exchange's proposal could further
reduce networks that are already too thin for patients.

Charles Bacchi, chief executive of the California Association of Health
Plans, predicted that Covered California's idea will backfire,
discouraging hospitals and doctors from participating in the exchange
and driving up premiums as a result.

"It's the right goal but the wrong approach," Bacchi said. "Covered
California is proposing a top-down, arbitrary measurement system that
carries a big stick. This can make it difficult for health plans and
providers to work together constructively."

http://californiahealthline.org/news/california-insurance-marketplace-wants-to-kick-out-poor-performing-hospitals/

***


Comment by Don McCanne

California has been an "active purchaser" of health plans for its ACA
exchange - Covered California. To help keep insurance premiums down, it
has contracted with plans that have amongst the narrowest provider
networks in the nation. Now they want to measure quality and costs and
expel providers, beginning with the hospitals, that rank poorly on these
measurements. What could be wrong with this?

Choosing physicians and hospitals is much more involved than merely
exercising personal preferences. Impaired accessibility, instability,
lack of continuity with changing contracts, lack of integration of
services, surprise out-of-network billings, and the like are just a few
of the reasons that narrow networks are disadvantageous for patients,
and, after all, shouldn't the system be designed primarily to take care
of patients?

The purported reason for active purchasing is to obtain higher quality
at lower cost. But we don't even know how to measure quality beyond
token star-type ratings. Outcomes are much more dependent on
socioeconomic factors than they are on the quality of the delivery
services. So then is cost alone an adequate reason to pursue active
purchasing? The traditional Medicare program is far more effective at
controlling costs than are the private sector health plans, including
those offered through the exchanges. So forget quality and cost as
determinants of optimal provider networks.

Dedicated physicians and hospitals who care for some of the sickest and
most deprived patients do not score as high on quality measures simply
because the measurements are more focused toward the carriage trade.
What an injustice it would be for the poor and sick if we expelled their
physicians and hospitals merely because they failed the tests of some
naive policy wonk from behind the scenes.

Patients should have free choice of their physicians and hospitals in a
system that is affordable for all. We could have that by changing to a
single payer national health program - an improved Medicare for all.

qotd: Policy experts give Hillary’s plan a passing grade?

MedPage Today
March 15, 2016
Clinton's Health Plan Gets Mostly Passing Grades From Policy Experts
By Joyce Frieden

Democratic presidential candidate Hillary Clinton's ideas for improving
the Affordable Care Act (ACA) drew cautious praise from health policy
scholars, but they said they had no chance of enactment without a major
change in Congressional attitudes.

"If we're really serious about getting to the general uninsured and
getting costs down, and it's a choice between scratching everything and
starting over [or] building on the Affordable Care Act ... I would build
on what Clinton's talking about," Ken Thorpe, PhD, of Emory University
in Atlanta, said in a phone interview.

Clinton's plan is "Very much a small adjustment to ACA, and in the
climate we have, getting anything through [Congress] is a real
challenge," said Paul Hughes-Cromwick, MA, of the Center for Sustainable
Health Spending at the Altarum Institute, in Ann Arbor, Mich. "Most of
what she's talking about is very small, and some things are already
happening."

On her website, Clinton lists the following planks among those in her
healthcare proposal:

* Make premiums more affordable and lessen out-of-pocket expenses for
consumers purchasing health insurance on the ACA exchanges. This would
include a tax credit of up to $5,000 per family to offset a portion of
out-of-pocket and premium costs above 5% of income.

* Support new incentives to encourage all states to expand Medicaid.
Clinton proposes allowing any state that signs up for the Medicaid
expansion to receive a 100% match for the first 3 years.

* Invest in navigators, advertising, and other outreach activities to
make exchange enrollment easier. Today, as many as 16 million people or
half of all those uninsured are eligible but not enrolled in Medicaid or
an exchange plan. Clinton plans to invest $500 million per year in an
aggressive enrollment campaign.

* Expand access to affordable healthcare to families regardless of
immigration status. Clinton "believes we should let families --
regardless of immigration status -- buy into the Affordable Care Act
exchanges," according to her website.

* Continue to support a "public option." Clinton wants states to be
able to establish a public option under which people could buy into a
publicly funded health insurance plan.

* Defend the ACA. "Hillary will continue to defend the ACA against
Republican efforts to repeal it," the website said. "She'll build on it
to expand affordable coverage, slow the growth of overall health care
costs (including prescription drugs), and make it possible for providers
to deliver the very best care to patients."

* Lower out-of-pocket costs like co-pays and deductibles. "Hillary
believes that workers should share in slower growth of national
healthcare spending through lower costs," according to the website.

* Reduce the cost of prescription drugs. "Hillary believes we need to
demand lower drug costs for hardworking families and seniors."

* Transform our healthcare system to reward value and quality. "Hillary
is committed to building on delivery system reforms in the Affordable
Care Act that improve value and quality care for Americans."

Compared with the plan offered by Clinton's Democratic primary opponent,
Sen. Bernie Sanders (I-Vt.), who wants to institute a single-payer
"Medicare-for-all" program, hers is "definitely more realistic," said
Michael Sparer, PhD, JD, of Columbia University in New York City, in an
interview. However, "a lot depends on what happens to Congress as well
[if she becomes President]. If something would change in Congressional
makeup, I think she has a pretty clear fix-it agenda."

Even without such a change in Congress, "she will try to use whatever
authority under ACA to encourage states to experiment," he added.

Similarly, Elbert Huang, MD, MPH, at the University of Chicago, said he
was impressed by the level of specificity in Clinton's plan, especially
compared with those of Sanders and Republican presidential candidate
Donald Trump.

Jon Oberlander, PhD, of the University of North Carolina-Chapel Hill,
agreed in an email that, overall, Clinton's plan is "more than
realistic" -- "if we are to continue to make progress in reducing the
uninsured population, making Obamacare more affordable for Americans
with modest incomes is imperative. Politically, however, even these
incremental measures are not so easy."

However, Oberlander continued, "As for [Clinton's] public option ... its
chances of enactment in the current Congressional environment are zero.
Even if Democrats retake majorities in Congress in 2016, it would face
an uphill path to enactment."

A federally run public option, he said, "is symbolic politics, something
that liberal Democrats like that allows Clinton to counter Sanders'
single-payer proposal."

Clinton's Medicaid expansion proposal "will be incredibly tricky to pull
off politically," said David Becker, PhD, of the University of Alabama
at Birmingham School of Public Health, in an email to MedPage Today.

"Even in a state like Louisiana where Medicaid expansion will take
effect on July 1, it is somewhat unlikely that Republican senators and
representatives would support expanding federal support. This proposal
also assumes that states that have already expanded their programs will
be happy to support the extension of funding without asking for
something in return."

As to spending more money on navigators, "I'm not entirely sure this is
money well spent," Becker said. "People that are eligible but not
enrolled for public health insurance programs tend to be low-utilizers
who re-enroll when they need care. Although marketing and outreach
efforts have varied across the states, the benefits of increased
spending on these efforts are not clear."

Clinton's proposal to lower out-of-pocket costs might work with plans on
the insurance exchanges, said Alan Sager, PhD, at Boston University, but
is incompatible with the economics of private insurance.

"For private employers it's very tough today, since employers and their
benefits advisors think that higher out-of-pocket costs are the one tool
they can wield to contain their healthcare costs," Sager said in an
email. "Many economists fantasize that higher out-of-pocket costs will
somehow shoehorn size 10 healthcare into size 5 free-market competition.
And some reporters and 'consumer advocates' fantasize that better
information about price and quality will make us healthcare super-shoppers."

Sager added, "Without real cost controls -- not widely supported
politically by Americans -- out-of-pocket costs will continue to look to
many people like the only game in town" for restraining overall costs.

He also dismissed the "reward value and quality" part of Clinton's plan,
calling it "tough to do without torturing hospitals and doctors to make
them give us still more data. And they control the data so they can game
the measures of value/quality if they want."

David Howard, PhD, another Emory University scholar, told MedPage Today
that he was troubled by Clinton's proposing of new spending without
suggesting how the costs would be offset.

"Clinton promises new subsidies for people who buy insurance on the
exchanges, new subsidies to help offset out-of-pocket costs, and
additional funds to subsidize state Medicaid expansions," he wrote in an
email. "At a time when the federal government is struggling to afford
entitlements, it is irresponsible to promise new spending without
offsetting spending reductions elsewhere."

Jan Carney, MD, MPH, at the University of Vermont in Burlington, said
she is concerned about what's missing from all the candidates'
proposals, including Clinton's.

"Public health issues such as infant mortality, obesity, HIV, injuries,
homicides, and drug-related deaths all represent preventable
contributors to health care costs," she said in an email. "These
specific areas (where we do much worse than other countries) and other
areas of public health, would make a strong addition to this national
healthcare discussion."

Christopher Jones, PhD, of the Vermont Center for Clinical and
Translational Science, in Burlington, named another topic of concern:
biocybersecurity. "Health information has a longer shelf life than
financial information and when both are sold on the black market, it is
health information that commands a higher price," he said in an email.
"This will most assuredly be a concern for the Democratic candidate when
s/he gets elected."

http://www.medpagetoday.com/Washington-Watch/ElectionCoverage/56734

***


Comment by Don McCanne

Not a very exciting article. And that's the point. When you read Hillary
Clinton's proposals, they all fall under the category of mere tweaks to
our current dysfunctional system.

Tens of millions will remain uninsured; underinsurance will not be
eliminated; Medicaid would be expanded without addressing its
deficiencies in access; administrative excesses, including waste in
marketing would increase; the undocumented would be allowed in without a
way to pay for it; an ineffectual public option would continue to be
offered through Section 1332 waivers; and so forth. Lower co-pays and
deductibles along with a higher tax credit would be helpful, but to be
effective, it would require significantly higher taxes when we have a
Congress that continues to resist, on a bipartisan basis, any tax increases.

Although the title of this article indicates that the health policy
experts cited give her efforts a "passing grade," they basically do not
see much more than fine tuning of the status quo. There is no suggestion
that we could achieve reform goals of universality, affordability,
increased provider choice, greater access, greater administrative
efficiency, and optimal equity in the financing of health care.

Many of the Clinton measures proposed would further increase health care
spending while falling short on goals. That would be a shame when
instead we could place effective controls on spending through a single
payer national health program - an improved Medicare for all - while
achieving all of the listed goals of reform.


/Physicians for a National Health Program (PNHP) is a nonpartisan
educational organization. It neither supports nor opposes any candidates
for public office./

qotd: Correction: Kenneth Arrow says single payer is better

... not single page

Sorry

qotd: Kenneth Arrow says single page is better than any other system

Pro-Market
The blog of the Stigler Center at the University of Chicago Booth School
of Business
March 15, 2016
"There Is Regulatory Capture, But It Is By No Means Complete"
Interview of Kenneth J. Arrow

Kenneth J. Arrow, one of the most influential economists of the 20th
century, reflects on the benefits of a single payer health care system,
the role of government and regulatory capture.

Kenneth J. Arrow requires very little introduction. Very few people, if
any, can say they have influenced the development of economic theory in
the 20th century as deeply as Arrow, who revolutionized the field of
economics with groundbreaking contributions to general equilibrium
theory, welfare theory, social choice theory and risk. In 1972, at the
age of 51, Arrow won the Nobel Prize in Economics (sharing the prize
with John R. Hicks). Arrow was the youngest economist ever to win the
prize, a title he still holds to this day.

Born in New York in 1921, the son of Romanian-Jewish immigrants, Arrow's
life and work were profoundly influenced by the experience of growing up
during the Great Depression. Over the years, his published papers on a
wide variety of subjects, from innovation and monopolies to racial
discrimination, information and climate change. In 1963, he published
his classic paper on health care, Uncertainty and the Welfare Economics
of Health Care, which was the first to show that existing competitive
market models cannot be applied to the health care industry. The article
effectively created the field of health economics, and is still
frequently cited in debates regarding the role of non-market forces and
institutions (like government) in the health system.

*Q: looking back on your seminal 1963 paper about healthcare industry –
it seems that the American health care system has only gotten worse
since. /Some people claim that it is the worst among developed nations
in terms of cost, waste and wrong incentives to physicians, hospitals
and research, and influence of special interest groups – producing very
high rents, and little value./*

Certainly in terms of inefficiency, I don't think it has improved at
all. The system is about as inefficient, and it was pretty inefficient
then too. If we look at measurements like cost per capita, compared to
comparable countries like Canada or the UK, it got worse. The rather
reasonable attempts to improve the delivery, that is to extend health
care to more people, have led to a bigger system, and therefore more
complexity and more chance for exploitation. We talk about a price
system, but that is not what we have. What we have is a system in which
one buyer will pay ten times what other buyers will pay for similar
medical devices, or services. So the idea of a price system as the
source of efficiency fails at the most elementary level.

These things are never simple. You do want incentives for pharmaceutical
companies to generate new drugs. Developing drugs is a pretty expensive
proposition, and the failure rate is pretty high, so we have to create
incentives for companies to innovate. The problem with what's happening
now is that to some extent, because the American market is not
uncontrolled and other markets are, we are subsidizing new drugs to
other countries.

*Q: Is there a way to mitigate this problem?*

This is not a problem that's just confined to the pharmaceutical
industry, but I think it's most intense there. The question of
intellectual property goes back several hundred years. Since the 17th
century, the basic deal is that in return for the innovation, you give
[innovators] monopoly power. That's the way you pay for the upfront
costs and provide incentive. This of course gives rise to monopolies,
which is an inevitable conflict. Even Hayek was disturbed about whether
intellectual property is really property in the same sense that a house
is property.

The truth is it's very easy to rail against it, but it's not easy to
find a substitute. People have proposed substitutes from time to time,
like paying the innovator the social value of the innovation, and insist
on free competition after that. But since no one knows how to evaluate
the social value, it's not a very practical answer.

There is no easy way out of this conflict, though a better-regulated
system could help. A better bargaining position will improve matters,
but you have to be a little careful, because you don't want to hurt
innovation. What you have under the present situation is a great
incentive for health providers, hospitals and HMO, to get bigger,
because that improves their bargaining position vis-à-vis the insurance
companies.

A single payer will have control that will allow it to prevent things
like differential pricing from happening. If the government was allowed
to use its bargaining power, it would dominate. There will be
monopolies, but they would be facing a single payer. A monopoly usually
has power because it is the only one facing a large market of diverse
individuals.

I'm afraid you're talking to someone who's an "on the one hand, on the
other hand" type of person, which makes me a poor advocate.

*Q: It does sound like you are strongly in favor a single-payer system,
though. Last year you signed, along with 266 other economists, a
declaration that called on policymakers around the world to work toward
universal health coverage.*

I wouldn't say I'm strongly in favor of a single payer system. I can
find objections to it. But I still think it's better than any other
system. However, the idea of permitting private practice must not be
ruled out. Similar to the UK, there can be a single payer system which
everybody can go to, and private medical practices for those who want.
In the UK, private medicine is about 20 percent of the total, so there
is this escape valve for those who want it, but also a single payer
system that anybody can join.

*Q: Perhaps the way to fix the American health care system is simply to
adopt the UK model?*

I would say the Canadian model, rather than the UK model. But it's so
politically out of the question I don't even think about it.

*Q: So you're saying that one answer to the influence of special
interest groups in the health care system is to have the government
intervene in a major way, whether it is through a single payer system or
something more akin to the UK model?*

That's right. Of course, George Stigler would say that there could be
regulatory capture, but so far it doesn't seem to have happened really.

*Q: Doesn't the rather-muted regulatory response to phenomena like
pharmaceutical price hikes and "evergreening" – making minor tweaks to
existing formulations in order to artificially extend patents – suggest
at least a possibility of a capture?*

There's no question that every time you have interaction between
government and private interests, especially concentrated ones, they're
always going to have power. In this case, I think there's no alternative.

Medicare particularly has succeeded in imposing price regulations of a
pretty detailed nature without too much trouble. Recent regulations
regarding readmission rates for Medicare have gone through a surprising
lack of opposition. We know that other countries have also succeeded in
doing this without too many scandals, even countries that are not
thought of as models of good government.

*Q: In that 1963 paper you wrote that "the laissez-faire solution for
medicine is intolerable." 50 years later, do you still believe that to
be true?*

We don't have a laissez-faire system. The intervention of the federal
government, as measured by expenditures, is growing. It is not a private
system at all. Roughly 50 percent of health costs are paid for by the
government, and state governments are spending more and more on health.
It's crowding out education. State budget-support for education,
especially higher education, is crowded out by two things: health and
prisons. Nobody is prepared for the idea of a laissez-faire system, and
we never really had one.

https://promarket.org/there-is-regulatory-capture-but-it-is-by-no-means-complete/

Arrow, Kenneth J., "Uncertainty and the Welfare Economics of Medical
Care, The American Economic Review, December 1963:
https://www.aeaweb.org/aer/top20/53.5.941-973.pdf

***


Comment by Don McCanne

Nobody understands markets and health care better than Nobel laureate
Kenneth Arrow who wrote the classic treatise on the topic over half a
century ago. Based on his work, it is clear that the government must be
involved if we are to improve efficiency in the system as we attempt to
expand it to include everyone. So what does Kenneth Arrow think about
single payer as a model for health care?

Although he understands that there are some deficiencies in the single
payer model, he states, "it's better than any other system." He does say
that he believes that private practice should be permitted as an option,
like they have in the United Kingdom. But when asked if the United
States should adopt the UK system, he says, "I would say the Canadian
model, rather than the UK model." That's interesting in that Canada does
not permit health care to be paid for privately if it is covered by
their single payer Medicare program (although that continues to be
challenged by the Canadian privatizers).

Kenneth Arrow is not an ideologue. He is a gifted, two-handed economist
(i.e., looks at the options). He has stated that single payer is better
than any other system, and we should listen to him.

qotd: Hillary Clinton on high insurance premiums

CNN
March 13, 2016
CNN TV One Democratic Presidential Town Hall
Hillary Clinton Part

QUESTION (from Teresa O'Donnell, an office coordinator from Powell,
Ohio): I have voted for Obama, and then my health insurance skyrocketed
from $409 a month to $1,090 a month for a family of four. I know Obama
told us that we would be paying a little more, but doubling – over
doubling my health insurance cost has not been a little more. It has
been difficult to come up with that kind of payment every month. I would
like to vote Democratic, but it's cost me a lot of money, and I'm just
wondering if Democrats really realize how difficult it's been on working
class Americans to finance Obama care.

(APPLAUSE)

HILLARY CLINTON: Wow, Thank you for asking me that, because. May I ask
you, before you were buying your family health insurance in the
individual family market? Were you getting it through the employer? How
were you insured before?

QUESTION: I was purchasing it privately, because we both had bouts of
unemployment.

CLINTON: So you were going to a broker and buying a health insurance
policy.

QUESTION: Yes.

CLINTON: And in effect, it nearly tripled after you went on to the
exchange and bought a policy under the Affordable Care Act, is that right?

QUESTION: We could not do that. It was much more expensive than just
purchasing private insurance from the insurance company.

CLINTON: So you are still buying private insurance directly?

QUESTION: Yes.

CLINTON: OK. Well, first of all, let me say I want very much to get
the costs down, and that is going to be my mission, because I do think
that for many, many people, but there are exceptions like what you are
telling me, having the Affordable Care Act has reduced costs, has
created a real guarantee of insurance, because if you'd had a
pre-existing condition under the old system, you wouldn't have gotten
affordable insurance.

So it has done a lot of really good things, but, it has become
increasingly clear that we are going to have to get the costs down. And
what I would like to see happen for you and your family is that if we
can get the co-pays down, the deductibles down, get the prescription
drug costs under control, that you would find an affordable plan on your
exchange.

And one thing that I would like you to do, and I'm not saying it's going
to make a difference, but I would like you to just go shopping on that
exchange. As I understand it, Ohio has the federal exchange, is that
right, Joyce? Because they did not set up a state exchange.

So you have the federal exchange. And to go on and keep looking to see
what the prices are, because we have to get more competition back into
the insurance market. One thing that I want to work on with my friends
from Congress who are here is we've got to get more non-profits that are
capable of selling insurance back into the insurance market.

You know, Blue Cross and Blue Shield used to be non-profits. And then
they transferred themselves into for-profit companies. And there was
some effort made under the Affordable Care Act to get some competition
from non-profit institutions, some of them worked and a lot of them didn't.

I want to know what we can do, because if you could get a range of
insurers, some of who were not-for-profit companies, that would lower
costs.

So there is a number of things I am looking at. And what I want to
assure you and your family of is I will do everything I can as
president, working with members of Congress where necessary, to try to
get the costs down.

But I do want you to keep shopping, because what you are telling me is
much higher than what I hear from other families, and so I want to be
sure that if there is a better option out there for you, you're going to
be able to take advantage of it.

And then I'll work as hard as I can to get the costs down for everybody,
and that includes prescription drug costs, which are skyrocketing and
increasing costs for everything else.

(APPLAUSE)

http://cnnpressroom.blogs.cnn.com/2016/03/13/full-rush-transcript-hillary-clinton-partcnn-tv-one-democratic-presidential-town-hall/

***


Comment by Don McCanne

Hillary Clinton says that one of her proposals is to bring health care
costs down. This town hall exchange is significant because it reveals
the depth, or lack thereof, as to how she might accomplish this.

She says that she would lower co-pays and deductibles. But the question
was about high premiums, and the market is using higher deductibles and
other cost sharing to lower premiums. Lowering deductibles will cause
higher premiums, not lower.

She says that we need more non-profit insurers like Blue Cross and Blue
Shield used to be. But if you compare premiums in California for
for-profit Anthem Blue Cross and non-profit Blue Shield, they are the
same. The non-profit insurers share the same inefficiencies and
administrative excesses as the for-profits.

She says that she wants more competition in the exchanges so that less
expensive plans will be available for diligent shoppers, but, again,
lower premiums are possible only by reducing coverage - higher
deductibles, less accessible narrower networks, etc.

Private plans competing in the marketplace is what we already had before
the Affordable Care Act was passed. We merely continued the same system.
Adding exchanges did very little except to enable the administration of
subsidies and credits for lower-income individuals. For those not
eligible for government subsidies and credits, nothing was done to
control the very high costs of health care and the insurance products
that pay for that care.

Unfortunately, Hillary's proposal is more of the same. Perpetuate the
fiction of lower prices through competition while manipulating the
insurance products to have either lower premiums or poorer coverage. In
fact, included in ACA is the excise tax (Cadillac tax) which is designed
to prevent the marketing of full benefit plans. Making health care less
affordable through greater out-of-pocket cost exposure is the exact
opposite of where Clinton says she wants to take us. The problem is that
the current financing infrastructure will not allow us to go there.

If we want affordable care for everyone, we need a single payer improved
Medicare-for-all which will control costs and make the financing more
equitable.


/Physicians for a National Health Program (PNHP) is a nonpartisan
educational organization. It neither supports nor opposes any candidates
for public office./
/
/

qotd: Burden of reporting quality measures

Health Affairs
March 2016
US Physician Practices Spend More Than $15.4 Billion Annually To Report
Quality Measures
By Lawrence P. Casalino, David Gans, Rachel Weber, Meagan Cea, Amber
Tuchovsky, Tara F. Bishop, Yesenia Miranda, Brittany A. Frankel,
Kristina B. Ziehler, Meghan M. Wong and Todd B. Evensong

Abstract

Each year US physician practices in four common specialties spend, on
average, 785 hours per physician and more than $15.4 billion dealing
with the reporting of quality measures. While much is to be gained from
quality measurement, the current system is unnecessarily costly, and
greater effort is needed to standardize measures and make them easier to
report.

**

The number of quality measures directed at US health care providers by
external entities such as Medicare, Medicaid, and private health
insurance plans has increased rapidly during the past decade. These
measures, such as rates of mammography screening for women or of testing
for cholesterol or hemoglobin A1c levels for diabetes, are used to
provide publicly reported information for patients and as a basis for
financial "pay-for-performance" incentives to physicians. At least 159
measures of outpatient physician care are now publicly available. The
movement toward accountable care organizations, the federal Sustainable
Growth Rate "fix" legislation, and the private-sector Catalyst for
Payment Reform coalition will further emphasize measurement of physician
performance.

Anecdotally, dealing with these measures imposes a considerable burden
on physician practices in terms of understanding the measures, providing
performance data, and understanding performance reports from payers, but
the extent of that burden has not been quantified. We present results
from a national survey of practices representing three common physician
specialty and multispecialty practices.

From the Study Results

On average, physicians and staff spent a total of 15.1 hours per
physician per week dealing with quality measures, with the average
physician spending 2.6 hours per week and other staff spending 12.5 hours.

By far the most time — 12.5 hours of physician and staff time per
physician per week — was spent on "entering information into the medical
record ONLY for the purpose of reporting for quality measures from
external entities."

The time spent by physicians and staff translates to an average cost to
a practice of $40,069 per physician per year.

From the Discussion

There is much to gain from quality measurement, but the current system
is far from being efficient and contributes to negative physician
attitudes toward quality measures. Improving the system rapidly will be
difficult. Obstacles include the fragmented US health care system, lack
of interoperability across EHRs, lack of EHR functionalities to
facilitate retrieval of data for quality measures, the cost of change to
external entities and to providers, and opposition from vested
interests. Increasing efforts to reduce the number of measures and to
standardize their use across external entities are being made by the
National Quality Forum, the Institute of Medicine, and America's Health
Insurance Plans, as well as by federal agencies such as the Centers for
Medicare and Medicaid Services and the Agency for Healthcare Research
and Quality. Our data suggest that US health care leaders should make
these efforts a priority.

http://content.healthaffairs.org/content/35/3/401.abstract

***


Comment by Don McCanne

Quality measures in health care have proven to be burdensome, consuming
excess resources in both time and money. This study quantifies those costs.

Not only do these quality games waste resources, they have become a
significant contributor to physician burnout.

Wouldn't it be far better to devote these extra resources to improving
access to actual health care for the uninsured and underinsured who are
now being all too often left out? It would be automatic under a single
payer Medicare for all program.

qotd: Burden of reporting quality measures

Health Affairs
March 2016
US Physician Practices Spend More Than $15.4 Billion Annually To Report
Quality Measures
By Lawrence P. Casalino, David Gans, Rachel Weber, Meagan Cea, Amber
Tuchovsky, Tara F. Bishop, Yesenia Miranda, Brittany A. Frankel,
Kristina B. Ziehler, Meghan M. Wong and Todd B. Evensong

Abstract

Each year US physician practices in four common specialties spend, on
average, 785 hours per physician and more than $15.4 billion dealing
with the reporting of quality measures. While much is to be gained from
quality measurement, the current system is unnecessarily costly, and
greater effort is needed to standardize measures and make them easier to
report.

**

The number of quality measures directed at US health care providers by
external entities such as Medicare, Medicaid, and private health
insurance plans has increased rapidly during the past decade. These
measures, such as rates of mammography screening for women or of testing
for cholesterol or hemoglobin A1c levels for diabetes, are used to
provide publicly reported information for patients and as a basis for
financial "pay-for-performance" incentives to physicians. At least 159
measures of outpatient physician care are now publicly available. The
movement toward accountable care organizations, the federal Sustainable
Growth Rate "fix" legislation, and the private-sector Catalyst for
Payment Reform coalition will further emphasize measurement of physician
performance.

Anecdotally, dealing with these measures imposes a considerable burden
on physician practices in terms of understanding the measures, providing
performance data, and understanding performance reports from payers, but
the extent of that burden has not been quantified. We present results
from a national survey of practices representing three common physician
specialty and multispecialty practices.

From the Study Results

On average, physicians and staff spent a total of 15.1 hours per
physician per week dealing with quality measures, with the average
physician spending 2.6 hours per week and other staff spending 12.5 hours.

By far the most time — 12.5 hours of physician and staff time per
physician per week — was spent on "entering information into the medical
record ONLY for the purpose of reporting for quality measures from
external entities."

The time spent by physicians and staff translates to an average cost to
a practice of $40,069 per physician per year.

From the Discussion

There is much to gain from quality measurement, but the current system
is far from being efficient and contributes to negative physician
attitudes toward quality measures. Improving the system rapidly will be
difficult. Obstacles include the fragmented US health care system, lack
of interoperability across EHRs, lack of EHR functionalities to
facilitate retrieval of data for quality measures, the cost of change to
external entities and to providers, and opposition from vested
interests. Increasing efforts to reduce the number of measures and to
standardize their use across external entities are being made by the
National Quality Forum, the Institute of Medicine, and America's Health
Insurance Plans, as well as by federal agencies such as the Centers for
Medicare and Medicaid Services and the Agency for Healthcare Research
and Quality. Our data suggest that US health care leaders should make
these efforts a priority.

http://content.healthaffairs.org/content/35/3/401.abstract

***


Comment by Don McCanne

Quality measures in health care have proven to be burdensome, consuming
excess resources in both time and money. This study quantifies those costs.

Not only do these quality games waste resources, they have become a
significant contributor to physician burnout.

Wouldn't it be far better to devote these extra resources to improving
access to actual health care for the uninsured and underinsured who are
now being all too often left out? It would be automatic under a single
payer Medicare for all program.

qotd: ‘Cadillac tax’ hits middle class hardest

International Journal of Health Services
Online March 9, 2016
The "Cadillac Tax" on Health Benefits in the United States Will Hit the
Middle Class Hardest
Refuting the Myth That Health Benefit Tax Subsidies Are Regressive
By Steffie Woolhandler, David U. Himmelstein

Abstract

U.S. employment-based health benefits are exempt from income and payroll
taxes, an exemption that provided tax subsidies of $326.2 billion in
2015. Both liberal and conservative economists have denounced these
subsidies as "regressive" and lauded a provision of the Affordable Care
Act — the Cadillac Tax — that would curtail them. The claim that the
subsidies are regressive rests on estimates showing that the affluent
receive the largest subsidies in absolute dollars. But this claim
ignores the standard definition of regressivity, which is based on the
share of income paid by the wealthy versus the poor, rather than on
dollar amounts. In this study, we calculate the value of tax subsidies
in 2009 as a share of income for each income quintile and for the
wealthiest Americans. In absolute dollars, tax subsidies were highest
for families between the 80th and 95th percentiles of family income and
lowest for the poorest 20%. However, as shares of income, subsidies were
largest for the middle and fourth income quintiles and smallest for the
wealthiest 0.5% of Americans. We conclude that the tax subsidy to
employment-based insurance is neither markedly regressive, nor
progressive. The Cadillac Tax will disproportionately harm families with
(2009) incomes between $38,550 and $100,000, while sparing the wealthy.

http://joh.sagepub.com/content/early/2016/03/08/0020731416637163.abstract

PNHP press release:
http://www.pnhp.org/news/2016/march/'cadillac-tax'-on-health-benefits-will-hit-middle-class-hardest-study

***


Comment by Don McCanne

The "Cadillac tax" is an excise tax on premiums of more expensive
employer-sponsored health plans. It was included in the Affordable Care
Act partly as a revenue source to help pay for ACA, partly to offset the
tax subsidies for employer-sponsored insurance that were more generous
for higher income individuals, and partly to reduce the incentive to
purchase more insurance than necessary under the theory that making
patients more sensitive to health care costs will prevent spending on
supposedly excessive health care services (certainly a contentious point).

Because of the high costs of health care, we do need funding mechanisms
that result in a transfer to those less able to pay. The Cadillac tax is
a problem because, instead of disproportionately assessing the very
wealthy, it impacts primarily working families. Not only is the tax
unfair, the health plans will likely have their benefits reduced in an
effort to escape the taxes.

In a PNHP press release (link above), Steffie Woolhandler, one of the
co-authors of the report, stated, "Taxpayers should be paying directly
for health care through Medicare-for-All, not indirectly through tax
subsidies to private insurance. However, removing the tax subsidies – as
Obamacare will do – without setting Medicare-for-All in place is a step
backwards. It's shameful that economists have provided cover for this
tax that will hit middle-class families and largely spare the wealthy."

The Cadillac tax is just one more example of the flawed policy patches
required simply because the architects of reform decided to build on our
current dysfunctional, fragmented financing system instead of replacing
it with a more efficient, effective and equitable single payer
Medicare-for-all program. That doesn't mean that we have to live with
our highly flawed system. We can still change it.

qotd: Single payer in the Democratic debate

The New York Times
March 10, 2016
Transcript of the Democratic Presidential Debate in Miami

Excerpt:

HILLARY CLINTON: But let me say this. Senator Sanders has talked about
free college for everybody. He's talked about universal, single payer
health care for everybody. And yet, when you ask questions, as many of
us have and more importantly, independent experts, it's very hard to get
answers.

And a lot of the answers say that this is going to be much more
expensive than anything Senator Sanders is admitting to. This is going
to increase the federal government dramatically. And, you know, my dad
used to say, if it sounds too good to be true, it probably is.

BERNIE SANDERS: All right. Let me respond to this.

(APPLAUSE)

CLINTON: And we deserve answers about how these programs will actually
work and how they would be paid for.

SANDERS: I want you all to think. What Secretary Clinton is saying is
that the United States should continue to be the only major country on
earth that doesn't guarantee health care to all of our people.

(APPLAUSE)

SANDERS: I think if the rest of the world can do it, we can. And by the
way, not only are we being ripped off by the drug companies, we are
spending far, far more per capita on health care than any other major
country on earth.

You may not think the American people are prepared to stand up to the
insurance companies or the drug companies. I think they are. And I think
we can pass...

RAMOS: Thank you senator.(CROSSTALK)

(APPLAUSE)

CLINTON: This is a very important point in this debate, because I do
believe in universal coverage. Remember, I fought for it 25 years ago. I
believe in it. And I know that thanks the Affordable Care Act, we are
now 90 percent of universal coverage. I will build on the Affordable
Care Act. I will take it further. I will reduce the cost.

But I just respectfully disagree. Between the Republicans trying to
repeal the first chance we've ever had to get to universal health care,
and Senator Sanders wanting to throw us into a contentious debate over
single-payer, I think the smart approach is build on and protect the
Affordable Care Act. Make it work. Reduce the cost.

(APPLAUSE)

SANDERS: I'm on the committee, I know a little bit about this, I'm on
the committee, Health, Education, Labor Committee that helped write the
Affordable Care Act. And it has done a number of good things. But when
Secretary Clinton says, well, 90 percent of the people have insurance,
yes, not really.

Many of you may have insurance, but you have outrageously high
deductibles and co-payments. One out of five Americans cannot afford the
prescription drugs their doctors prescribe. Elderly people are cutting
their pills in half.

I do believe that we should do what every other major country on earth
does, and I think when the American people stand up and fight back, yes,
we can have it, a Medicare for all health care system.

(APPLAUSE)

http://www.nytimes.com/2016/03/10/us/politics/transcript-democratic-presidential-debate.html

***

Hillary Clinton's health care proposals:
https://www.hillaryclinton.com/issues/health-care/

Bernie Sanders' health care proposals:
https://berniesanders.com/issues/medicare-for-all/

Donald Trump's health care proposals:
https://www.donaldjtrump.com/positions/healthcare-reform

***


Comment by Don McCanne

Although today's message does not seem appropriate for this forum since
it is political and our agenda is on policy, actually it is apropos
since it represents a disagreement over single payer policy, even though
framed as a political debate.

Of the three candidates for the presidential nomination who have
mentioned single payer, Donald Trump has recently clarified his stance
by releasing a health reform proposal that made no mention of single
payer. So the debate over single payer is really between the two
remaining Democratic candidates - Hillary Clinton and Bernie Sanders.

In this election season, single payer is a political issue. Bernie
Sanders is the first leading presidential candidate to support a bona
fide single payer Medicare for all. Hillary Clinton continues to support
private health plans in a multi-payer system, originally as her managed
competition model 25 years ago, and now as incremental expansion of the
Affordable Care Act. She opposes single payer since it would eliminate
the private insurers.

The politics have been somewhat bizarre. The Republicans have not had to
take a high profile position against single payer since many in the
progressive community have done their work for them. Although often
presented as policy arguments, the substance of the opposing arguments
by these progressives has been political. We can only speculate that
their reasons have more to do with their support of a particular
political candidate than they do with their position on single payer. In
fact, the leading analysis being used to oppose single payer was written
by an academic who has authored other single payer proposals.
Fortunately, many others in the progressive community have stood up to
insist that single payer be accurately portrayed.

Instead of trying to wade through the proxy arguments of these outside
experts, it would be better to listen to the words of the two candidates
themselves. What did they have to say in last night's debate?

Sanders reiterated his views on a truly universal Medicare for all,
whereas Clinton reiterated her views on rejecting single payer and
building on the Affordable Care Act which she mentions has us at 90
percent coverage. These are policy issues.

When you look at their respective plans (links above), you can see that,
from a policy perspective, Sanders' proposal automatically covers
everyone, whereas Clinton's proposals barely nudge us in that direction
but cannot come close to universal coverage. In addition, Sanders points
out that the current private insurance products frequently do not meet
the needs of those insured because of the exposure to high out-of-pocket
costs. Again, regardless of the politics, these are fundamental policy
issues that often determine whether or not people will receive the
health care that they need.

We'll continue to speak out on policy and leave it to others to get the
politics right.


/Physicians for a National Health Program (PNHP) is a nonpartisan
educational organization. It neither supports nor opposes any candidates
for public office./