qotd: Paying the deductible year after year

Medical Care Research and Review
June 2015
New Evidence on the Persistence of Health Spending
By Richard A. Hirth, Teresa B. Gibson, Helen G. Levy, Jeffrey A. Smith,
Sebastian Calónico, Anup Das

Abstract

Surprisingly little is known about long-term spending patterns in the
under-65 population. Such information could inform efforts to improve
coverage and control costs. Using the MarketScan claims database, we
characterize the persistence of health care spending in the privately
insured, under-65 population. Over a 6-year period, 69.8% of enrollees
never had annual spending in the top 10% of the distribution and the
bottom 50% of spenders accounted for less than 10% of spending. Those in
the top 10% in 2003 were almost as likely (34.4%) to be in the top 10%
five years later as one year later (43.4%). Many comorbid conditions
retained much of their predictive power even 5 years later. The
persistence at both ends of the spending distribution indicates the
potential for adverse selection and cream skimming and supports the use
of disease management, particularly for those with the conditions that
remained strong predictors of high spending throughout the follow-up period.

http://mcr.sagepub.com/content/72/3/277.abstract?etoc

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AcademyHealth Blog
July 9, 2015
High health spending is more persistent than you might think
By Austin B. Frakt, PhD

You get hit with a major health condition and your health care needs and
spending spikes. A lot. Welcome to the 10% club, whose members spend at
least $30,000 on health care in a year. Yeah, most of it is covered by
insurance, but selecting the plan with the $2,500 deductible you blew
through (not to mention the thousands more in copayments) looks like a
bad idea in hindsight.

It could be worse. It could happen to you next year, and the year after,
and the year after that, and so on. Will it?

This is a question of health spending persistence. And, as surprising as
it may sound, we don't know a lot about it, at least for the working age
population.

Richard Hirth and colleagues recently were able to take an analysis of
persistence for workers and their dependents a lot further, and using
recent data. They looked at six years of health spending data
(2003-2008) for a sample of millions of individuals with coverage from
over 100 medium and large employers. One of their findings is that at
least one in every three high spenders in a given year will be a high
spender in any of the next five years. (Here, high spender is defined as
in the top 10% of the annual spending distribution.) I don't know what
your prior is, but this is a much higher level of persistence than I
expected.

If you're unlucky enough to get hit with a very costly health condition,
consider yourself relatively lucky if it's not highly persistent. The
new work by Hirth and colleagues shows that such persistence is
surprisingly common and remarkably long. This is how sickness saps
savings, for those with coverage that comes with high enough deductibles
and copayments. Today, we call that "insurance." Is it?

http://blog.academyhealth.org/high-health-spending-is-more-persistent-than-you-might-think/

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Comment by Don McCanne

We already know that high deductibles and other cost sharing can result
in financial hardships for individuals who develop major medical
problems. But how many face the additional burden of having to pay the
high deductibles in the years following? This study provides an answer.

Of health plan members or their family members who were in the top 10
percent of spending in a given year, 43 percent were still in the top 10
percent the following year, and an astonishing 34 percent were still in
the top 10 percent five years later.

These are workers and their family members - largely middle-income
Americans - who had employer-sponsored health plans. These are the plans
that the Affordable Care Act was designed to protect. Now that employers
are are switching to "consumer-directed" high-deductible health plans,
these plans are devastating to the personal finances of these families
that must meet the high-deductibles and other cost sharing year after
year. Forget retirement funds, college funds, vacations, and the like
and plan to spend time with bill collectors and bankruptcy referees.

When you think about the financial protection that you should be
receiving from your health plan, it is deplorable that one-third of
those who have the greatest needs for health care are exposed to years
of recurrent, persisting financial burdens simply because of the
fundamentally flawed design of our private health plans. Austin Frakt is
right to question if this is even "insurance."

The authors of the study suggest that the solution is found in disease
management. What? Disease management only tweaks spending on major
medical problems and would have no impact on the high-deductibles that
patients would have to pay before their coverage kicks in. Let's get real.

A single payer system with first dollar coverage would eliminate the
burden of high medical bills that these unfortunate individuals face
under our current, dysfunctional health care financing system. Yes, they
need qualified health professionals to help them manage their diseases,
but that's a function of the health care delivery system. Intrusive,
private, third-party money managers need to get out of the way.

qotd: Seidman and Pollack: ACA versus Medicare for All

Journal of Health Politics, Policy and Law
August 2015
Point-Counterpoint


The Affordable Care Act versus Medicare for All
By Laurence Seidman

Abstract

Many problems facing the Affordable Care Act would disappear if the
nation were instead implementing Medicare for All — the extension of
Medicare to every age-group. Every American would be automatically
covered for life. Premiums would be replaced with a set of Medicare
taxes. There would be no patient cost sharing. Individuals would have
free choice of doctors. Medicare's single-payer bargaining power would
slow price increases and reduce medical cost as a percentage of gross
domestic product (GDP). Taxes as a percentage of GDP would rise from
below average to average for economically advanced nations. Medicare for
All would be phased in by age.

http://jhppl.dukejournals.org/content/early/2015/06/09/03616878-3150160.full.pdf


Medicare for All — If It Were Politically Possible — Would Necessarily
Replicate the Defects of Our Current System
By Harold Pollack

Abstract

Medicare for All, ideally implemented, could offer powerful advantages
over our current health care financial system. Unfortunately, the
political obstacles to such a system are formidable and are likely to
remain so for decades. More to the point, a politically viable
single-payer system would not replace our currently dysfunctional health
care politics. It would be a product of that same legislative process
and political economy and thus be disfigured by the same interest group
politics, path dependence, and fragmentation that Laurence Seidman
rightly laments.

From the text

Laurence Seidman's brief for single payer will be congenial to many
JHPPL readers, and for good reasons. As someone who has spent the past
seven years advocating for the Affordable Care Act (ACA), I must concede
that a well-conceived, well-implemented Medicare for All system would
offer powerful advantages over our current health care financing system.

Medicare for All would be fundamentally more disruptive for tens of
millions of people. As a matter of basic accounting, a huge reform that
creates millions of winners creates millions of losers, too: affluent
workers receiving generous tax expenditures, too many constituencies to
count across the supply side of the medical economy who are likely to be
squeezed in a new system, individuals subject to small or large tax
increases, to name a few. This list includes some of the most powerful
and organized constituencies in American politics. They would have to be
accommodated in complex, sometimes unappetizing, ways.

Medicare for All cannot offer itself as the replacement of our
depressing health politics. It would have to arise as another product of
that very same process, passing through the very same legislative choke
points, constrained by the very same path dependencies that bedevil the ACA.

For the foreseeable future, the main health policy challenge is to make
the ACA work.

I hope that the public option returns in some form as a viable choice
within the new marketplaces. One possibility would be to allow
individuals over the age of sixty the option of purchasing public
insurance coverage. Many Americans would welcome this option, which
would also provide needed competition and market discipline of providers.

Policies like this may someday pave the way to a Medicare for All
system. More likely, these would allow the possibility of public
insurance carving out a complicated coexistence with private coverage.
This may be the best outcome. If we keep our shoulder to the wheel in
pursuing the messy, frustratingly incremental process of health reform,
we can create a more humane and disciplined health system. That's no
small accomplishment. I'm not sure what else we can do either.

http://jhppl.dukejournals.org/content/early/2015/06/09/03616878-3150172.full.pdf

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The New Republic
August 2009
Will Doctors Be An Impediment To Reform?
By Harold Pollack

On the left, there are Physicians for a National Health Care Program. (I
happen to dislike PNHP leaders' unhelpful stance in the current debate,
but that is another story.)

http://www.drsforamerica.org/blog/-will-doctors-be-an-impediment-to-reform-hat-tip-h-pollack--260

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The Incidental Economist
December 3, 2011
How not to argue about health policy
By Harold Pollack

One can make a principled decision to withdraw from the incremental
politics of American health policy. I understand why single-payer
advocates are tempted to take this course. Most do so with greater
awareness of the attendant tensions and costs. PNHP was a sideline, not
always very civil participant in the political fight to enact and
preserve health care reform. Indeed its leaders denigrate important
provisions of ACA that expand access for 32 million people and protect
millions against catastrophic financial risks. I wish the group would
talk and act rather differently in this debate.

http://theincidentaleconomist.com/wordpress/weekend-edition-how-not-to-argue-about-health-policy/

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Comment by Don McCanne

This pair of Point-Counterpoint articles from the Journal of Health
Politics, Policy and Law renew the debate over the Affordable Care Act
versus Medicare for All. Laurence Seidman presents the solid case for
the policy superiority of the single payer Medicare for All model while
Harold Pollack also acknowledges the superior policies of single payer,
yet rejects it based on our dysfunctional health care politics.

Policy is not the issue in this particular debate; it is the politics.
You do not compromise clearly superior policy to conform with the
dysfunctional politics, but rather you change the politics in order to
support optimal policy.

PNHP's mission is to educate the public on the single payer model - an
essential step in changing the politics. Harold Pollack instead supports
incremental changes, such as those of ACA, as a means of negotiating the
politics. Both approaches are reasonable and neither should be
completely rejected in deference to the other one. The ultimate goal
should always be the utopian version of single payer, and every effort
must be made to achieve that goal. In the interim, incremental measures
that improve health care should be supported. But it is important to
continue to inform the public on the inadequacies of these interim
measures that perpetuate hardship and suffering, lest inertia set in.

Harold Pollack writes about "pursuing the messy, frustratingly
incremental process of health reform," and says, "I'm not sure what else
we can do." Yet he concedes that "a well-conceived, well-implemented
Medicare for All system would offer powerful advantages over our current
health care financing system." He says that he wishes PNHP "would talk
and act rather differently in this debate." This defies any
interpretation other than that PNHP should abandon their mission of
single payer and join him in supporting his incremental pathway to
reform. Yet he suggests that "the best outcome" may be "the possibility
of public insurance carving out a complicated coexistence with private
coverage." PNHP emphatically disagrees that this would be the best outcome.

Recognizing that policy goals must not be compromised and that the
politics must change, we wish the incrementalists "would talk and act
rather differently in this debate." After all, we do share the ultimate
goal of health care justice for all.

qotd: Baicker and Chandra on cost sharing

JAMA Internal Medicine
July 2015
The Veiled Economics of Employee Cost Sharing
By Katherine Baicker, PhD; Amitabh Chandra, PhD

This year, once again, millions of people in the United States who get
health insurance through their employers received the unwelcome news
that cost sharing would increase.

At first blush, it might seem that cost sharing is just a way of
dividing up whether employers or employees pay the bills, but decades of
evidence show that lower cost sharing leads patients to consume more
care of limited health value—such as unnecessary tests—and that this
consumption leads to higher health insurance premiums. Cost sharing can
thus mitigate the premium increases that would be needed to expand
coverage to new services—many of which may particularly benefit patients
with serious illnesses.

The potential usefulness of cost sharing does not, however, mean that we
would all be better off with across-the-board increases in cost sharing.
First, insurance provides crucial financial protection against
potentially catastrophically high health expenditures. Patient cost
sharing erodes the value of the risk protection that health insurance
provides. The benefit of reducing the overuse of medical services that
is inherent in subsidizing health care must be balanced against the cost
of losing financial protection when it really matters. A
disproportionate share of health spending is for a relatively small
number of people requiring very expensive care. Any insurance plan with
adequate protection against catastrophic out-of-pocket spending (such as
an annual out-of-pocket maximum of $10 000) will leave a substantial
share of health care expenditures in excess of that maximum, and thus
not subject to cost sharing. Second, as we have discussed, a given
dollar amount of cost sharing has different implications for people with
different incomes, suggesting that optimal cost sharing might increase
with income. At present, this feature is seen more in cost-sharing
subsidies for low-income enrollees in some public plans than in
employer-sponsored health insurance. Third, patients facing higher
deductibles and copays may reduce care of high value (such as adherence
to effective medications) along with the care of low value (such as
tests that are not recommended). The evidence suggests that more
sophisticated cost sharing, such as higher copays for care of
questionable health benefit, might encourage higher-value health care
spending and stem the growth of health insurance premiums. Examples are
"carve-outs" that protect preventive care from copayments and
"value-based" insurance plans that subsidize medications that help keep
patients out of the hospital.

These caveats do not mean that cost sharing should be eschewed as a tool
to improve value—but rather that cost sharing should be deployed in a
more nuanced way than it is now. If enabled by regulatory changes and
health care system reforms, cost sharing based on the value of care and
scaled by income could improve health, slow increases in health
insurance premiums, and increase take-home pay.

http://archinte.jamanetwork.com/article.aspx?articleID=2289129

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Health Affairs
July 2015
Tracking Trends In Provider Reimbursements And Patient Obligations
By Katherine Hempstead, Iyue Sung, Joshua Gray and Stewart Richardson

ACAView attempts to capture how health reform affects the day-to-day
practice of community-based medicine. The project has collected data on
more than seventeen million visits to nearly 15,000 providers in 2013
and 2014.

Patients' payment obligations rose for all specialties, and deductibles
were the largest category of increased patient spending.

From the Conclusion

Coverage expansion in the United States has benefited millions of
people. However, the high out-of-pocket expenses that many people are
facing may cause some to forgo nonurgent care. The overall implications
for providers are unclear. Increased bad debt is one potential outcome.

It will be important to monitor changes in patient obligation and
provider reimbursement as the effects of coverage expansion, risk
contracting, and narrow networks continue to unfold. The degree to which
these changes may affect access to care for low-income insured patients
and debt levels for providers in particular deserves close scrutiny.

http://content.healthaffairs.org/content/34/7/1220.abstract

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Comment by Don McCanne

Can we balance the benefit of spending reductions associated with high
deductibles and other cost sharing with the potential reduction in
beneficial health care services that can result from patient exposure to
out-of-pocket expenses as a prerequisite for health care access? Perhaps
a better question is, should we?

Although Katherine Baicker and Amitabh Chandra support high deductibles
and other cost sharing as a means to slow the increase in health care
spending, they do recognize the problems with this approach to cost
containment, for example: 1) the erosion of protection against the
financial risk of essential health care services, 2) the ineffectiveness
of cost sharing for most of health care spending - the catastrophic
costs of the minority who have major health care problems, 3) the
negative impact of cost sharing on those with lower incomes, and 4) the
decrease in the use of high value care because of the financial barriers
of cost sharing.

Rather than abandoning their support of the consumer-directed approach
of increasing patient sensitivity to health care costs through
out-of-pocket cost sharing, Baicker and Chandra recommend improving cost
sharing by taking into consideration income levels, chronic disease
status, and the relative value of the health care services provided. As
if applying cost sharing was not already administratively burdensome,
imagine applying these three adjustments to each patent's cost sharing.
Even then, the benefits of these adjustments would be only relative
since you cannot eliminate 100 percent of the financial hardships, nor
ensure that patients would receive 100 percent of the essential health
care services that they need.

When you consider that most health care spending (about 80 percent) is
not subject to cost sharing, you really have to give more thought as to
whether this decades-long experiment in cost sharing is worth continuing.

It is not as if we don't have a far better option. With a single payer
system, monopsonistic price setting would obviate the need for patient
price shopping. So then the only purpose for cost sharing would be to
reduce the use of "low value" services. Beneficial services that some
may consider to be of low value, but not of no value, are commonplace
today, and who is to say that we should establish policies that impair
access to that care? On the other hand, services that clearly have
absolutely no diagnostic nor therapeutic benefit would simply be
excluded from coverage.

The system would be 100 percent effective in preventing financial
hardship due to medical bills and 100 percent effective in removing
financial access barriers, while slowing the rate of increases in health
care spending down to that of other industrialized nations. You would
have the cost containment that we need without the injustices and
profound administrative waste of our fragmented, multi-payer system.

Perhaps Harvard's Baicker and Chandra, with their PhDs, should sit down
with Himmelstein and Woolhandler, with their MDs, and have a frank
discussion of priorities in reform - like placing the patient first, as
a single payer system would.