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

United States Census Bureau

September 2016

Health Insurance Coverage in the United States: 2015

By Jessica C. Barnett and Marina Vornovitsky

Highlights (excerpts)

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

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

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

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

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

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

https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-257.pdf

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Income and Poverty in the United States: 2015

By Bernadette D. Proctor, Jessica L. Semega, and Melissa A. Kollar

Highlights (excerpts)

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

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

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

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

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

Income Inequality

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

https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-256.pdf

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PNHP release on Census health insurance report:

http://www.pnhp.org/news/2016/september/stronger-rx-than-obamacare-needed-to-cover-everyone-and-control-costs-physician-

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Comment by Don McCanne

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

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

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

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

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

The New York Times

September 10, 2016

Dropout by Dartmouth Raises Questions on Health Law Cost-Savings Effort

By Robert Pear

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

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

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

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

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

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

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

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

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

http://www.nytimes.com/2016/09/11/us/politics/dropout-by-dartmouth-raises-questions-on-health-law-cost-savings-effort.html

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Health Affairs

January 2007 (online December 2006)

Creating Accountable Care Organizations: The Extended Hospital Medical Staff

By Elliott S. Fisher, Douglas O. Staiger, Julie P.W. Bynum and Daniel J. Gottlieb

Abstract

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

http://content.healthaffairs.org/content/26/1/w44.abstract

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Quote of the Day

October 28, 2010

How does the Affordable Care Act define ACOs?

Comment by Don McCanne

Excerpt

So how do ACOs achieve higher quality and lower cost?

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

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

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

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

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

http://www.pnhp.org/news/2010/october/how-does-the-affordable-care-act-define-acos

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Quote of the Day

March 28, 2011

Elliott Fisher questions whether ACOs will work

Comment by Don McCanne

Excerpt

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

http://www.pnhp.org/news/2011/march/elliott-fisher-questions-whether-acos-will-work

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Comment by Don McCanne

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

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

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

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

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

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

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

Employee Benefit Research Institute

Issue Brief

August 2016

The Impact of an HSA-Eligible Health Plan on Health Care Services Use and Spending by Worker Income

By Paul Fronstin, Ph.D. and M. Christopher Roebuck, Ph.D.

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

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

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

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

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

https://www.ebri.org/pdf/briefspdf/EBRI_IB_425.Aug16.HSAs.pdf

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Comment by Don McCanne

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

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

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

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