Physicians For a National Health Care Plan
Bill by Sen. Mark Begich (D-AK) would expand employer health coverage
Council for Affordable Health Coverage, August 18, 2014
The Council for Affordable Health Coverage today released an estimate by Avalere Health LLC showing that legislation to permit a new, less expensive tier of insurance coverage under the Affordable Care Act would lead to an additional 350,000 Americans keeping their employer sponsored health insurance in 2016. Because fewer people would lose their coverage, taxpayers would spend $5.8 billion less on exchange subsidies, while employers would pay about $5.5 billion less in penalties under the employer mandate.
****Estimated Impact on the Federal Deficit and Insurance Premiums from Creating a New Health Plan Tier with an Actuarial Value Level of 50 Percent
Avalere, June 6, 2014
The Council for Affordable Health Coverage requested Avalere Health to estimate the impact on the federal deficit of a legislative proposal that would allow a new type of plan tier for consumers in the new health insurance marketplace as well as small employers. Plans on this new tier would have an actuarial value (AV) of 50 percent. As originally passed in the Affordable Care Cat (ACA), commercial health insurance plans in the individual and small group markets must cover at least 60 percent of the estimated health costs of enrollees starting in 2014.
We estimate that creating a new tier with an AV of 50 percent would reduce the federal deficit by $0.3 billion between FY 2015 and FY 2024. This estimate assumes that the new tier would be available to consumers starting in plan year 2016. The reduction is due to a net $5.8 billion decrease in subsidies paid by the federal government for individuals in the new health insurance marketplace, primarily due to an increase in the estimated number of employers who will offer affordable coverage to employees. Counteracting this reduction in federal spending is an estimated $5.5 billion decrease in revenues collected by the federal government, again primarily due to fewer employers paying the employer mandate penalty.
We also estimate that the premium for the new plan with a 50 percent AV would be nearly 18 percent lower than the premium for an average bronze tier plan in 2016. The lower premium would result in a slight increase in estimated enrollment in the new marketplace.
****‘Copper plans’ could cut subsidies, lower deficit, but would consumers bite?
By Paul Demko
Modern Healthcare, August 19, 2014
Allowing cheaper health plans designed to cover just half of medical costs to be sold on the exchanges would result in 350,000 additional individuals enrolling in coverage in the next decade, according to an analysis by Avalere Health.
The lower actuarial threshold also would convince some employers to maintain coverage, according to the Avalere analysis. The Society of Actuaries has predicted that 3% of employers will stop providing coverage under the ACA. But if the copper plan option existed, Avalere estimates that 4% of that group would continue offering coverage to workers. That increase represents just 0.1% of the current employer-sponsored market.
America’s Health Insurance Plans, the primary industry group, supports allowing what are often referred to as “copper plans” to be sold on the exchanges. The organization has argued that it would entice more people—particularly younger, healthier individuals – into the marketplaces.
One of the major problems with the Affordable Care Act is that it has established underinsurance as a new standard. It was bad enough when the decision was made to allow insurers to offer products that covered an average of only 60 percent of estimated health care costs, but now there is a serious proposal to reduce that to 50 percent. What does this do?
From the insured’s perspective, it would fulfill the requirement to purchase insurance, while keeping premiums as low as possible, with a tradeoff that you must accept the risk of paying on average the other half of health care costs that the insurer does not pay for (plus all costs for services not covered and for the balance of charges for out-of-network services). For the majority, such costs would create a financial hardship should significant medical problems develop – the reason this is labeled underinsurance.
From the insurers’ perspective, while discounting the premium by only 18 percent below that of a 60 percent actuarial value bronze plan, they can attract healthier individuals who are more likely to be willing to gamble that they may not need much health care. This would be a great deal for the insurers.
A 50 percent actuarial value copper plan would be appealing to libertarian conservatives for a few reasons. It uses a consumer-directed approach to health care purchasing by exposing the patient to significant out-of-pocket costs, requiring the patient to became an informed price shopper (even though the out-of-pocket expenses may not be affordable). It also allows consumers to exercise choice over market originated insurance products, rather than defaulting to a more comprehensive single payer program administered by the government that would actually work. Furthermore, the Avalere study shows that adding a copper level choice would reduce the federal deficit by about 30 million dollars a year. Little does it matter that 30 million dollars would not even qualify as a footnote in our federal budget, it is fulfilling an ideological goal of reducing federal spending that is compelling to conservatives.
What about fulfilling the goal of advocates of health care justice? Obviously this proposal was not written for them. Creating a plan that exposes the sick to financial hardship is the opposite of what insurance should be doing.
Rather than talking about insurance, we should be talking about prepaid health care – removing the financial barriers to the health care that you need, when you need it. This is precisely what a single payer national health program would do.
I can’t wait to see their proposal for a health plan with a 10 percent actuarial value. You doubt it? If AHIP can get clearance for private insurers to produce such a plan and have it count as fulfilling the insurance requirement thereby avoiding the penalties for being uninsured, I guarantee you that they will find a market for it. It would be ideal for insurers since it would eliminate 90 percent of their risk while allowing them to continue to sell us a profusion of wasteful administrative services. And our bureaucrats? “If that’s a product that the people want…”
By Lawrence P. Casalino, Michael F. Pesko, Andrew M. Ryan, Jayme L. Mendelsohn, Kennon R. Copeland, Patricia Pamela Ramsay, Xuming Sun, Diane R. Rittenhouse and Stephen M. Shortell
Health Affairs, August 13, 2014 (online)
The Affordable Care Act and initiatives by private health insurance companies are driving major changes in the ownership of physician practices, the incentives practices face to improve the care they provide, and the processes practices use to improve care. Many practices are consolidating into larger medical groups. Many others are shifting from physician ownership to hospital ownership. Practices are increasingly subjected to pay-for-performance and public reporting programs and are being encouraged to implement processes used in patient-centered medical homes.
Ambulatory care–sensitive admissions are defined by the Agency for Healthcare Research and Quality (AHRQ) as admissions for conditions such as congestive heart failure for which good primary care may prevent admission.
In our large national study of small and medium-size primary care–based practices, practices with 1–2 physicians had ambulatory care–sensitive admission rates that were 33 percent lower than those of the largest small practices (having 10–19 physicians). Practices with 3–9 physicians also had rates that were lower than the rates for the largest small practices, although slightly higher than the rates for practices with 1–2 physicians. These findings were unexpected, since small practices presumably have fewer resources to hire staff to help them implement systematic processes to improve the care they provide. Larger practices did have higher patient-centered medical home scores than the practices with 1–2 physicians (though not higher than those with 3–9 physicians) and so appear to use more such processes, but these higher scores were not associated with lower ambulatory care–sensitive admission rates in multivariate analyses.
It is possible that small practices have characteristics that are not easily measured but result in important outcomes, such as fewer ambulatory care–sensitive admissions. For example, there is evidence that patients in smaller practices are better able to get appointments when they want them and better able to reach their physician via telephone, compared to larger practices. It is also possible that physicians, patients, and staff know each other better in small practices, and that these closer connections result in fewer avoidable admissions.
We cannot fully exclude the possibility that the largest practices, which had a somewhat higher percentage of specialists, had patients who were sicker and, therefore, more likely to have an ambulatory care–sensitive admission. However, we controlled for the percentage of specialists in practices and for patients’ demographic characteristics and comorbidities, and we found that the smallest practices cared for a significantly higher percentage of dual-eligible patients and for patients with more comorbidities.
Physician-owned practices had lower ambulatory care–sensitive admission rates than hospital-owned practices in both bivariate and multivariate analyses—approximately 13 percent lower in multivariate analysis.
Hospital ownership would be expected to result in a lower ambulatory care–sensitive admission rate if hospitals provided additional resources to practices to hire staff and implement systematic processes to improve care. In fact, consistent with prior studies, we found that hospital-owned practices used more patient-centered medical home processes than physician-owned practices. But these practices nevertheless had higher ambulatory care–sensitive admission rates. Hospital acquisition of a practice might disrupt longstanding referral relationships between the practice’s physicians and specialists outside the practice and might lead to other changes that result in worse performance by the practice and higher ambulatory care–sensitive admission rates.
We did not find an association between the ambulatory care–sensitive admission rate and the use of patient-centered medical home processes or between that rate and pay-for-performance or public reporting incentives. Prior research has resulted in inconsistent findings regarding the relationship between patient-centered medical homes and physician practice performance and between incentives and physician practice performance.
Physicians in small practices have no negotiating leverage with health insurers, so insurers typically pay them much lower rates for their services than they pay to physicians who practice in larger groups or are employed by hospitals. This policy might be penny wise and pound foolish if it drives small practices out of existence and if further research confirms that small practices have lower ambulatory care–sensitive admission rates, and possibly lower overall costs for patients’ care, than larger groups.
Small practices have many obvious disadvantages. It would be a mistake to romanticize them. But it might be an even greater mistake to ignore them, and the lessons that might be learned from them, as larger and larger provider organizations clash to gain advantageous positions in the new world of payment and delivery system changes catalyzed by health care reform.
It is believed that consolidation of the health care delivery system through the formation of larger groups of physicians and through hospital ownership of physician practices is anti-competitive and drives up health care spending, especially through non-competitive pricing. Nevertheless this consolidation is being encouraged under the assumption that closer integration of the health care delivery system will improve processes and outcomes, one rapidly expanding model being accountable care organizations. This important study casts doubt on this concept.
One important measure of the quality of care being provided is ambulatory care-sensitive admissions – admissions that can be prevented through good primary care. This study shows that small primary care practices had lower preventable admission rates than did larger practices. Further, although larger practices did have higher patient-centered medical home scores, the scores were not associated with lower ambulatory care–sensitive admission rates. Also, hospital-owned practices used more patient-centered medical home processes than physician-owned practices, yet these hospital-owned practices had higher ambulatory care–sensitive admission rates. Neither pay-for-performance nor public reporting incentives improved the rate of ambulatory care-sensitive admissions.
The policy and political communities are pushing innovations such as more closely integrated groups through consolidation and accountable care organizations, pay-for-performance, and patient-centered medical homes, when there is sparse evidence that these measures will improve quality or reduce costs. On the other hand, studies such as this demonstrate that traditional Marcus Welby, MD-type primary care practices serve us very well (as long as they do see more than one patient a week).
Patients have better access through a long standing relationship with a health care professional they know and trust and who knows and respects them, while receiving their care at a lower cost. Although this traditional model is now being threatened, a single payer system would revitalize it as long as it serves patients well.
To: Sylvia Burwell, ?Secretary of Health and Human Services
From: Over 300 patient advocacy groups
Letter, July 28, 2014
Based on reports of enrollee experiences during the first year of Marketplace implementation, we have identified a number of concerns. These include discriminatory benefit designs that limit access, such as restrictive formularies and inadequate provider networks; high cost-sharing; and a lack of plan transparency that may deprive consumers of information that is essential to making informed enrollment choices.
Due to the manner in which Essential Health Benefits (EHBs) are defined for plan years 2014 and 2015, select plans do not include all the medications that enrollees may be prescribed to address their health care needs. Plans are further restricting access to care by imposing utilization management policies, such as prior authorization, step therapy and quantity limits. Tying plan formulary requirements to the number of drugs in each class in the state benchmark has resulted in some plans not covering critical medications, including combination therapies. Additionally, there is no requirement for plans to cover new medications and plans can remove medications during the plan year as long as the plan continues to meet the state’s benchmark requirements. Narrow provider networks and a lack of access to specialists are also negatively impacting access to quality care for enrollees.
These design elements appear to affect certain patient populations disproportionately – many of the same populations that were subject to pre-existing condition restrictions prior to ACA implementation.
Despite enrollee out-of-pocket limits that are included in the ACA and reduced cost-sharing for people with very low income levels, some plans are placing extremely high co- insurance on lifesaving medications, and putting all or most medications in a given class, including generics, on the highest cost tier. This creates an undue burden on enrollees who rely on these medications. Unlike employer-sponsored plans, where enrollees usually experience reasonable co- pays, enrollees in the Marketplace are being subject to plans that impose 30%, 40% and even 50% co-insurance per prescription. Such high co-insurance is shocking enrollees and will lead to reduced medication adherence and medical complications as people are unable to afford to begin or stay on medications. Some plans are also imposing high deductibles for prescription medications and high cost-sharing for accessing specialists.
We believe these practices are highly discriminatory against patients with chronic health conditions and may, in fact, violate the ACA non-discrimination provisions.
Transparency and Uniformity:
Individuals must have access to easy-to-understand, detailed information about plan benefits, formularies, provider networks, and the costs of medications and services. Unfortunately, individuals cannot access this information easily through an interactive web tool such as a plan finder or benefit calculator that matches an individual’s prescriptions and provider needs with appropriate plans (such as the one utilized by the Medicare Part D program). Most troubling is the practice of requiring co-insurance without information for an individual to understand what their actual cost-sharing will be. Transparent, easy-to-navigate grievances and appeals processes are needed, along with special enrollment procedures when patients lose access to a medication due to formulary changes during a plan year.
In spite of regulations defining the essential health benefits to be covered, actuarial values of the health plans, and adequacy of plan descriptions, the private insurers continue to use deceit in implementing these regulations to avoid enrolling individuals with greater health care needs. Even if some of the current deceptions are patched, they will always use the marketplace tool of innovation in order to advantage themselves over patients.
Though the government may try to revise regulations as problems arise, no regulation can ever alter the innate amorality of the industry – no, make that immorality. The private insurers need to be replaced with a single payer national health program.
By Sidney M. Wolfe, MD
JAMA Internal Medicine, August 15, 2014
In June 2014, the US Food and Drug Administration (FDA) for the first time issued draft guidance for the pharmaceutical industry on distributing scientific and medical publications about the risks of approved prescription drugs and biological products. In my view, the draft guidance, which is open for public comment until August 25, 2014, has the potential to undermine the FDA’s drug safety laws and regulations and should be substantially changed.
As written, the draft guidance would allow pharmaceutical companies who believe that the FDA-approved drug-labeling information overstates the risks of their drug to tell physicians that the risks are, in fact, lower. Companies could inform physicians of the purportedly lower risks by distributing peer-reviewed articles and instructing their sales representatives to discuss the information they contain about the lower risks. Laws and regulations requiring FDA approval of the drug label would have little meaning if a company, without the agency either reviewing the data or approving it, can detail this information. In analogy to the off-label promotion of unapproved uses of drugs, this activity might be referred to as “off-label risk reduction.”
The draft guidance states that
“FDA does not intend to object to the distribution of new risk information that rebuts, mitigates, or refines risk information in the approved labeling, and is distributed by a firm in the form of a reprint or digital copy of a published study, if the study or the analysis and the manner of distribution meet the [specified] principles….”
The agency guidance was issued in response to petitions from 11 pharmaceutical companies seeking clarification and expansion of the limits on industry for communications with physicians and others without risking FDA enforcement action for off-label promotion of unapproved indications. Since 1991, pharmaceutical companies have paid tens of billions of dollars to the United States for criminal and civil legal violations. Two of the common forms of illegal activity have been off-label promotion of unapproved uses of drugs and understating the risks of approved uses.
The draft guidance suggests that the agency has now tilted toward protecting industry’s commercial speech and away from protecting patients from the risks of prescription drugs and biological products.
Unfortunately, the draft guidance strikes the balance more toward the industry’s view of its First Amendment right to commercial speech than toward the agency’s mandate for patient protection.
The longer a drug is marketed, the historical pattern is for information to develop about an increase in the risk to patients, not a decrease in risk. FDA-approved labeling changes about risk are rarely about reductions in risk. More commonly, labeling changes incorporate information about increased risk, including many new boxed warnings. For example, a 2005 FDA guidance that is frequently referred to in the 2014 draft guidance discusses, almost in its entirety, the various kinds of post-marketing surveillance that result in information about increased risks. Between 1975 and 2009, the FDA approved 748 new drugs; 114 (15.2%) received 1 or more boxed warnings after approval, and 32 (4.3%) were withdrawn from the market for safety reasons.
To protect patients and the public health, the FDA should substantially revise its draft guidance for industry on distributing medical publications about the risks of prescription drugs and biological products. When new information supports a reduction in risk, the company should inform the FDA and provide the evidence, as is required under current regulations; if the agency is convinced, the label can be changed. Off-label risk reduction is a misguided approach.
****Era Of Faster FDA Drug Approval Has Also Seen Increased Black-Box Warnings And Market Withdrawals
By Cassie Frank, David U. Himmelstein, Steffie Woolhandler, David H. Bor, Sidney M. Wolfe, Orlaith Heymann, Leah Zallman and Karen E. Lasser
Health Affairs, August 2014
After approval, many prescription medications that patients rely on subsequently receive new black-box warnings or are withdrawn from the market because of safety concerns. We examined whether the frequency of these safety problems has increased since 1992, when the Prescription Drug User Fee Act, legislation designed to accelerate the drug approval process at the Food and Drug Administration, was passed. We found that drugs approved after the act’s passage were more likely to receive a new black-box warning or be withdrawn than drugs approved before its passage (26.7 per 100.0 drugs versus 21.2 per 100.0 drugs at up to sixteen years of follow-up).
The Prescription Drug User Fee Act (PDUFA)—first enacted in 1992 and renewed in 1997, 2002, 2007, and 2012—authorizes the FDA to collect fees from drug companies to expedite the drug approval process. Congress enacted the PDUFA in response to widespread concerns that the process was taking too long.
New drugs have a one-in-three chance of acquiring a new black-box warning or being withdrawn for safety reasons within twenty-five years of approval. We believe that the ultimate solution is stronger US drug approval standards.
****Trends in Boxed Warnings and Withdrawals for Novel Therapeutic Drugs, 1996 Through 2012
By Christine M. Cheng, PharmD1; Jaekyu Shin, PharmD, MS; B. Joseph Guglielmo, PharmD
JAMA Internal Medicine, August 15, 2014
Our study demonstrates that boxed warnings are common, affecting more than one-third of recent drug approvals. While nearly three-quarters of boxed warnings had been applied to novel therapeutics at the time of approval, more than 40% acquired the warning after a median market period of 4 years. Clinicians should be aware of the prevalence and growing numbers of boxed warnings and the importance of continued adverse event reporting for identifying new safety concerns.
The Food and Drug Administration (FDA) protects the public from pharmaceutical firms that increase their drug sales by not being totally forthcoming about both the effectiveness and safety of their drug products. The required drug labeling is based on the best information available. History has repeatedly confirmed that such oversight is essential even now with the pharmaceuticals firms having paid tens of billions of dollars in penalties for these continuing violations.
Yet the FDA seems to be allowing the pharmaceutical firms more leeway. An example is that the FDA allows the firms to pay fees for the purpose of expediting the consideration of new drug applications. Allowing them to buy their way to the front of the queue is not only a compromise of justice, much more importantly it has allowed new products to be introduced to markets prematurely. This has resulted in an increased need to add post-marketing black box warnings about more serious adverse effects of the drugs. Of even greater concern has been the increased need to withdraw drugs from the market, raising concern that the accelerated approval process may have allowed the release of drugs that never should have been on the market in the first place.
The current request pending before the FDA to allow pharmaceutical firms to distribute studies that have not been cleared by the FDA that show that their products are safer than the required labeling would indicate should raise concerns since the first draft of this FDA guidance would allow such activity. Although it proposes some guidance on how this information would be distributed, based on previous behavior of the pharmaceutical firms, there is absolutely no doubt that they would abuse this process by supporting studies done by researchers who are friendly to the industry, and by selecting only the favorable studies and burying those that are less favorable.
Those who are concerned about this ill-advised FDA guidance, and we all should be, can read the full draft of the guidance and then submit a comment to the FDA. Public comments are open only until Aug. 25.
Submit a comment on the guidance:
By Rosemarie Day, Pamela Nadash and Angelique Hrycko
Health Affairs Blog, August 13, 2014
Health reform has been a catalyst for change. It has fostered the creation of public health insurance exchanges and accelerated existing trends in health insurance coverage for employees. Many employers are reevaluating their coverage offerings, some employers are no longer providing insurance coverage, and, among those who continue to offer it, high deductible plans with restricted networks are becoming the norm.
In addition, employers are increasingly outsourcing health insurance benefits management by moving employees to private health insurance exchanges – often in combination with a shift toward a defined contribution approach. Estimates vary, but surveys show that anywhere from 9 to 45 percent of employers plan to implement private exchanges in the future.
Accenture has predicted that by 2018, private exchange enrollment will outpace public exchange enrollment.
Consulting firms and benefits consultancies are positioning themselves to grab this market, and are generating interest by publicizing upbeat projections of conversions to private exchanges. This publicity means that attention is focused on these firms and the large employers they target.
However, another, less visible movement is taking place among small to mid-size employers, whose employees may not be so well served by private exchanges. Not only do small employers lack the negotiating power of large employers, but exchange operators for this market may be unable to offer the same level of service; nor does it seem likely that the public small business exchanges will offer sufficient competition.
Benefits consultancies, such as Aon Hewitt, Towers Watson, and Mercer, have been actively recruiting employers to switch to this model, and — with notable success — have acquired large well-known companies like Walgreens. Other major employers are currently negotiating arrangements, planning to phase in private exchanges over time, focusing on different groups of employees.
Two Tiers: Small vs. Large Employers
However, these established consulting firms and benefits consultancies are, by and large, initially focusing on large employers, which represent only one segment of the American workforce. Small employers (with 2-50 employees working at least 30 hours a week) make up nearly 96 percent of all U.S. businesses and employ nearly 34 million workers – and the health insurance picture here isn’t pretty.
People working at firms with fewer than 50 employees are disproportionately uninsured, constituting 25 percent of American workers, but 40 percent of the uninsured. The smaller the firm, the less likely they are to cover their workers.
Moreover, the health insurance that they do provide has tended to be less robust than that offered by large employers – the phenomenon that the term “underinsurance” was created to describe. This is largely because small businesses pay, on average, 18 percent more for health insurance than large employers do, due to higher administrative costs.
The Affordable Care Act (ACA) attempts to address this problem by establishing the Small Business Health Options Program, or SHOP exchanges.
SHOP vs. Private Exchanges
However, like the public exchanges for the individual market, SHOP exchanges have had their problems. For the 32 states participating in the federal SHOP exchange, the picture is gloomy: the administration delayed implementation and dropped the requirement that insurers participating in the public exchange also participate in the federal SHOP exchange, reducing choice for employees, and making life more complicated for the federal SHOP exchange – they will now need to negotiate with each carrier individually to encourage participation.
In addition, the “employee choice” option was delayed for the federal SHOP exchanges until 2015, and most recently, 18 of these exchanges sent a request to CMS to opt-out of employee choice for another year, pushing this delay to 2016.
The picture for the 17 states and DC running their own SHOP exchanges is somewhat better, but not great. Currently, only 3,000 out of roughly 120,000 small businesses in Colorado participate in its SHOP exchange, while enrollment in other states has been low: in Connecticut, only 330 lives are insured, along with only 4,900 lives in California.
Are There Any Downsides to These Private Sector Efforts?
Given the slow start-up of the SHOP exchanges, the private exchanges may provide a valuable service, and, because they have the chance to corner the market before the SHOP exchanges are fully up and running, they may provide public exchanges with stiff competition.
Yet, with private exchanges, employers are likely to get what they pay for. Consequently, large employers will likely have the interest and capacity to demand quality from the sophisticated organizations competing for their private exchange business. These entities are likely to do a good job, using well-designed websites and decision support tools that promote product transparency.
Less sophisticated organizations, dealing with employers who have less negotiating power and insurance expertise, may not.
Private exchanges may well end up segmenting based on the markets they are catering to: more bare-bones, with fewer options and decision support tools for the small employer sector, and more generous, better options with more sophisticated decision support tools for large employers.
Moreover, if private exchanges corner the market, SHOP exchanges may never get off the ground.
It’s complicated. As insurance coverage expands, inside and outside of the ACA marketplace (insurance exchanges), it looks like some of the current inequities and injustices will be expanded as well.
Briefly, here is what we are looking at:
- The public ACA exchanges are now covering individuals, but primarily with plans that have lower actuarial value (pay a smaller percentage of health care costs) and with narrow networks (greatly limiting choice of physicians and hospitals). These undesirable features slow the growth of insurance premiums though, even with government subsidies, they are still too high for many who are then allowed to opt out on a hardship basis.
- Federal and state SHOP exchanges (Small Business Health Options Program) are being established to provide a health insurance market for small businesses now, and eventually for large employers as well. For reasons explained in the article, these government SHOP exchanges are off to a very slow start and may become inconsequential as employers turn to private insurance exchanges instead.
- Employers have been seeking relief from the burdens of their employee health benefit programs. They are turning to private insurance exchanges which employees accept as a means of providing them with greater choices of health insurance plans. However, employers are using this opportunity to increase deductibles and other cost sharing, reduce provider choice through narrower networks, and switch from defined benefit to defined contribution – placing more of the burden on employees. It may take a while before employees realize what happened.
- Large employers will still have leverage to negotiate more favorable features with the competing private exchanges.
- Small employers will not have leverage and will be stuck with higher administrative costs and bare minimum, lower actuarial value plans. They likely will end up using private exchanges by default because of the implementation difficulties that the government SHOP exchanges are experiencing.
- As this article explains, it appears that we will perpetuate and expand the two-tiered nature of lousy plans for small employers and slightly better but mediocre plans for large employers.
Where is health care justice in all of this? Not to be found. We need an equitable single payer national health program. The sooner the better.
By Mary Agnes Carey
Kaiser Health News, August 13, 2014
Dr. Robert Galvin is chief executive officer of Equity Healthcare (a wholly owned subsidiary of Blackstone, a global investment and advisory firm), where he works with executives of nearly 50 companies that purchase health coverage for 300,000 people. Galvin says the 2010 Affordable Care Act has made employers more engaged in health benefits while encouraging their workers to be savvier health care consumers.
“I think what the ACA has done more than anything is it has made every employer examine their strategy and in every case it’s bringing the CFO and the CEO” into decisions about the company’s health care, which often didn’t use to happen, he said.
Q: We’re hearing a lot these days about narrow networks. While they existed before the ACA, how are employers using tools like narrow networks or high-deductible plans to control costs?
A: Those employers who are going to stay in the game – which is the majority of them – in many cases have to [improve] what they’re covering. They now have to use the managed care tools that they all abandoned 15 years ago.
So the answer is narrow networks – we now call them “performance networks” – they are definitely increasing in popularity. And I think what we’re trying to do differently this time is to make them performance [based] and not just narrow.
The second change from the ‘90s is always offering options outside of the narrow network. So rather than “Here’s your narrow network, that’s it,” it’s, “Here’s your performance network that is going to be less expensive for you. If you want to, [you have the option] of paying considerably more money, and getting to another network, or another physician.”
I think what we learned in the ‘90s was that Americans want choice, even if it’s the wrong choice.
On the high deductible side, there’s absolutely a move in that direction. The way we think about it, we’re trying to make more informed consumers.
This is a more intelligent way of getting people more involved in their health decisions. I think the thing to watch, honestly, is the full replacement high deductible. [There’s] no [preferred provider option], no point-of-service. All you have is a high deductible. There’s still in and out of network but what it means as an employee is you can’t choose between a PPO where you pay $20 to see your doctor or a high deductible where you’ll have to pay $120. The only option you have is the high deductible. About 20 percent of the commercial companies have that. The key thing to watch is how many companies basically only offer high deductibles. It’s about 20 percent now but I think that’s going to grow double-digits every year.
Q: Does the ACA need the employer mandate to work?
A: My bottom line feeling about that is no.
I think people in government have absolutely no idea what kind of work and complexity [employers face] for what seems like a simple regulation. In terms of who’s eligible, who’s tracking hours, doing the look back, what you have for HR systems to manage the reporting requirements, actually administering that is a nightmare.
Q: How do employers help their employees understand more about the health care they’re purchasing?
A: The first thing is they need to make employees price sensitive. Time has shown that all the education you can give someone really only impacts a small percent of employees who are interested anyway.
With more price sensitivity is an obligation, if you want the market to work, for information. And information that works for individuals. More companies are giving [employees] access to health navigators, or health coaches. So that if you look at information on the computer or you don’t have broadband or you don’t know what it means, you have someone to call who can walk you through it.
It’s a real need in the market to be able to call a navigator or a coach, not through an insurance company, but a free-standing company and have that person help employees figure things out.
Along with price sensitivity has to come the support.
Equity Healthcare (a subsidiary of Blackstone)
Equity Healthcare works with private equity firms and their portfolio companies to bring innovative solutions to manage health care costs.
At Blackstone, we apply our strengths as a leading global investment and advisory firm to deliver solutions, unlock value and propel growth.
Above all, we have made it our No. 1 priority to serve the needs of our investors and clients.
Follow the logic. To receive greater value in health care, we need to put the patients in charge of purchasing decisions by exposing them to price sensitivity – requiring out-of-pocket payment of high deductibles. We also have to use the managed care tools of 15 years ago – provider networks – but which are now narrower, so we are renaming them “performance networks.” But this does increase the complexity of a system already infamous for its administrative excesses. So what can we do to improve the patient’s ability to negotiate this complex maze of market-oriented health care?
Simple. Let’s provide each patient with a “health navigator” or “health coach.” They can help patients figure out how this thing works. Of course, they can’t give medical advice, but they can provide additional administrative services to assist the patient. Equity Healthcare promotes free-standing companies that provide health navigator services – more administrative services, but no health care services, but at least these entities can help fulfill the mission of serving the needs of Blackstone’s investors.
We gain more administrative services and greater investor opportunity at a cost of reducing patient choices in health care while exposing them to potential financial hardship. Is that how markets are supposed to work? Making things worse for patients while imposing on them the costs of yet more superfluous administrative services? Adam Smith would be perplexed. Producers gain by serving consumers, yet today producers are abusing consumers to achieve their gains. Isn’t it time to replace the invisible hand of the market with the opaque hand of government by establishing our own single payer national health program?
By Gary V. Walker, Stephen R. Grant, B. Ashleigh Guadagnolo, Karen E. Hoffman, Benjamin D. Smith, Matthew Koshy, Pamela K. Allen and Usama Mahmood
Journal of Clinical Oncology, August 4, 2014
The purpose of this study was to determine the association of insurance status with disease stage at presentation, treatment, and survival among the top 10 most deadly cancers using the SEER database.
Patients and Methods
A total of 473,722 patients age 18 to 64 years who were diagnosed with one of the 10 most deadly cancers in the SEER database from 2007 to 2010 were analyzed. A Cox proportional hazards model was used for multivariable analyses to assess the effect of patient and tumor characteristics on cause-specific death.
Overall, patients with non-Medicaid insurance were less likely to present with distant disease (16.9%) than those with Medicaid coverage (29.1%) or without insurance coverage (34.7%; P < .001). Patients with non-Medicaid insurance were more likely to receive cancer-directed surgery and/or radiation therapy (79.6%) compared with those with Medicaid coverage (67.9%) or without insurance coverage (62.1%; P < .001). In a Cox regression that adjusted for age, race, sex, marital status, residence, percent of county below federal poverty level, site, stage, and receipt of cancer-directed surgery and/or radiation therapy, patients were more likely to die as a result of their disease if they had Medicaid coverage (hazard ratio [HR], 1.44; 95% CI, 1.41 to 1.47; P < .001) or no insurance (HR, 1.47; 95% CI, 1.42 to 1.51; P < .001) compared with non-Medicaid insurance.
Among patients with the 10 most deadly cancers, those with Medicaid coverage or without insurance were more likely to present with advanced disease, were less likely to receive cancer-directed surgery and/or radiation therapy, and experienced worse survival.
Clearly, insured patients with one of the most deadly cancers have better outcomes than uninsured patients. Of concern is that this study shows that patents on Medicaid do not do much better than uninsured patients. What can we make of this?
Medicaid coverage is limited to low-income populations. These people have many other problems that can result in impaired access and impaired outcomes – conceivably enough to explain these differences. However, Medicaid also may result in impaired access because of a lack of an adequate number of physicians who are willing to care for Medicaid patients. This is particularly true of specialists, such as oncologists who would otherwise care for these patients with the most deadly cancers. Impaired access due to a lack of willing providers applies to both uninsured and Medicaid patients. That is not true for either privately insured or Medicare patients.
Under a well designed single payer system – an improved Medicare for all – physicians would not cull patients out of their practices merely because they were on Medicaid or uninsured. Enacting single payer would allow us to remove barriers based simply on the type of insurance coverage or lack thereof. That would then allow us address other important societal issues that result in impaired access, delayed or forgone management, and impaired survival.
Although this study will be used by opponents as an excuse not to fund Medicaid based on the fact that Medicaid patients did not do much better than the uninsured, we cannot allow them to discount the other factors faced by low-income patients that undoubtedly played a greater role in these disparate outcomes. Many other studies have shown that Medicaid patients definitely fare better than the uninsured. Until we can enact and implement a single payer system, it is imperative that Medicaid continue to be offered as an interim measure.
By Jordan Rau
Kaiser Health News, August 6, 2014
One of Medicare’s attempts to improve medical quality – by rewarding or penalizing hospitals – did not lead to improvements in the first nine months of the program, a study has found.
The quality program, known as Hospital Value-Based Purchasing, is a pillar of the federal health law’s campaign to use the government’s financial muscle to improve patient care. Since late 2012, Medicare has been giving small increases or decreases in payments to nearly 3,000 hospitals based on how patients rated their experiences and how faithfully hospitals followed a dozen basic standards of care, such as taking blood cultures of pneumonia patients before administering antibiotics. …
The study, published last month on the Health Services Research journal online site, is the first to look at how hospitals performed under the value-based purchasing program. The researchers, led by Andrew Ryan, … analyzed hospitals’ performances in the five years before the program began and the period from July 2011 through March 2012, the nine months of data that Medicare used to determine the first year of bonuses and penalties. The researchers compared how the hospitals in the program did with the performance of several hundred hospitals that were exempted from the program. … The researchers found no significant difference in performance, with both groups of hospitals improving at equal rates.
Evidence refuting the claims made for pay-for-performance (P4P) is piling up. The paper by Andrew Ryan et al. is just the latest example. Ryan et al. found that yet another P4P experiment with hospitals, this one ordered by Congress in 2010, isn’t working. We already knew that. An enormous P4P experiment involving hospitals, ordered by Congress in 2003, didn’t work either. That project, known as the Premier Hospital Quality Incentive Demonstration, has been shown to have no effect on quality.
The best that can be said for P4P is that it can sometimes cause doctors to score slightly higher on measures linked to financial incentives, but only at the expense of patients whose care is not being measured. We know this teaching-to-the-test effect is real because research indicates doctors must work 22 hours a day to meet existing guidelines for preventive and chronic care and still address the acute care needs of their patients. Obviously, under those constraints, P4P can work only by shifting physician priorities away from priorities previously established by doctors and their patients.
The teaching-to-the-test effect of P4P was demonstrated at Kaiser Permanente Northern California which began experimenting with P4P in the late 1990s. Lester et al. found that removing incentives for screening for diabetic retinopathy and cervical cancer led to “a decrease in performance of about 3 percent per year on average for screening for diabetic retinopathy and about 1.6 percent per year for cervical cancer screening.”
Lester et al. speculated that they had demonstrated the teaching-to-the-test effect. In my view, they demonstrated it. Even assuming the worst about Kaiser Permanente’s doctors – that large numbers of them had no idea they should examine the retinas of diabetics or screen for cancer in women, and that this widespread ignorance was corrected by Kaiser’s P4P scheme – we must still conclude that the decline in the scores on these measures after the P4P incentives were removed reflected a return to physician-patient priorities uncontaminated by P4P incentives. The alternative explanation – that a substantial number of doctors reacquired a previous ignorance about the measured services, and there were no competing demands on their time – makes no sense.
Before wrapping up this indictment of P4P I should note that P4P harms poor people, and as of this date we have virtually no information on what it costs to administer the myriad P4P schemes in operation today.
It is timely, therefore, to ask, What happens when health policy experts commit errors? Do we say, “To err is human,” and move on?
Errors by doctors and hospitals trigger a variety of responses, including investigations, malpractice suits, loss of patients, loss of licenses, and criminal prosecution. But when health policy experts make mistakes, nothing happens, at least nothing potent enough to alter expert behavior. The P4P fad illustrates this double standard. P4P was endorsed by the Institute of Medicine (IOM) and many other prominent groups and individuals with no evidence to support it, and now that the evidence indicates P4P doesn’t work, not one of these groups and individuals has stepped forward to admit error.
We need an analysis of errors in health policy and why those errors go uncorrected long after they have been revealed. I would like to suggest that the IOM undertake this task. I suggest they entitle their report, To Err is Human, and Health Policy is No Exception.
In 1999, the IOM released a highly influential report entitled To Err is Human which estimated errors in hospitals caused 44,000 to 98,000 deaths per year. The IOM said this was “not acceptable” and called for a “comprehensive strategy [to] reduce preventable medical errors.” It defined “medical errors” as “the failure of a planned action to be completed as intended or the use of a wrong plan to achieve an aim.”
The experts’ endorsement of P4P meets the IOM’s definition of “error”: “The use of a wrong plan to achieve an aim.” For several reasons, the P4P fad constitutes an especially good case study for the study of errors by health policy experts:
• The fad had a rather discrete beginning date (about 2000),
• it was clear when the fad began that there was no evidence to support it,
• the proponents of the fad left behind a rather extensive paper trail revealing their flimsy justification for recommending it, and
• evidence indicting the fad accumulated quickly.
The P4P fad sprang up around 2000 not because research suddenly demonstrated it would work, but because the insurance industry, self-insured employers, and their allies in government and academia wanted desperately to find a new cost-control tactic to replace the more intrusive tactics that inspired the “HMO backlash” of the 1990s. (See, for example, this comment by Paul R. Reich, MD, the medical director of Blue Cross and Blue Shield of Rhode Island, in a 2003 article: “With the decline of capitation as a means of compensating doctors, ‘paying for performance’ has become a viable alternative.” [“Pay for performance,” Managed Care Interface 2003;16:14])
By 2005 the health policy establishment’s interest in P4P had exploded into a full-fledged fad. The Leapfrog Group (a creation of the Business Roundtable) endorsed P4P in 2000, the IOM endorsed it in 2001, an association of eight insurers in California (the Integrated Healthcare Association) established a large P4P program in 2001, and Medpac endorsed P4P in reports to Congress published in 2003 and 2005. In 2003 a group of prominent managed care advocates, including Donald Berwick, Nancy-Ann DeParle, Paul Ellwood, Alain Enthoven, and John Wennberg, published a paper in Health Affairs entitled “Paying for Performance: Medicare should lead.” By 2005, according to the Congressional Research Service, at least 107 P4P programs were underway in the US in the private and public sectors, and Congress was considering authorizing more.
This call for P4P from the health policy elite was not supported by evidence that P4P in medicine was safe, effective, or affordable. For example, in the paper mentioned above by Berwick et al., the authors cited not one study supporting their assertion that “payment for performance should become a top national priority.”
P4P proponents did not justify their call for P4P with evidence because there was none to invoke. Rather, their justification boiled down to, “The status quo is terrible; P4P can’t be worse than the status quo.” Glenn Hackbarth, chairman of Medpac, offered that rationale for Medpac’s endorsement of P4P in a 2006 paper:
Why is MedPAC confident that P4P is the proper thing to do, especially given the limited amount of hard evidence on its impact? Two reasons. First, there is overwhelming research documenting the poor performance of our health care system…. The status quo is unacceptable…. Second, there is abundant evidence that health care providers respond to incentives. For people with substantial experience in health care delivery and policy, like the MedPAC commissioners, it does not seem like much of a leap to conclude that P4P is a step in the right direction.” (“Commentary,” Medicare Care Research and Review 63:1 (Supplement to February 2006), 118S.
In a 2005 press release, Robert Wood Johnson’s president and CEO offered a similar justification: “Whether or not you believe P4P will make a significant difference, it’s time for payers of health care to reward providers who are improving quality rather than turn a blind eye.” (“Pay for performance improving health care quality and changing provider behavior; but challenges persist,” press release, November 15, 2005.)
I will leave aside for now the question of whether P4P proponents have vastly exaggerated the “quality” problem and ignored the role that administrate waste (including the cost of running P4P projects), high prices, and managed care play in preventing patients from getting recommended medical care. I’ll note merely that if doctors adopted the same excuse for trying out risky, expensive and unproven treatments on their patients – “My patient was very sick, the status quo was unacceptable, I couldn’t turn a blind eye” – the health policy elite would raise holy hell, and rightly so. But the standards for “people with substantial experience in health care delivery and policy,” to quote Hackbarth, are different. If you are one of those people, raw, fervently held opinion will suffice.
This devil-may-care attitude toward evidence is a root cause of error in health policy. We badly need research on why this attitude exists and its role in our nation’s inability to adopt effective health policies.
Kip Sullivan, J.D., is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. His writing has appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.
By Jon Kingsdale and Julia Lerche
Health Affairs Blog, August 4, 2014
Since recovering from its flawed rollout, the ACA has enjoyed a string of successes. By April, some eight million Americans managed to enroll.
Approximately 87 percent of Marketplace enrollees claimed premium tax credits, of which an estimated 85 percent, or six million, actually paid premiums. Many of the original six million, plus more recent enrollees, will experience their second enrollment between November 15, 2014 and February 15, 2015. They will also file with the IRS for a premium tax credit as early as January 2015.
The two events in combination represent a huge risk.
However, moderate rate actions, and even rate decreases, can translate into huge, net (after-subsidy) rate hikes. This is one of the challenges that Marketplaces and other stakeholders must anticipate and address. The other potential crisis for enrollees, coinciding with the last month of open enrollment, is filing for their 2014 tax refunds; while most high-income filers with complex returns file in March, April or later, many low-to-moderate-income taxpayers who anticipate a refund file by February. But doing so in 2015 may be impossible. If not addressed, rate shock followed by refund delays will deliver a one-two punch.
I. Rate Shock
Premium subsidy calculations are based on household income and the benchmark premium (second-lowest-cost silver plan) available to each household. For the benchmark plan, a subsidy-eligible enrollee’s monthly contribution is based solely on the household’s modified adjusted gross income (“MAGI”); but for any other qualified health plan, the subsidized enrollee’s contribution is based on MAGI plus/minus the difference in premium between that plan and the benchmark.
There is a very high likelihood that the price and identity of the benchmark plan will change from year to year, as issuers adjust premiums, offer new, narrow network plans, enter new Marketplaces, and expand or contract service areas. A recent study of proposed premium changes in the largest city in each of nine states indicated a change in benchmark plans in eight of them. The impact on after-subsidy rates will be very significant.
Because subsidies are tied to a benchmark plan, the only way a subsidy-eligible consumer can ensure relatively stable premiums is to enroll in the benchmark plan each year. Consumers could even move to another state and pay similar after-subsidy rates, if they were committed to enrolling in the benchmark plan. However, consumers may resist changing plans each year, because they like their current plans, they like their current providers, and/or because of simple inertia.
The calculus is even more complicated for enrollees in non-benchmark plans. Since they contribute the rate they would have paid for the benchmark plan, plus or minus the difference in premiums between their plan and the benchmark, their monthly contributions will change if either the benchmark or their current plan’s premium changes. In other words, it is the difference between two moving targets that determines the net contribution for a subsidized household in a non-benchmark plan. This creates counter-intuitive results.
II. Delayed Tax Refunds
Fifteen public Marketplaces, hundreds of issuers, and CMS/IRS have been trading information for months now in a massive effort to reconcile who is enrolled in what coverage for which months, and who owes what to whom. These are the “back-office” processes that are still being worked on, months after most consumer-facing web sites were fixed. This kind of reconciliation among accounting entities can continue for years; indeed, it is generally “tolerated” ad infinitum among insurers, Medicare, Medicaid, and hospitals with respect to claims submitted, approved, and actually paid, not to mention COB and subrogation. The firms estimate year-end liabilities and reserve for them; auditors check their credibility.
The “tolerable” accounting timeframe for taxpayers of modest means is entirely different. They typically file returns soon after receiving their W-2s in January. Why the rush? According to H&R Block, the country’s largest tax preparer, many of their 21 million clients fit the socio-economic profile of subsidy-eligible enrollees, and most of those receive tax refunds. Refunds average $2,500 to $3,000 and often represent the filers’ largest financial transaction of the year; filers may urgently need the refunds to pay rent, utilities, medical and other bills.
The annual cycle for these tax filers begins to build in January, and it crests in mid-February. No doubt, this is why the IRS requires Marketplaces to provide all their enrollees with the information required to claim and reconcile premium tax credits by January 31. However, meeting this deadline in 2015 will be a challenge, to say the least. Anticipating the need for corrections, IRS/CMS will allow Marketplaces to update these notices monthly, until April 15, 2015. They also want Marketplaces to start sending CMS this information (year-to-date) no later than October 15, but the ability of some Marketplaces to comply is in serious doubt. Even for Marketplaces that have been tracking and reconciling these data all along, two other problems will arise.
First, there will be hundreds of thousands of “open” issues in December 2014, which probably cannot be resolved in time for the January notices. If not delayed, these January notices must be subsequently “corrected.” For example, consider the impact of the 90-day grace period for late premium payment: subsidy-eligible enrollees who do not pay their share of October-through-December premiums until late December will have received APTCs for October, but not for November and December. If the late-payment is received within 90 days (December 29), the issuer must post and report it to the Marketplace, and the Marketplace must reconcile this report with prior data, report that to CMS/IRS, and incorporate it into the enrollee’s 1095-A by January 31 — smack in the middle of its busy open enrollment season. On the other hand, if late payment is not received by year-end, and there were other lapses in coverage, the enrollee may be subject to a tax penalty. (A filer may qualify for both premium tax credits and the penalty.)
Second, for tax filers accustomed to handling one or more W-2s and perhaps their bank’s 1099, the new 1095s with over a dozen data fields will be mystifying. Some tax filers will receive multiple 1095s from Marketplaces, employers and insurers. Many subsidized enrollees will probably not recall “receiving” advance tax credits, since the advance credits simply offset QHP premiums. Reconciliation will also require filing a new (8962) tax form; and filers who previously used the short form (1040EZ) must switch to a long form (1040 or 1040A).
And this is the simple scenario. The IRS regulations also describe multiple formulas for allocating premiums and tax credits among (a) members of one tax-filer’s household enrolled in multiple health plans, or (b) members of one subscriber’s family who file taxes separately.
Difficulties in projecting tax credits at the time of enrollment and fear about “claw-back” later on have received much attention. Far more significant may be the dislocation that will occur if millions of low-to-moderate income enrollees cannot file their tax returns in January and February 2015 because they lack accurate 1095s, cannot decipher them, or are stymied by the new tax forms.
Ducking This One-Two Punch
Those closest to these issues, the IRS, CMS, and Marketplaces in particular, may have more practical solutions, but we offer a few suggestions for consideration. First, urge enrollees to compare premiums and shop for the best choice of health plans, rather than auto-renew their current health plan. Exchanges were developed to facilitate comparison shopping and they should continue to engage consumers. Doing so will minimize rate shock in 2015 and can actually reduce monthly contributions for some subscribers. This means overcoming consumers’ natural inertia and the policy arguments in favor of auto reenrollment.
Second, help subsidized enrollees understand the gyrations in their net (after-subsidy) rates and select the best option. This will require decision-support tools which customer service representatives, navigators, brokers, and outreach workers can use to assist shopping and APTC redetermination. “Premium migration tables,” developed at the rating region or county level, by FPL level and household size, plus guidance as to which plans offer enrollees’ current providers, could help with renewals. The premium tables are readily doable, but they require advance notice to develop and disseminate.
Third, consider one-time “fixes” to the premium tax credit reconciliation process for 2014, in order to enable timely filing for refunds. One option might be to cut off reconciliation of premium tax credits for 2014 prior to the end of December, so that carriers and Marketplaces have enough time to issue accurate 1095 forms by January 31, 2015. Another might be for the IRS to apply Marketplace-generated data on premium tax credits, even if tax filers omit the long form and 8962s. This might even mean carrying over some 2014 reconciliations into tax-year 2015.
Fourth, prior to January 2015, mail Marketplace enrollees a partial-year 1095-A, reporting advance tax credits paid through September or October 2014. Doing so would remind enrollees that they are benefiting from these tax credits, and allow them to scrutinize and seek corrections of the calculations.
Fifth, provide clear, detailed training from the enrollees’ perspective to health plans, brokers, navigators, and tax preparers on both premium tax credits and counter-intuitive changes in enrollees’ contributions.
The next customer experience with new enrollments, renewals, and tax filings is the next big opportunity to reset public perception of the ACA. At a minimum, those who will be holding enrollees’ hands next winter, must understand these challenges and be given the tools and training to help their clients cope.
Easy. Set up marketplaces (ACA insurance exchanges), let each shop for his or her own preferences, then apply premium subsidies based on income. Then next year let the plan automatically renew. Then why does it require so many words for Jon Kingsdale and Julia Lerche to describe this simple process?
Clearly, when you read this article, you see that the process is not simple, and, at that, only some of the complexities are discussed here. These complexities are directly due to the highly flawed model of reform selected by President Obama and the Democratic members of Congress.
The authors suggest five possibilities for getting around the two problems they discuss – rate shock and delayed tax refunds. But when you read their proposals for negotiating your way around these complications, you see that they are not so simple either. You almost need an accountant, though that is not affordable for most people who are eligible for premium subsidies because of their lower incomes.
According to the authors, “The next customer experience with new enrollments, renewals, and tax filings is the next big opportunity to reset public perception of the ACA.” And where will that reset of public perception land? In a sea of ACA complexities.
How would renewal under a single payer system compare to renewal in the ACA marketplaces? Renewal wouldn’t exist. Your initial enrollment is for life, not to mention that it is an exceedingly simple process – a matter of simply identifying who you are for purposes of enrollment.
By Stephanie Armour
The Wall Street Journal, August 6, 2014
Almost 90% of the nation’s 30 million uninsured won’t pay a penalty under the Affordable Care Act in 2016 because of a growing batch of exemptions to the health-coverage requirement.
The architects of the health law wanted most Americans to carry insurance or pay a penalty. But an analysis by the Congressional Budget Office and the Joint Committee on Taxation said most of the uninsured will qualify for one or more exemptions.
The Obama administration has provided 14 ways people can avoid the fine based on hardships, including suffering domestic violence, experiencing substantial property damage from a fire or flood, and having a canceled insurance plan. Those come on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects.
Factoring in the new exemptions, the congressional report in June lowered the number of people it expects to pay the fine in 2016 to four million, from its previous projection of six million.
****Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update
Congressional Budget Office, June 5, 2014
Under the Affordable Care Act, most legal residents of the United States are required to obtain health insurance or pay a penalty.
CBO and JCT have estimated that about 30 million nonelderly residents will be uninsured in 2016 but that the majority of them will be exempt from the penalty. Those who are exempt include:
- Unauthorized immigrants, who are prohibited from receiving almost all Medicaid benefits and all subsidies through the insurance exchanges;
- People with income low enough that they are not required to file an income tax return;
- People who have income below 138 percent of the federal poverty guidelines (commonly referred to as the federal poverty level) and are ineligible for Medicaid because the state in which they reside has not expanded eligibility by 2016 under the option provided in the ACA;
- People whose premium exceeds a specified share of their income (8 percent in 2014 and indexed over time); and
- People who are incarcerated or are members of Indian tribes.
CBO and JCT estimate that 23 million uninsured people in 2016 will qualify for one or more of those exemptions. Of the remaining 7 million uninsured people, CBO and JCT estimate that some will be granted exemptions from the penalty because of hardship or for other reasons.
All told, CBO and JCT estimate that about 4 million people will pay a penalty because they are uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf).
The Affordable Care Act was designed with incentives for almost everyone to obtain insurance. A financial penalty was to be assessed against any individual who remained uninsured, but now almost 90 percent of the uninsured will be exempt from the penalty. Larger employers were to be penalized if their employees remained uninsured, but now there is bipartisan support to eliminate the employer mandate. The expansion of Medicaid was to occur in all states but it has now been declined by about half of the states. Even with legislative patches, this fragmented system can never ensure that everyone has adequate health care coverage.
Compare this to a single payer system in which absolutely everyone would have been automatically enrolled in a better plan than any of those currently available, including Medicare. Why is there no clamoring for change?
By Fred Schulte
The Center for Public Integrity, August 7, 2014
A new federal study shows that many Medicare Advantage health plans routinely overbill the government for treating elderly patients — and have gotten away with doing it for years.
Analyzing government data never before made public, Department of Health and Human Services researchers found that many plans exaggerate how sick their patients are and how much they cost to treat. Medicare expects to pay the privately run plans — an alternative to traditional Medicare — some $160 billion this year.
The HHS study does not directly accuse any insurers of wrongdoing or name specific plans that were scrutinized. But the researchers offer the most comprehensive evidence to date that suspect billing practices have been common across much of the Medicare Advantage industry and are likely to get worse unless officials crack down.
Medicare pays the Advantage health plans higher rates for sicker patients and less for healthy people using a complex formula called a “risk score.” But the HHS study spells out several ways health plans have inflated those scores, from reporting implausibly high levels of medical conditions such as alcohol or drug dependence to billing for an inordinately high number of patients with complications of diabetes.
Despite its broad implications for Medicare spending, the study by HHS researchers Richard Kronick and W. Pete Welch has attracted scant notice in Washington. It was quietly posted late last month on an online research site run by the Centers for Medicare and Medicaid Services, part of HHS.
Kronick directs the HHS Agency for Healthcare Research and Quality, whose mission is to improve health care delivery. Welch works for the HHS Office of the Assistant Secretary for Planning and Evaluation.
****Measuring Coding Intensity in the Medicare Advantage Program
By Richard Kronick and W. Pete Welch
Medicare and Medicaid Research Review (MMRR), A publication of the Centers for Medicare & Medicaid Services, 2014: Volume 4, Number 2
In 2004, Medicare implemented a system of paying Medicare Advantage (MA) plans that gave them greater incentive than fee-for-service (FFS) providers to report diagnoses.
The increase in relative MA scores appears to largely reflect changes in diagnostic coding, not real increases in the morbidity of MA enrollees.
Concerns about overpayment as a result of favorable risk selection have confronted the Medicare program throughout the history of Medicare contracting with health maintenance organizations and other private plans. In the late 1980s, Medicare paid health plans using a system that adjusted for demographic factors such as age and gender, but plan enrollees were healthier than fee-for-service beneficiaries with the same demographic characteristics, and, as a result, health plans were estimated to be overpaid by approximately 11%.
In order to reward health plans for attracting sicker-than-average enrollees, and to discourage plans from constructing business models designed to avoid risk, Medicare and other payers have increasingly turned to diagnosis-based risk- adjusted payment systems in which health plans are paid more for enrollees expected to need more care. While mitigating the incentive to enroll only healthy people, diagnosis-based risk adjustment creates another set of incentives: to find and report as many diagnoses as possible.
The MA payment system uses diagnostic information to assign a risk score to each beneficiary.
This payment system creates incentives for MA plans to find and report as many diagnoses as can be supported by the medical record.
In addition to the incentives to report more completely, the method of collecting diagnostic information also provides MA plans additional opportunities to increase risk scores. FFS diagnoses are drawn only from health care claims submitted for payment. MA plans may also review medical records and can report all diagnoses that are supported in the record, including those that were not reported by physicians on any health care claim or encounter record. MA plans can also employ nurses to visit enrollees in their homes to conduct health assessments and report diagnoses that are found.
From the Discussion
It appears that most of the reason that MA risk scores increased more quickly than FFS scores is due to increases in relative coding intensity—measured as increases in risk scores for stayers—with little of it accounted for by changes in enrollment mix. There is little sign of coding intensity slowing; in fact, Exhibit 2 shows that it may be increasing.
CMS and the Congress have responded to the increase in risk scores over time in several ways. First, starting in 2010, CMS lowered payment by 3.41% by applying an across-the-board coding adjustment. The coding intensity adjustment will increase to 4.91% in 2014 and to at least 5.91% in 2018. Second, starting in 2013, CMS set the four most severe diabetes HCCs (Hierarchical Condition Category) to have the same payment coefficient (Department of Health and Human Services, 2012). As a result, recording diagnoses that move enrollees from HCC18 (diabetes with ophthalmologic or unspecified manifestation) into HCC15 (diabetes with renal or peripheral circulatory manifestation) will no longer increase revenue for MA plans. Third, CMS made further changes to the model in 2014, removing some of the HCCs that were the subject of MA efforts at increasing coding intensity.
Relative MA risk scores have been increasing at least 1% per year and are likely to continue to do so, even though MCBS-based risk scores have been roughly constant.8
Footnote 8: Some would expect that MA plans will react to the 2013 and 2014 model changes by finding other HCCs on which to focus their efforts, and the success of coding intensity efforts may well increase in the future.
We have discussed before the ways in which the private Medicare Advantage (MA) plans have been cheating the taxpayers, including cheating the beneficiaries in the traditional Medicare program who are paying higher premiums to support these private MA plans. Today’s message is especially significant since it cites a detailed 19 page report from the director of AHRQ and his colleague – a report which further confirms the private insurers’ distortion of Hierarchical Condition Categories (HCC) to receive extra risk adjustment payments based on upcoding that reports their patients as being more ill than they actually are (i.e., they pad the diagnoses).
The history of Medicare Advantage is that of a steady string of abuses. The program began with overpayments of about 14 percent over the cost of caring for Medicare patients in the traditional program. That overpayment was a deliberate ploy of Congress to give the private plans a competitive market advantage in an effort to privatize Medicare. The plans then selectively enrolled healthier, less expensive patients through deceptive marketing practices. When an effort to correct this favorable selection was made through risk adjustment using Hierarchical Condition Categories, the insurers then padded the diagnoses, as mentioned above. Further, since the Affordable Care Act included adjustments to correct the overpayments, the insurance industry heavily lobbied Congress and the Obama Administration to use three years of accounting gimmicks to reduce the impact of these adjustments. Cheat, cheat, cheat.
What can we expect now? Richard Kronick and W. Pete Welch are reserved in their language when they state, in a footnote, “Some would expect that MA plans will react to the 2013 and 2014 model changes by finding other HCCs on which to focus their efforts, and the success of coding intensity efforts may well increase in the future.”
I’ll be more frank. These crooks will continue to cheat the American taxpayers. They will surely use other HCCs to upcode their patients, until that door is finally slammed shut. What then? The private insurers continually tout to their shareholders the importance of “innovation” in health care coverage. They will always be able to find new and more effective ways to cheat us.
One of the more important improvements in an Improved Medicare for All would be to get rid of these crooks once and for all. The sooner the better.
By Christopher Flavelle
Bloomberg View, August 4, 2014
The debate over Obamacare’s Medicaid expansion divides states into two broad categories — those that expand their program and those that don’t. New research suggests we should talk more about a third group: States that agree to expand Medicaid, then impose premiums whose only purpose seems to be keeping people out of the program.
A paper released today in the journal Health Affairs, written by researchers from the federal government’s Agency for Healthcare Research and Quality, seeks to quantify the effect of premium increases on children’s enrollment in Medicaid or its sister plan, the Children’s Health Insurance Program. They found that even small premiums lead to big drops in sign-ups.
Using data from 1999-2010, the researchers — Salam Abdus, Julie Hudson, Steven C. Hill and Thomas M. Selden — found that for children in families making from 101 percent to 150 percent of the federal poverty line, a $10 increase in monthly premiums was associated with a 6.7 percent reduction in enrollment. For the subset of families not eligible for health coverage through their jobs, that grew to 7.3 percent.
The authors of the Health Affairs study don’t examine the effect of premium increases on adults. But Laura Dague, a professor at Texas A&M University, has. In an article published in the Journal of Health Economics in May, Dague looked at three years of data from the Wisconsin BadgerCare Plus program, which offers subsidized health coverage to families with low incomes. She found that moving from $0 to $10 a month reduced enrollment among children and adults by 12 percent to 15 percent.
What struck Dague about those results was that it’s not just the magnitude of the premium that matters, but the existence of a premium.
“The biggest effects in my data were at the margin where folks start having to pay premiums at all,” she told me by phone last week. She wasn’t sure why that was — perhaps the difficulty of paying another monthly bill or the psychology of having to pay in the first place.
What makes these papers relevant is that at least four states — Indiana, Iowa, Michigan and Pennsylvania — have expanded or are trying to expand Medicaid access in a way that imposes premiums on those making from 101 percent to 138 percent of poverty. Those premiums aren’t high: $25 a month in Indiana, $10 in Iowa, $25 in Pennsylvania ($35 for a household) and 2 percent of income in Michigan. But these new studies show that even those small amounts can significantly reduce the number of people who sign up.
That seems to be the point. After all, Medicaid spending per beneficiary will reach almost $6,400 in 2014, against which $120 in premiums each year generates additional revenue that’s barely significant. And as Dague notes, imposing a premium at all means spending money to obtain and process those payments.
“If the administrative costs of collecting premiums are high relative to revenue collected,” she wrote, “small premiums seem difficult to justify as anything other than a measure to discourage enrollment.”
If the states that have already imposed premiums were the outliers, then this would be a frustrating story but a limited one. However, 24 states still refuse to expand their Medicaid programs, and there’s a strong chance that some of those will change their minds on the condition that they can impose premiums, too. There’s an equally good chance that the Centers for Medicare and Medicaid Services, which faces pressure to bring those states into the fold, will go along with it.
Unquestionably, access to Medicaid for a small premium is better than no access at all. But this new research says we shouldn’t mince words about the point of those premiums. They’re designed to get fewer people to sign up.
****Children’s Health Insurance Program Premiums Adversely Affect Enrollment, Especially Among Lower-Income Children
By Salam Abdus, Julie Hudson, Steven C. Hill and Thomas M. Seedless
Health Affairs, August 2014
In this article we have examined the effects of public premiums on insurance coverage of children who were eligible for Medicaid or CHIP and whose family incomes were above 100 percent of the federal poverty level in 1999–2010. Higher public premiums are associated with lower public coverage and with increases in private coverage and uninsurance. The magnitudes of these premium effects vary considerably by poverty level and by parental coverage offers.
Among lower-income children, premium increases are associated with larger reductions in enrollment in public coverage, and a larger share of the decline in enrollment takes the form of increased uninsurance. The association between premiums and uninsurance is particularly strong among lower-income children who lack access to employer-sponsored insurance through parental offers.
****The effect of Medicaid premiums on enrollment: A regression discontinuity approach
By Laura Dague
Journal of Health Economics, September 2014
This paper estimates the effect that premiums in Medicaid have on the length of enrollment of program beneficiaries. Whether and how low income-families will participate in the exchanges and in states’ Medicaid programs depends crucially on the structure and amounts of the premiums they will face.
The obsession of the policy and political communities with requiring even low income families to experience consumer sensitivity to costs has crossed the bounds into blatant psychopathology, as these studies confirm.
The Medicaid and CHIP programs were specifically designed to provide health care coverage for low income families – a goal with which most caring individuals agree. The very modest Medicaid and CHIP premiums extracted from these families are so small that they have no impact on the overall financing of the programs. Yet they are enough that these families with no discretionary income find these programs to be unaffordable, and so they remain uninsured.
The screwball idea that these premiums somehow make these low income families better consumers is totally void of reason. These premiums merely defeat the purpose of the programs – getting these people the coverage that they need. The psychopathology rests with those who insist that cash payments, no matter how small, are absolutely essential for these families to appreciate the benefits of actively participating in markets rather than passively accepting a government handout. This is ideology gone mad!
Under a well designed single payer system, premiums and cost sharing are eliminated. People simply get the heath care they need when they need it. Paying for the system is totally removed from the delivery of care since it is financed through progressive taxes that everyone can afford.
By William Cabin, David U. Himmelstein, Michael L. Siman and Steffie Woolhandler
Health Affairs, August 2014
For-profit, or proprietary, home health agencies were banned from Medicare until 1980 but now account for a majority of the agencies that provide such services. Medicare home health costs have grown rapidly since the implementation of a risk-based prospective payment system in 2000. We analyzed recent national cost and case-mix-adjusted quality outcomes to assess the performance of for-profit and nonprofit home health agencies. For-profit agencies scored slightly but significantly worse on overall quality indicators compared to nonprofits (77.18 percent and 78.71 percent, respectively). Notably, for-profit agencies scored lower than nonprofits on the clinically important outcome “avoidance of hospitalization” (71.64 percent versus 73.53 percent). Scores on quality measures were lowest in the South, where for-profits predominate. Compared to nonprofits, proprietary agencies also had higher costs per patient ($4,827 versus $4,075), were more profitable, and had higher administrative costs. Our findings raise concerns about whether for-profit agencies should continue to be eligible for Medicare payments and about the efficiency of Medicare’s market-oriented, risk-based home care payment system.
Medicare’s home health payment system aims to harness market-oriented incentives for efficiency. CMS seeks to upgrade care through a quality monitoring program that imposes substantial documentation burdens on clinicians. Our findings suggest that this program may not fully insulate patients from profit-incentivized quality compromises.
Meanwhile, the payment incentives have nourished the growth of proprietary agencies whose costs (and profits) are far higher than those of their nonprofit counterparts. Overall, it appears that proprietary home care agencies deliver slightly lower-quality care at a substantially higher cost, belying claims that for-profit incentives increase efficiency.
Further analysis of the impact of proprietary ownership (and other factors associated with poor home health agency performance) is sorely needed. If our findings are confirmed, Medicare should consider returning to the pre-1980 prohibition on investor ownership of home health agencies and simplifying the current complex payment system, which has neither contained costs nor maximized quality.
H.R. 676, Expanded & Improved Medicare For All Act
Sponsored by Rep. John Conyers, Jr and 60 cosponsors
(a) Requirement To Be Public or Non-Profit.–
- In general.–No institution may be a participating provider unless it is a public or not-for-profit institution. Private physicians, private clinics, and private health care providers shall continue to operate as private entities, but are prohibited from being investor owned.
- Conversion of investor-owned providers.–For-profit providers of care opting to participate shall be required to convert to not-for-profit status.
Markets, competition, investor ownership, and profits are touted incessantly as being key to higher quality and lower costs in health care, even though Noble laureate Kenneth Arrow showed us decades ago why markets do not work in health care. Previously studies of hospitals, HMOs, nursing homes, hospices, and dialysis centers have show us that investor ownership is associated with lower quality and higher costs. We can now add Medicare home health agencies to that list wherein proprietary, for-profit investor ownership is detrimental.
H.R. 676, the Expanded & Improved Medicare For All Act, sponsored by Rep. John Conyers, Jr, is a single payer bill that includes provisions that would eliminate investor-owned, for-profit providers. Today’s article adds to the evidence as to why the leadership of Physicians for a National Health Program supports the elimination of passive investors and profit diversion from our health care system. Health systems must be designed to benefit patients, not market exploiters that sacrifice quality while draining resources from health care. The primary missions are different. One is to take care of patients and the other is to make money.
By Abby Goodnough
The New York Times, August 2, 2014
Advocates of the Affordable Care Act, focused until now on persuading people to buy health insurance, have moved to a crucial new phase: making sure the eight million Americans who did so understand their often complicated policies and use them properly.
The political stakes are high, as support for the health care law will hinge at least partly on whether people have good experiences with their new coverage.
Many people who signed up for private coverage through the new marketplaces had never had health insurance, and even the basics — like what a premium is and why getting a primary care doctor is better than relying on the emergency room — are beyond their experience. Others have a sense of how insurance works but find the details of the marketplace plans confusing, especially if they signed up without the help of someone who understood them.
Insurers, too, are trying to help ease their new members’ confusion. Independence Blue Cross, which enrolled 165,000 people in its marketplace plans, has representatives traveling the Philadelphia region this summer in a tractor-trailer, the Independence Express, and offering educational seminars. Independence also has tried to reach all of the new members by phone to welcome them and “make sure they understand what they bought,” said Paula Sunshine, the company’s vice president of consumer sales and marketing.
The company knew going in that the learning curve would be steep. It held focus groups last year with nearly 2,000 people and found, for example, that virtually none knew what coinsurance was.
In one sign of widespread confusion, a recent Kaiser Family Foundation survey of programs that helped people apply for marketplace coverage found that 90 percent had already been re-contacted by consumers with post-enrollment questions.
If health care reform had worked the way it should have, today anyone could get the health care that he or she needed without having to worry about how to pay for it. What are we seeing instead? Just trying to enroll in health care coverage has been a very difficult process for many, and tens of millions will still remain uninsured. And today’s article shows how problematic the next step is – trying to put your coverage to use.
Some of the problems have already been widely publicized. Newer plans, especially those in the exchanges, have low actuarial values (i.e., very high deductibles and other excessive cost sharing). Cost sharing can make care unaffordable for those with modest incomes. Plans are now using narrow- and ultra-narrow networks of hospitals and health care professionals which limit patients’ choices in their health care, often preventing access to the most appropriate physicians and hospitals. We are now seeing tiered levels of specialized services and pharmaceuticals in which patients are financially penalized if they use specialists or drugs in the higher, more expensive tiers even if they are clearly preferred for medical reasons. The penalty is assessed by the insurers strictly to dissuade patients from using more expensive care even though it may be better care. Patients are also having difficulties determining not only whether specific providers are in or out of their networks, but also which tier they are in and what that means. Furthermore, the provider enrollment in these networks is quite unstable, not to mention the instability that arises when the patient must change plans and therefore change networks. This says nothing about the problems patients face when they try to get an appointment and find that there are no openings, or find that the distances are too far – directly due to the insurance innovation that promises a higher volume of patients to fewer physicians so that insurers can get greater discounts, even though overloading their practices. The list goes on and on with administrative excesses that are designed to enhance the business performance of the insurance products at a cost to the patients that they should be serving.
It should not have been this way. A single payer national health program would have automatically enrolled everyone; it would have included all providers, and it would have been financed through equitable taxes, making it affordable for everyone.
Although this New York Times article presents the problem as a need to teach individuals the complexities of using these newer insurance products, the problem is actually the complexities themselves and the tremendous injustices that ensue.
The remainder of this comment is composed of more excerpts from the NYT article. The experience of Salwa Shabazz should enrage us and drive us to demand health care justice for all. Her case shows us the compelling need for comprehensive structural reform of our health care financing system.
The following are excerpts from the NYT article (link above):
Last week, Salwa Shabazz arrived at the office of a public health network here with a bag full of paperwork about her new health insurance — and an unhappy look on her face. She had chosen her plan by phone in March, speaking to a customer service representative at the federal insurance marketplace. Now she had problems and questions, so many questions.
“I’ve had one doctor appointment since I got this insurance, and I had to pay $60,” Ms. Shabazz told Daniel Flynn, a counselor with the health network, the Health Federation of Philadelphia. “I don’t have $60.”
Mr. Flynn spent almost two hours going over her Independence Blue Cross plan, which he explained had a “very complicated” network that grouped doctors and hospitals into three tiers. Ms. Shabazz, who has epilepsy, had not understood when she chose the plan that her doctors were in the most expensive tier.
“None of that was explained when I signed up,” she said. “This is the first I’m hearing it.”
Independence Blue Cross has focused on making sure people understand the tiered-network plan that Ms. Shabazz chose, which was popular because of its relatively low price but also particularly hard to understand. Ms. Shabazz, 38, paid only about $32 a month in premiums, with federal subsidies of $218 covering the rest. But she could not afford the $60 co-payments to see her specialists on her annual income of $19,000.
Her financial situation worsened when she had to quit her job at the Pennsylvania Liquor Control Board in June because of the epilepsy, she said. She had called the federal marketplace to report her change in income, and had received a letter that she handed to Mr. Flynn, hoping he could explain it. The news, he said, was not good: With no more paychecks, she had fallen into the so-called coverage gap, earning too little to keep qualifying for the subsidies that made her premiums affordable, but likely still not qualifying for Medicaid because Pennsylvania has not expanded that program, as 26 states have under the Affordable Care Act.
“You’ll probably have to cancel your plan,” he said.
Ms. Shabazz’s mother, Waheedah Shabazz-El, who had accompanied her to the appointment, shook her head as her daughter wiped away tears. “There are so many layers to this,” Ms. Shabazz-El said.
Closing comment by Don McCanne: We are not powerless. Let’s demand single payer, and not let up until we get it.
By Stuart Pfeifer, Chad Terhune, Soumya Karlamangla
Los Angeles Times, July 31, 2014
Defying an industry trend of double-digit rate hikes, California officials said the more than 1.2 million consumers in the state-run Obamacare insurance exchange can expect modest price increases of 4.2% on average next year.
“We have changed the trend in healthcare costs,” said Peter Lee, Covered California’s executive director. “This is good news for Californians.”
State officials and insurers credited the strong turnout during the first six-month enrollment window that ended in April for helping to keep 2015 rates in check. But others cautioned it’s still too early to gauge the health law’s impact, suggesting several factors may be temporarily holding rates down in the individual market.
“We don’t really know what the real cost of Obamacare is yet because insurance companies are heavily subsidized for the first three years” of the law’s implementation, said Robert Laszewski, a healthcare consultant in Virginia who has closely tracked the overhaul. “The insurance companies essentially can’t lose money.”
California Insurance Commissioner Dave Jones said the modest uptick in premiums was a positive sign, but he said insurers were likely motivated by a November ballot initiative, Proposition 45, that would give his office new authority to regulate health insurance rates.
“This is merely a pause in the double-digit rate increases we’ve seen historically,” Jones said.
Consumer Watchdog, the Santa Monica advocacy group pushing Proposition 45, said insurers held back this year to avoid that kind of voter backlash.
WellPoint Inc., Anthem Blue Cross’ parent company, Kaiser and other insurers have contributed more than $25 million to defeat the ballot measure.
Before we discuss some of the possible reasons that the 2015 increase in premiums for California’s ACA exchange were held down to 4.2 percent, we should mention the bad news that is not being covered by the media. We are celebrating an artificially low increase that is still twice the rate of inflation – 2.1 percent (Consumer Price Index, June 2014 – Bureau of Labor Statistics), as workers continue to fall behind over the last three decades of increasing income inequality.
Although ACA enthusiasts are touting success in controlling health insurance premiums, there are many reasons why their celebration is premature, but two stand out.
Proposition 45, which will be on the November ballot, would provide authority to California’s insurance commissioner to regulate health insurance premiums. The last thing the insurers want to do is to anger voters with high rate increases just before this election. The insurers have already contributed over $25 million to defeat this measure.
The other important reason is that the insurers are still protected by reinsurance and insurance rate corridors. In fact, the Obama administration adjusted this coverage to be sure that the insurers were fully protected again next year should they not receive enough premium revenue to meet their expenses. They can’t lose! Of course they are going to come in with low bids when they are under the threat of voter revolt.
And what about the next year when they no longer have protection against losses? We already know the routine. “The patients enrolled in our plans were older and sicker while the younger, healthier individuals were covered by plans at work, or bought the cheap catastrophic plans, and the new drugs that cost tens of thousands of dollars or more placed a strain on our budgets, and our contingency reserves were depleted with the market crash of 2015, and we’ve lost our rate flexibility with the termination of government reinsurance, and…” Well, you know.
Although there are many other uncertainties as the implementation of ACA plays out, one certainty that we can rely on is that insurers will be requesting much larger premium increases for 2017, possibly double digits. That would not be happening under a single payer national health program.
By Victor R. Fuchs
The Atlantic, July 23, 2014
Despite the news last week that America’s healthcare spending will not be rising at the sky-high rate that was once predicted, the fact remains that the U.S. far outspends its peer nations when it comes to healthcare costs per capita. This year the United States will spend almost 18 percent of the gross domestic product (GDP) on healthcare.
Why does the United States spend so much more?
The biggest reason is that U.S. healthcare delivers a more expensive mix of services. For example, a much larger proportion of physician visits in the U.S. are to specialists who get higher fees and usually order more high-tech diagnostic and therapeutic procedures than primary care physicians.
A second important reason for higher healthcare spending in the U.S. is higher prices for inputs such as drugs and the services of specialist physicians. The prices of branded prescription drugs in the U.S. are, on average, about double those in other countries. The fees of specialist physicians are typically two to three times as high as in other countries. The lower prices and fees abroad are achieved by negotiation and controls by governments who typically pay for about 75 percent of all medical care. Government in the U.S. pays about 50 percent, which would still confer considerable bargaining power, but the government is kept from exerting it by legislation and a Congress sensitive to interest-group lobbying.
The third and last important reason for higher spending in the U.S. is high administrative costs of insurance. Many of our peer countries have lower administrative costs through more coordination, standardization, and in some countries a single national system or several regional healthcare-insurance systems, even when the provision of care is primarily a private-sector responsibility.
The complexity of private-sector insurance is not in the public interest. Each company offers many plans that differ in coverage, deductibles, co-pays, premiums, and other features that make it difficult for buyers to compare the prices of different policies.
If we turn the question around and ask why healthcare costs so much less in other high-income countries, the answer nearly always points to a larger, stronger role for government. Governments usually eliminate much of the high administrative costs of insurance, obtain lower prices for inputs, and influence the mix of healthcare outputs by arranging for large supplies of primary-care physicians and hospital beds while keeping tight control on the number of specialist physicians and expensive technology. In the United States, the political system creates many “choke points” for diverse interest groups to block or modify government’s role in these areas.
For those who would like to limit government control, there is an alternative route to more efficient healthcare through “managed competition,” proposed by Alain Enthoven, a Stanford University Business School Professor, more than 25 years ago. It is based on integrated group practice, which brings the insurance function, physicians, hospital, drugs, and other elements of care into a single organization that takes responsibility for the health of a defined population for an annual risk-adjusted per capita payment. Examples include the Group Health Cooperative of Puget Sound in Seattle and the Kaiser Permanente organizations in California.
With regard to healthcare, the United States is at a crossroads. Whether the Affordable Care Act will significantly control costs is uncertain; its main thrust is to reduce the number of uninsured. The alternatives seem to be a larger role for government or a larger role for managed competition in the private sector. Even if the latter route is pursued, government is the only logical choice if the country wants to have universal coverage. There are two necessary and sufficient conditions to cover everyone for health insurance: Subsidies for the poor and the sick and compulsory participation by everyone. Only government can create those conditions.
Highly respected Stanford economist Victor Fuchs has long supported private solutions to universal coverage, such as Alain Enthoven’s managed competition. Although there is much to be said for establishing integrated health care delivery systems within the community, the logistics of providing all care through competing integrated delivery systems have proven to be insurmountable, as witness the managed care revolution that reduced this concept to competition between inefficient, expensive and intrusive third party insurer money managers.
Fuchs now notes that “the complexity of private-sector insurance is not in the public interest.” He acknowledges the crucial role of government in other nations. He states that we are now at a crossroads between “a larger role for government or a larger role for managed competition in the private sector.” Even if private managed competition is selected, “government is the only logical choice if the country wants to have universal coverage.”
But look at the government requirement he would impose if the private managed competition option were selected: “Subsidies for the poor and the sick and compulsory participation by everyone.” We already have that in the Affordable Care Act, and yet we will be left with 31 million uninsured.
At least Fuchs is right when he says, “Only government can create those conditions.” But the vehicle has to be functional. That’s why we need to do it through a single payer national health program. We can still have our integrated health care delivery systems that Arnold Relman also supported, but in addition we will need the other components that make the system work efficiently for all of us.
By Bianca DiLulio, Jamie Firth, Larry Levitt, Gary Claxton, Rachel Garfield and Mollyann Brodie
Kaiser Family Foundation, July 30, 2014
Of those Californians who were uninsured prior to open enrollment, 58 percent now report having health insurance, which translates to about 3.4 million previously uninsured adult Californians who have gained coverage, and 42 percent say they remain uninsured. The most common source of coverage was Medi-Cal with 25 percent of previously uninsured Californians reporting they are now covered by Medi-Cal. An additional 9 percent of California’s previously uninsured say they enrolled in a plan through Covered California, resulting in about a third reporting new coverage from the two sources most directly tied to the ACA. Twelve percent say they obtained coverage through an employer and 5 percent report enrolling in non-group plans outside of the Covered California Marketplace; some enrollment in these types of coverage may have been motivated by the ACA’s requirement to purchase insurance and some may be the result of normal movement within the marketplace.
Section 3: The Remaining Uninsured
Who Remained Uninsured?
As many previously uninsured Californians gained coverage, 42 percent remained uninsured. Many of the remaining uninsured have tenuous links to health insurance posing challenges for future enrollment efforts. Forty-five percent of the remaining uninsured reported in the baseline survey that they had been without health insurance for two or more years and an additional 37 percent said they have never had insurance. Hispanics make up 62 percent of the remaining uninsured and nearly half of them (29 percent) are undocumented Hispanics who are not eligible for Medi-Cal or assistance through Covered California. About 4 in 10 (39 percent) report family income that put them in the group likely eligible for Medi-Cal and another quarter (24 percent) are likely eligible for financial assistance through Covered California. These shares reflect the demographics of people who were uninsured prior to the first ACA open enrollment period and did not get coverage during the open enrollment period. Others may have been covered prior to open enrollment but now uninsured – a group not captured by this survey.
Why Did They Remain Uninsured?
Why did 42 percent of California’s uninsured prior to open enrollment remain without coverage? Most of the remaining uninsured seem to value insurance, with majorities saying it is something they need (71 percent) and that it is worth the costs (59 percent). Still roughly 3 in 10 of the remaining uninsured say they can get by without insurance (28 percent) or don’t feel coverage is worth the price (33 percent), including 4 in 10 (40 percent) of those who are likely eligible for coverage through Covered California or Medi-Cal due to their self-reported income level and immigration status.
The cost of insurance (whether perceived or actual) remains a barrier. When asked in their own words why they didn’t get coverage, one-third (34 percent) point to costs as the reason. Fifteen percent say they don’t qualify or don’t think they do, including 9 percent who say they can’t enroll or are worried about signing up because of their immigration status. Other reasons the remaining uninsured give for not signing up for coverage include not having yet tried or being too busy (9 percent), not having enough information about enrolling (9 percent), having tried but not being successful (8 percent), and not wanting or needing coverage (7 percent). A few (6 percent) say they didn’t get insurance because of issues associated with the application process, including three percent who say they are still awaiting contact or approval – a finding that is perhaps related to the large backlog of about 900,000 Medi-Cal applicants waiting for counties across the state to process their applications.
California’s Undocumented Uninsured
In California, undocumented immigrants make up about a fifth of those who were uninsured before the ACA expansions kicked in, and under the law, they are not eligible for Medi-Cal or subsidies through the exchange. As a group they are largely aware of these restrictions – 63 percent say they are not eligible for Medi-Cal and 70 percent say they don’t qualify for financial assistance through Covered California. Half say the mandate doesn’t apply to them and most (60 percent) correctly respond that they won’t have to pay a fine for not having coverage.
While the ACA restricts access to health benefits for undocumented immigrants under the law, there is still keen interest in coverage among this group. Since last summer about a third (35 percent) of California’s undocumented uninsured say they obtained coverage and of those who remain uninsured, half say they intend to get coverage later this year. In fact, the remaining undocumented uninsured are more apt to say they place a high value on insurance than other remaining uninsured Californians; nearly three quarters (73 percent) of the undocumented uninsured say health insurance is worth the cost and 85 percent say it is something they need, each 20 percentage points higher than the share for other remaining uninsured Californians.
California’s aggressive efforts to implement the provisions of the Affordable Care Act resulted in 58 percent of the previously uninsured now having coverage – about 3.4 million individuals. While this certainly gives cause for celebration, it must be tempered by the knowledge that 42 percent of the previously uninsured are still uninsured. Who are these people and why are they not insured?
The excerpts above provide a brief answer, though much more is available in the comprehensive report at the link above. In very general terms, as these authors note, many of the remaining uninsured “have tenuous links to health insurance posing challenges for future enrollment efforts.” The roughly 2.5 million previously uninsured who still remain uninsured will provide much greater challenges in trying to get them enrolled in some form of coverage, and a great many of them will still remain uninsured.
A comment should be made about California’s undocumented residents. They tend to be blamed by some for California’s high numbers of uninsured. Actually they constituted only about one-fifth of the uninsured before implementation of ACA. Although they are not eligible for Medi-Cal (Medicaid) nor for subsidies under Covered California (ACA insurance exchange), 35 percent obtained coverage on their own and another 50 percent intend to later this year. They have, in fact, been more responsible in this regard than have other uninsured Californians who were not enrolled in Medi-Cal or Covered California.
California’s efforts have been exemplary, and those involved in the ACA implementation are to be commended. Yet it is likely that one or two million people will remain uninsured. That’s not acceptable, and it is not California’s fault. California, and the entire nation for that matter, has an irreparably flawed health care financing infrastructure with which to work. It is obvious what we need to do. We need to replace this flawed system with a single payer national health program covering everyone, including the undocumented. The sooner the better.
By David Dranove and Craig Garthwaite
Narrow Networks Redux, July 29, 2014
The Affordable Care Act is premised, at least in part, on the notion that competition can be harnessed to reduce healthcare costs and improve quality.
When most people think about the benefits of competition, they tend to think about prices. Monopolies charge high prices; competitors charge low prices. There is nothing wrong with this perspective, but it misses a more fundamental point. In the long run, the greatest benefit of competition is that it has the potential to fuel innovation.
This is as true, in theory, for health insurers as it is for telecommunications and consumer electronics. It hasn’t always been true in practice; for several decades after the IRS made employer-sponsored health insurance tax deductible, insurers tended to offer the same costly indemnity products. But consumers eventually demanded lower premiums, and insurers responded with managed care. After the backlash, insurers developed high deductible health plans and value based insurance design. Insurers are now moving towards reference pricing. These plans offer consumers reimbursement up to a pre-specified level for treatments that can be easily broken into a treatment episode such as hip replacements or MRIs.
High deductibles and reference pricing are fine, but do not always work in practice. Chronically ill patients quickly exhaust their deductibles, and reference pricing does not work well for chronic diseases. In order to complement these tactics, some insurers are once again offering narrow network plans. We commented in earlier blog posts that the ACA would catalyze the return of these narrow networks and also warned that this might fuel another backlash. Unfortunately, a recent New York Times article shows, the backlash is well underway.
Make no mistake, restrictive networks are essential to cost containment. Through narrow networks, insurers can negotiate lower prices. More importantly, they can direct enrollees to providers who have lower overall costs and higher quality. Dranove has written two books about this. Don’t take his word for it. The independent Robert Wood Johnson Foundation has published two comprehensive studies showing that the competition triggered by networks has been successful in reducing costs and improving quality.
By definition, some providers are excluded from narrow networks, and this is where the trouble begins. Excluded providers who have lost out in the cauldron of competition always complain the loudest. We should have no sympathy for them.
What about patients? Some patients knowingly choose health plans with narrow networks in order to save money, and should not be surprised to find that some of their favorite providers are excluded. Others may be in the dark about their networks. The solution isn’t to regulate narrow networks out of existence; it is to shine some light on network structure.
Another concern may be that low income enrollees who cannot afford broader networks might be at a disadvantage. But if we want to provide big enough subsidies so that all enrollees have broad networks, we will have to either (a) raise taxes further, or (b) limit the number of uninsured we can enroll. Neither choice seems better than the status quo.
Now, this does not mean that we think there is no place for regulation of narrow network plans. We don’t think that the newly formed ACA exchanges, or any market, should be the proverbial Wild West. For example, if we want consumers to make educated choices across insurance plans, then they require timely and accurate information about which providers are in which networks. We would think this would be more than feasible, though healthcare.gov was somehow unable to provide this information to many of the initial enrollees. We understand that providers go in and out of networks all the time and it would be burdensome for insurers to inform enrollees of all network changes in real time. But insurers could provide regular updates. We also wonder if insurers have the capability of identifying, through billing records, when a particular patient’s provider has gone out of network, and sending that patient an immediate update. In these situations, patients should be allowed to change their choice of plans outside of the open enrollment period in the same way they might be able to if they had another qualifying event such as the birth of a child.
In addition, narrow network plans are only effective if there are multiple high quality providers offering services in an area. Given the recent wave of provider consolidations, it is critical that anti-trust authorities carefully monitor these mergers. After all, competition can only work in truly competitive markets.
But what we must avoid is mandating broader access. This would spell the end of market-based health reform. If insurers cannot exclude some providers, then providers have little incentive to lower prices and become more efficient.
Many states have already attempted to mandate minimum access through Any Willing Provider laws. These laws require insurers who have come to terms with a specific provider to accept all providers who agree to those same terms. This may sound fair, but the economic implications of AWP for patients are anything but fair. Under AWP, no providers need negotiate with insurers or accede to an insurer’s request for discounts. Providers can bide their time, knowing that they can always force their way into the network. Having lost all their leverage, insurers can no longer demand discounts, and prices invariably rise.
The push for broad access seems to be especially strong in sparsely populated states such as Montana. But proposals to assure access, which often take the form “At least X% of enrollees must live within Y miles of a provider” do more to drive up costs than any other rules we can imagine, because they grant effective monopoly rights to rural providers. Insurers facing such rules have two options (a) accede to the pricing demands of the local monopolies, or (b) drop coverage in areas where providers have been granted local monopolies. Montanans may as well have nationalized healthcare.
This blog entry by David Dranove and Craig Garthwaite is another example, like yesterday’s, where economists from “the other side” clearly understand the policy issues, but are guided by an ideological preference for market solutions as opposed to more effective government solutions.
Narrow networks do terrible things. As these authors state, narrow networks provoke backlashes from patients who are unhappy with the restrictions. Healthy individuals select their plans primarily based on price but then are disappointed when they find that the networks are unable to meet either their needs or their choices. The narrow networks become anti-competitive when excluded providers leave the community and are not available for the next year of provider contracting. The authors point out that requiring the providers to be within a reason distance from patients drives up costs, as if cost containment is far more important than access. With the inevitable changes in patient plan enrollment and in provider network enrollment, narrow networks can be highly disruptive because of the need to leave your established care and enter new narrow networks. Perhaps worst of all, the authors state that “low income enrollees who cannot afford broader networks might be at a disadvantage.” But then they state that if we are to broaden the networks we must “either (a) raise taxes further, or (b) limit the number of uninsured we can enroll,” as if there were absolutely no other option for containing costs that did not involve narrow networks. They seem to believe that the trade-off is worth the cost of disadvantaging low income enrollees.
They contend that “restrictive networks are essential to cost containment,” after making the case that other market tools of competition have been inadequate. But ideology dictates that market competition must be the driving force for cost containment. They caution that mandating broader access “would spell the end of market-based health reform.”
The case they make for Montana seems to be the clincher on why narrow networks are such a highly flawed policy – a conclusion that they did not intend. They complain that requiring reasonable distances to health care creates a provider monopoly that will cause insurers to either charge outrageous rates or simply drop coverage. They say that “Montanans may as well have nationalized healthcare.” Maybe they should, as should the rest of us.
If the inadequacy of other tools of market competition have required insurers to turn to perverse narrow networks maybe we should be questioning whether market competition is the best policy for controlling costs. Come to think of it, maybe we should listen to these authors when they say that allowing broader access “would spell the end of market-based health reform.” Other national systems depending on government administered pricing provide care for everyone at an average of half of what we are spending per capita. Now that’s effective cost containment, and it’s accomplished without kowtowing to the ideologues who insist that health reform must be market based.
By Dana P. Goldman and Tomas J. Philipson
Forbes, April 1, 2014
Health insurance markets allow people to share risks; those lucky enough not to need health care pay premiums to cover care for the unlucky ones who do. This risk-sharing—which most of us are very willing to purchase — amounts to a modest income loss through our premiums when we are healthy to avoid serious financial trouble when we are sick.
However, a disturbing trend has emerged over the last few years. As health care costs have risen, many insurance companies have responded by starting to increase cost-sharing on to patients when they get sick, sometimes dramatically. This has occurred particularly for the unlucky patients who are the sickest and who need highly specialized therapies. Such so called “specialty drugs” are different than standard prescription drugs and often cost substantially more, many times because they are harder to manufacture. For example, the Centers for Medicare and Medicaid Services, the agency that implemented the Medicare Part D prescription drug benefit, allowed plans to create a ‘formulary tier’ specifically for drugs costing $600 or more per month—and about 90 percent of plans use them. And, among the plans who use the tier, more than half require patients to pay 25% or more of costs. The drugs on this tier are those of patients faced with many difficult conditions – it includes medications for rheumatoid arthritis, osteoporosis, MS, and even cancer.
This insurance design often means that the sickest patients also take the largest financial hits; what we argue amounts to a “double jeopardy” of current health insurance. Consider the case of cancer care which is a relatively rare event compared to diseases like hypertension or diabetes, but often leads to a cascade of high expenses. Insurance companies are now pushing those expenses on patients at the time of care, rather than covering them through premiums paid before illness. Ironically, this has led to outrage against manufacturers of cancer treatments rather than payers, For example, oncology specialists have often criticized the manufacturers for the high prices involved because their patients can’t afford the treatments. The irony is that other forms of care are much more expensive — such as the use of intensive care units (ICUs) — yet there is no outcry by physicians against the device manufacturers concerning these costs. The reason is that ICU care–which often costs about $4,000 per day in the most futile cases–is fully covered (as it should be), whereas the specialty treatments remain only partially covered.
Pushing these costs onto the patient at the time of sickness not only distorts treatment patterns, but also leads to inequity. One common strategy to manage these specialty products is to force patients to try cheaper treatments before insurers will cover more expensive ones – a practice euphemistically called ‘step therapy.’ For those who respond to the cheaper therapy, they get better and pay very little. But for those who are unlucky enough not the respond to the first treatment, they move to the next therapy, often at much higher cost. The result is both worse health prospects but also a larger financial burden for the same but more severe form of the same disease, another form of double jeopardy. The high out-of-pocket costs of second-line therapy may also encourage patients and their physicians to retry ineffective, first line therapies, sometimes at great risk to the patient. Patients with more recalcitrant disease are being asked to pay more—the opposite of what we want insurance to do.
Since the 1960’s, economists have noted that cost-sharing at the time of illness for medical services is a way to balance the financial risks of health care spending against improper incentives for care when sick. On the one hand, full coverage eliminates all financial risks to patients, but it provides no incentive to economize on care when sick. On the other hand, no insurance imposes too much risk on a patient while it provides better incentives to economize on care. Thus, economists agree that the optimal cost-sharing should strike a balance between financial protection and proper incentives to economize on care. In particular, when treatments are valuable and patients are willing to seek them at very high prices, economists recognize there is little value to high copayments because they would just impose financial risks through care that would have been undertaken anyway. However, double jeopardy of American insurance imposes financial risk on the patient at precisely the moment when it is likely least appropriate. A cancer patient is willing to pay large sums to cling on to life, but is hit with both the dreaded disease and a large medical bill at the same time.
What can be done to limit the damage of double jeopardy in insurance? In cases where treatment is effective, payers should provide real insurance and not impose substantial burdens on patients when they are sick—especially those who do not respond to conventional first line care. In face of market forces, we would expect patients or their benefit managers to sooner or later shun plans with double jeopardy designs. The second best alternative would be to encourage manufacturers to fix the insurance failure by providing copayment assistance for these patients. The analogy is Medigap coverage, which provides secondary insurance for costs that Medicare does not cover. In the private sector, such coverage is often outlawed on the grounds that it interferes with payer’s incentives to make patients economize on care.
The bottom line is that insurance that doesn’t cover the financial risks for the sickest seriously lowers the value of coverage to the insured pool, imposes the largest losses on the sickest even within the same diagnosis, and leads to finger-pointing at the wrong parties.
Dana P. Goldman is the Leonard D. Schaeffer Chair and Director of the Schaeffer Center for Health Policy and Economics at the University of Southern California. Tomas J. Philipson is the Daniel Levin Chair of Public Policy at the University of Chicago. Both are founding partners of Precision Health Economics LLC.
This is an important article. The topic is important because it represents one of the more serious flaws in recent trends of health care financing reform – a flaw which results in greater financial burdens being imposed on people with serious medical disorders. It is also important because it represents the views of two authorities in the health policy community who come from the “other side,” generally holding views at odds with the health care justice positions of PNHP. This time they are right.
Insurers are using several techniques that place patients in “double jeopardy” – facing both the burdens of serious illness and the high costs imposed on them by insurance plan design. When serious medical problems develop, the insurers impose higher cost sharing on patients through techniques such as ever higher deductibles, large coinsurance requirements (paying a higher percentage of costs rather than lower copayments), and tiering of drugs and specialized services with even higher coinsurance requirements for the most expensive tiers.
The authors note that, not only are the patients exposed to higher costs, but some insurers require less expensive treatments as a trial before high cost treatments will be authorized (stepped therapy). The risk of delay of definitive treatment is obvious in disorders such as cancer, not to mention that it introduces more inequity into health care.
Although they repeat the consumer-directed canard that cost sharing is essential to provide incentives to economize on care, they seem to express the opposite view when they state, “when treatments are valuable and patients are willing to seek them at very high prices, economists recognize there is little value to high copayments because they would just impose financial risks through care that would have been undertaken anyway.”
Further, they state, “double jeopardy of American insurance imposes financial risk on the patient at precisely the moment when it is likely least appropriate. A cancer patient is willing to pay large sums to cling on to life, but is hit with both the dreaded disease and a large medical bill at the same time.”
Their solution is even more interesting, considering where they come from. “In cases where treatment is effective, payers should provide real insurance and not impose substantial burdens on patients when they are sick — especially those who do not respond to conventional first line care. In face of market forces, we would expect patients or their benefit managers to sooner or later shun plans with double jeopardy designs.” Imagine that. They suggest that the markets will reject precisely those cost sharing plans that their colleagues on the “other side” are pushing – plans which have gained great traction in recent years, especially since the implementation of the Affordable Care Act.
An alternative proposal of theirs also seems to reject the concept of making the consumer a better health care shopper through cast sharing. “The second best alternative would be to encourage manufacturers to fix the insurance failure by providing copayment assistance for these patients. The analogy is Medigap coverage, which provides secondary insurance for costs that Medicare does not cover.” Wow. Right now their colleagues are recommending that Medigap be pared back to deliberately increase exposure of patients to the direct costs of health care.
We can be thankful that these authors have pointed out the perversities of cost sharing. They do speak of “balance” but not when the burden is significant. Although, what might seem to many to be modest levels of cost sharing, that balanced level has been shown to be a harmful burden for those of more modest means.
We should accept their principle that payers should provide real insurance without burdens or secondary insurance for uncovered costs. But far easier and much more efficient than altering the private insurance model would be to replace it with a universal prepaid health system with equitable public funding (i.e., single payer). Although Goldman and Philipson are not quite there, maybe we can coax them over.
By Ted Van Dyk
Crosscut.com (Seattle), July 23, 2014
Seattle City Council member Kshama Sawant also was critical of Obamacare, arguing that the administration colluded with drug and insurance companies in framing it. Sawant spoke longest and most avidly at the meeting. She called on committed single-payer supporters to follow the example of those who sought a $15 minimum wage in Seattle, and bring tireless pressure to bear on Democratic officeholders in particular. Sawant is a committed socialist who often referred to “working class interests” and “corrupt corporations, banks, and hedge fund operators.”
Kshama Sawant (video at 4:45):
“Our discussion should be formulated not on the basis of whether or not the ACA delivered something good. Maybe it did, but that’s not the point. The point is, what are we not getting from it, and why didn’t we win single payer health care? That’s what I would like to focus on.”
Socialist Kshama Sawant, a member of the Seattle City Council, came to national attention by leading her fellow council members in passing a $15/hour minimum wage for their city. Having shown that political activism can still be effective, she has important advice for us in our efforts to enact single payer reform.
Currently attention has been diverted from single payer, as most progressives are celebrating the supposedly great successes in implementation of the Affordable Care Act (ACA). Even the Republicans in Congress who have voted several times to repeal ACA, are now suing President Obama for not implementing it fast enough.
Those of us who continue to adamantly support single payer are facing criticism for not joining the ACA bandwagon. This is where Sawant’s message is so important. Whether “ACA delivered something good” is not the point. The point is, we have to inform the public on “what are we not getting from it.” And what we are not getting is most of the goals of reform! The accomplishments are extremely modest compared to the reform that we need.
What are we not getting from ACA that we would be getting from single payer?
- Truly universal coverage
- Dramatic reduction in administrative waste
- Removal of financial barriers to care
- Coverage of all essential health care services
- Free choice of hospitals and health care professionals
- Removal of the interventions and excesses of the private insurers
- Taxpayer financing based on ability to pay
- Infrastructure reform that would slow spending to sustainable levels
And what successes are the ACA supporters touting (though using different rhetoric)?
- Coverage of only about half of the uninsured
- Shift to underinsurance products
- Guaranteed issue of these underinsurance products
- Deductibles that keep patients away from care by erecting financial barriers
- Insurance subsidies that are inadequate
- Ultra-narrow networks that take away choice
- Insurance marketplaces that increase administrative complexity and waste
- Inadequate cost containment policies (except for perverse higher deductibles)
Sawant delivers a very strong leftist message on social justice issues, and includes in her comments the failures of the Democratic Party to act. But this point on what we are not getting from ACA and why we need single payer is not a leftist message. It is a call for all of us from across the political spectrum who support single payer to take control of the message. We can no longer allow ourselves to be a meek voice silenced by those who, for noble and ignoble reasons, celebrate the paltry successes of ACA.
Again, the something good that ACA did is not the point. The point is what we are not getting from ACA and would be getting under a single payer system. Let’s drown out the message of the ACA supporters who wimped out on real reform.