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eridani

Profile Information

Gender: Female
Hometown: Washington state
Home country: USA
Current location: Directly above the center of the earth
Member since: Sat Aug 16, 2003, 02:52 AM
Number of posts: 45,233

About Me

Major policy wonk interests: health care, Social Security/Medicare/Medicaid, election integrity

Journal Archives

How Insurers Competed in the Affordable Care Act's First Year

http://www.commonwealthfund.org/publications/issue-briefs/2015/jun/insurers-aca-first-year

Prior to the Affordable Care Act (ACA), most states’ individual health insurance markets were dominated by one or two insurance carriers that had little incentive to compete by providing efficient services. Instead, they competed mainly by screening and selecting people based on their risk of incurring high medical costs. One of the ACA’s goals is to encourage carriers to participate in the health insurance marketplaces and to shift the focus from competing based on risk selection to processes that increase consumer value, like improving efficiency of services and quality of care. Focusing on six states — Arkansas, California, Connecticut, Maryland, Montana, and Texas — this brief looks at how carriers are competing in the new marketplaces, namely through cost-sharing and composition of provider networks.



Comment by Don McCanne of PNHP: What should the consumer expect from marketplace competition? Business experts tell us that competition is the key to higher quality at lower cost. So what has competition between private health insurance plans brought us?

Based on international comparisons, our health care quality is mediocre and our health care costs are by far the highest of all nations. The insurers have been ineffective in improving either of those. Okay, but what about the health plans themselves? Are we receiving high quality insurance products at low prices?

Before the Affordable Care Act (ACA), insurers competed primarily on the prices of their insurance premiums, and they still do. Before ACA, the most effective method of keeping their premiums from increasing more than they did was to exclude people from coverage who actually needed health care. The most important purpose of insurance is to make health care access affordable by diluting risk through insurance risk pools. Yet the insurers instead excluded risk by attempting to insure only those who could pass underwriting standards in the individual market, or by pricing group plans out of the market if they experienced high health care utilization.

A quality risk pooling program would be designed to ensure that everyone receives essential health care, yet by excluding those who have the greatest needs for care, the insurers abandoned any effort to ensure quality in their insurance products.

As far as costs are concerned, health care costs continued to escalate out of control, demonstrating that the insurers could not deliver on the promise of lower costs either.

What has happened since ACA was implemented?

Although the act prohibits medical underwriting, the insurers are still using devious methods to discourage individuals with greater heath care needs from enrolling. As an example, drugs used for certain chronic conditions are placed in upper tiers of drug coverage which require greater coinsurance payments, pricing these products out of reach for the patients, which deters them from joining the plan in the first place. Plans also are still selectively marketed to healthier populations. Professionals and institutions noted for providing care to high needs patents are frequently left out of the insurers’ networks, chasing away patients who use these providers. Again, these efforts to exclude those with needs confirm that the insurers are still marketing low quality insurance products that fall short of the health care needs of the community.

This new report from The Commonwealth Fund shows that the insurers are using two innovations to improve their competitive positions in the marketplace: cost sharing and narrow provider networks.

Cost sharing through deductibles, co-payments, coinsurance, and exclusion of coverage erects financial barriers to care, reducing the use of beneficial services and thus allowing the insurers’ premiums to be priced more competitively. An insurance product that is designed to keep people away from care that they need is a low quality product.

Narrow provider networks reduce health care utilization by preventing coverage of health care professionals and institutions that may be the most appropriate for the patients’ conditions, requiring them to turn to lesser care or no care at all. Also, care may be made less accessible simply by increasing the distances needed to travel to network providers while excluding nearby providers from the networks. Again, insurance products designed to impair access to appropriate health care providers are low quality products.

Thus, with ACA, insurers are impairing quality through the use of the barriers of cost sharing and narrow networks. And regarding costs, it appears that they are again on an upward trajectory. Health care prices have not been controlled. The only slowing has been due to a modest reduction in the use of beneficial health care services caused by these barriers that the insurers have erected. The insurers have failed again on their promise of higher quality at lower cost.

What about the future? The Commonwealth Fund report states, “we expect the competitive strategies in the marketplaces to evolve as consumers and carriers gain more experience with marketplace competition.” We know what this means. The insurers will not be looking for ways to pay for more beneficial health care services. They will be introducing more innovations that prevent patients from getting the care that they need. That’s the way that the marketplace for health insurance products works.

Medicare doesn’t work that way. Instead, efforts are made to include everyone who is qualified and to include all health care professionals and institutions. At the same time, payments are based on legitimate costs and fair margins - a system that is less costly because of administrative efficiencies.

If we really want higher quality at a lower cost, we need to improve Medicare and expand it to cover everyone. The private insurance industry certainly is never going deliver on quality and cost since they will do better for themselves with their warped approach to competition.

Old, Disabled People, and Social Security: A Study in Depression

http://www.commondreams.org/views/2015/06/25/old-disabled-people-and-social-security-study-depression

You work your whole life. You pay your taxes – boy, do you pay your taxes. Unlike upper-middle and upper-class folks who have tax preparers and accountants to help them with their taxes and find deductions and loopholes and so forth, you get slammed every year and you can barely keep afloat…then, the worst happens.

You get old and disabled and you can’t work any more and your disability/social security isn’t really enough to live on and you never were able to get much retirement money together so the government gives you something called SSI. Between that and Social Security you still don’t have enough to live on but what can you do?

To add indignity to insult, the government tells you how much money you can have in the bank and it ain’t much, and then if you work they cut out some of the SSI so you still don’t have enough to live on.

If someone lends you money to get by you can’t repay the debt out of your Social Security or SSI because the government watches everything you do and they don’t want you to borrow money or pay it back because the bottom line is the government is afraid to be cheated. Sadly enough, they are mostly afraid of being cheated by poor people. Rich people seem to be able to get away with murder.

Medicare Part D has not saved money for Medicare

Researchers find prescription drug benefit did not save money for Medicare

http://www.northeastern.edu/news/2015/06/researchers-find-prescription-drug-benefit-did-not-save-money-for-medicare/

“We are con­cluding that Medicare Part D did not save the (Medicare) pro­gram any money overall,” said Briesacher, a health ser­vices researcher in the School of Phar­macy with nationally-​​recognized exper­tise in drug policy and med­ica­tion use in older adults. “You have to be real­istic about the fact that giving people access to med­ica­tion is impor­tant, but it’s not going to sub­stan­tially save money in other parts of the health care system or keep a sig­nif­i­cant number of people out of the hospital.”


Did Medicare Part D Affect National Trends in Health Outcomes or Hospitalizations?

http://annals.org/article.aspx?articleid=2322799

Results: Five years after Part D implementation, no clinically or statistically significant reductions in the prevalence of fair or poor health status or limitations in ADLs or instrumental ADLs, relative to historical trends, were detected. Compared with trends before Part D, no changes in emergency department visits, hospital admissions or days, inpatient costs, or mortality after Part D were seen. Confirmatory analyses were consistent.

Conclusion: Five years after implementation, and contrary to previous reports, no evidence was found of Part D's effect on a range of population-level health indicators among Medicare enrollees. Further, there was no clear evidence of gains in medical care efficiencies.


Comment by Don McCanne of PNHP: Although it was important to include a drug benefit in the Medicare program there was concern that the conservatives designing the program wanted to allow the market to work its magic. The program was to be administered by private pharmacy benefit managers (PBMs) rather than the government. In fact, the government was even prohibited from negotiating drug prices with the manufacturers. Further, it was thought that the benefits of improving access to drugs would make patients healthier thus reducing future costs for Medicare.

This study shows that the magic did not work in that the drug benefit did not save money for Medicare, and it did not measurably change the health status of Medicare beneficiaries. Specifically there were no changes in emergency room visits, hospitalizations, and inpatient costs, nor was there any change in mortality.

It would not be surprising to see conservatives propose that the Part D program be terminated since it supposedly isn’t doing any good. But there are innumerable studies that have shown that some medications do provide at least a modest benefit, though those benefits were not detected by this study.

At any rate, it is clear that PBMs are not as effective price negotiators as is our government, as demonstrated by the greater value in drug purchasing that we have through the VA and the Medicaid program. Also, the PBMs waste considerable funds in excess administrative activities, not to mention the added middleman profits that they divert to themselves.

Under an improved Medicare for all we would have a more efficient and less costly publicly-administered program that would ensure that the government was paying fair prices for our drugs. It is not that way now.

High deductible plans discourage unnecessary care--and also necessary care

https://theconversation.com/health-care-cost-sharing-prompts-consumers-to-make-big-cuts-in-medical-spending-41657

“What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics” by Zarek Brot-Goldberg, Amitabh Chandra, Benjamin Handel and Jonathan Kolstad (43 slides):

http://eml.berkeley.edu/~bhandel/wp/BCHK.pdf

Giving consumers direct incentives to think about their health care spending is a cornerstone of health reform in the US and plays a large role in several national health systems around the world, such as in France.

An important prerequisite for these reforms to be successful is that consumers, who may or may not be making medical decisions in conjunction with physicians, understand the costs and benefits of different health care services. Our evidence suggests that consumers don’t seem to be responding to increased cost-sharing with nuanced expertise and instead reduce consumption across the range of medical services, some valuable and some likely wasteful.

Additionally, they reduce care heavily when sick and under the deductible, even when their true marginal price of care is very low.

Thus, while increased consumer cost-sharing can be an effective instrument for reducing health care spending, it may be a blunt instrument for encouraging higher value medical spending, especially relative to supply-side interventions that target physician incentives or interventions that reduce the use of high-cost low-value medical technologies.



Comment by Don McCanne of PNHP: A cursory glance at this article suggests that it is simply one ore study that confirms that high deductible plans decrease health care spending, and since you already know that you might be tempted to pass on reading today’s message. But don’t skip this one if you wish to better understand just what impact high deductibles really do have.

What is unique about this study is that it evaluated the patterns of the change in health care spending when a large firm switched about 85 percent of its employees from a PPO plan that provided first dollar coverage (no deductibles, no coinsurance, and $0 out-of-pocket maximum) to a HDHP (high deductible health plan with $3,750 deductible, 10% coinsurance, and $6,250 out-of-pocket maximum). The health care providers were the same both before and after the change was made. This is about as pure of a study as you could devise on this topic - the same employees, the same health care providers, but with a change to a high deductible with coinsurance and a new patient responsibility for up to $6,250 in cost-sharing.

As expected, spending abruptly declined - by about 19%. So was this a result of better price shopping, as the advocates of these consumer-directed HDHPs tout? No. Medical prices did not go down after the switch was made. These health care consumers did not shop prices.

What went down was the quantity of health care provided. In fact, the sickest employees reduced their use of health care services even more - by about 25%. The reductions in utilization were across the board - inpatient services, outpatient services, emergency room services, mental health care, drug purchases, imaging, and preventive health services. Most of these are beneficial services.

Another interesting finding is that those individuals with significant disorders who knew that they would reach their maximum out-of-pocket spending nevertheless reduced their utilization of health care services while they were still under the deductible. They did not need to reduce their use of these services since after the out-of-pocket maximum is reached, their marginal cost of additional health care is essentially zero. Their net costs are the same regardless of their utilization. It is likely that these sick individuals were needlessly forgoing beneficial health care services.

The author states, “consumers appeared to reduce consumption across a range of medical services, from low to high value.” Clearly policies that reduce the consumption of high value care are undesirable, and, for this reason alone, deductibles and coinsurance should be eliminated. But what about low value care? What is low value care? Is that the MRI that, in retrospect, turned out to be normal? Wasn’t there some benefit in excluding potential pathology? Attempting to ferret out low value care can be detrimental if it consequentially results in the blunt elimination of high value care as well.

Besides, how much spending reduction would we really see with the reduction in beneficial health care services that results from deductibles? Remember that the 20 percent of individuals with greater health care needs consume 80 percent of our health care services. Most of this spending is well above the maximum out-of-pocket costs and thus cost-sharing has very little impact on this spending. The deductibles might influence utilization for the other 80 percent of us, but that would reduce spending by only a fraction of the 20 percent of health care that we use. Anyway, is the amount of health care used by us low-utilizers really an egregiously excessive amount of care? We usually have a legitimate reason for going to the doctor.

In this article, Ben Handel states, “while increased consumer cost-sharing can be an effective instrument for reducing health care spending, it may be a blunt instrument for encouraging higher value medical spending, especially relative to supply-side interventions that target physician incentives or interventions that reduce the use of high-cost low-value medical technologies.”

Instead of using detrimental demand-side patient cost-sharing instruments to reduce spending, just think of what could be accomplished on the supply-side using a well designed single-payer monopsony for financing health care: global budgeting of institutions such as hospitals, dramatic reduction of administrative waste, negotiation of rates for services and products, bulk purchasing of pharmaceuticals, avoiding excess capacity through planning and separate budgeting of capital improvements, and establishing a global budget for the entire health care delivery system.

There is no need to assess financial penalties (deductibles and coinsurance) merely for accessing beneficial health care services. With a single payer system, patients simply obtain the health care that they need, when they need it. That's the way it should be.

50 Hospitals Charge Uninsured More Than 10 Times Cost of Care, Study Finds

http://readersupportednews.org/news-section2/318-66/30629-50-hospitals-charge-uninsured-more-than-10-times-cost-of-care-study-finds

Fifty hospitals in the United States are charging uninsured consumers more than 10 times the actual cost of patient care, according to research published Monday.

All but one of the these facilities is owned by for-profit entities, and by far the largest number of hospitals — 20 — are in Florida. For the most part, researchers said, the hospitals with the highest markups are not in pricey neighborhoods or big cities, where the market might explain the higher prices.

Topping the list of the most expensive hospitals is North Okaloosa Medical Center, a 110-bed facility in the Florida Panhandle about an hour outside of Pensacola. Uninsured patients are charged 12.6 times the actual cost of patient care.

Community Health Systems operates 25 of the hospitals on the list; Hospital Corp. of America operates another 14.

“They are price-gouging because they can,” said Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health, co-author of the study in Health Affairs. “They are marking up the prices because no one is telling them they can’t.”

He added: “These are the hospitals that have the highest markup of all 5,000 hospitals in the United States. This means, when it costs the hospital $100, they are going to charge you, on average, $1,000.”

The big Washington dodge on Obamacare’s prevention provision

http://crosscut.com/2015/05/the-big-washington-dodge-on-obamacares-prevention-provision/

When politicians, pundits and other know-it-alls tussle over whether to renovate, repeal or preserve Obamacare, they talk about Medicare expansion, the enrollment mandate and the ban on excluding pre-existing conditions. No one complains about one key provision: that insurers pay fully, with no copay or deductible required, for the most effective preventive procedures.

You might think that’s because that requirement is so clear and noncontroversial that no one, not even a flinty-eyed insurance adjuster, could look askance at it. If so, you would be wrong.

Regence BlueShield, the state’s and region’s largest insurer, doesn’t dispute that provision openly. In fact, Regence doesn’t seem to want to talk about it at all. But where it counts, in the processing of claims from thousands of member-customers, Regence, acting on behalf of the state of Washington, is brazenly defying the ACA’s requirement, amplified by follow-up federal directives, to cover one preventive procedure with proven lifesaving value.

That procedure is colonoscopy, which uses a flexible probe to detect, at a harmless early stage, the polyps that may grow into colon and rectal cancers and remove them on the spot with a hot wire extended from the probe. The U.S. Cancer Society deems it the most “sensitive” – i.e. effective – method for detecting colorectal cancer. The U.S. Preventive Services Task Force, the federal panel charged with evaluating preventive procedures, gives it a top “A” rating. You, too, may know or know of people who met a sad early end because they would not or did not have their innards probed.

Three national gastroenterological societies claim that colonoscopies could prevent half the 50,000-plus deaths from colorectal cancer in the United States each year. A 2007 study published by the National Institutes of Health found that they could prevent 64 percent of all colorectal cancers. If everyone over 50 got scanned on schedule (typically every 10 years), they’d also save our perversely incentivized medical system a ton of cash; the cost of colonoscopies pales before the $250,000-plus tab to treat advanced colorectal cancer.

If the Fire Department Were Run Like Healthcare…


https://www.healthcare-now.org/blog/if-the-fire-department-were-run-like-healthcare/

During a press conference prior to the first of six public hearings held by the New York Assembly across the state, Assemblyman Richard Gottfried, Chair of the Assembly Health Committee since 1987, was asked by a reporter whether his legislation for universal, public health coverage for all of New York would limit patients’ choice of providers… Watch as Assemblyman Gottfried flips the script on the reporter, and paints a picture of how inhumane and dysfunctional our fire services would be if they worked like the U.S. healthcare system!

Insight 11. Medicare Helps Low Income People

Of the 54 million people with Medicare, a staggering 25% have annual incomes below $14,400. For these people living in retirement, or coping with a disability in poverty, Medicare coverage offers a lifeline, a chance to get needed health care. That precious red white and blue Medicare card means that a doctor will see you, a physical therapist will help you recover from a stroke and much more. But that lifeline disappears if you can’t afford to pay your $105 monthly Medicare Part B premium, or your $1260 hospital deductible, or if you have 10 prescriptions that need filling, each with a co-pay of $20 or $30.

Fortunately, the Medicare lifeline does work for many people in poverty, but only because safety net programs work together with Medicare to plug coverage gaps and make the Medicare benefit affordable. The Medicaid program covers Medicare premiums, deductibles and co-payments. Enrollees in full-scope Medicaid receive Medicaid long-term services along with coverage of their Medicare costs; those who qualify only for Medicare Savings Programs – operated by state Medicaid agencies and generally offered to people with incomes slightly higher than full Medicaid cut-offs – get help with their Medicare costs but do not get other Medicaid services. Today fully twenty percent of Medicare beneficiaries rely on Medicaid-funded programs for Medicare premium or cost-sharing assistance. In addition, the Low Income Subsidy, known as “extra help,” provides relief to about 11 million beneficiaries who otherwise could not afford Medicare prescription drug program premiums, deductibles and co-pays. That subsidy also protects low income beneficiaries from falling into the infamous donut hole.

Dual eligibles, people who qualify for both Medicare and Medicaid, need these safety net programs to remain strong and to grow. When states seek instead to narrow Medicaid eligibility standards, they not only are cutting off people from needed Medicaid services, like long-term services and supports, but also are effectively making it impossible for dual eligibles to use their Medicare. Medicare is a benefit that many earned working their whole lives at low-paying difficult jobs. Like other workers, they saw their Medicare contributions deducted from each and every paycheck. We at Justice in Aging are committed to working with the Center for Medicare Advocacy and other advocates to ensure that all Medicare beneficiaries, especially those who most need what Medicare can provide, can afford to use the benefits to which they are entitled.

You can read more about Justice in Aging, Medicare and low income beneficiaries at http://justiceinaging.org/our-work/healthcare/dual-eligibles-california-and-federal/.

You can read all of the Center for Medicare Advocacy's Medicare Insights at: http://www.medicareadvocacy.org/medicares-50th-anniversary/#Insights.


“Doc Fix” Package Passed by House Takes Too Much from Beneficiaries with Too Little In Return

Today, March 26, the House of Representatives passed the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2). While the Center for Medicare Advocacy believes it’s in the best interest of Medicare beneficiaries to find a permanent solution to the broken physician payment formula called the “Sustainable Growth Rate” (SGR), this Bill is not the answer. Unfortunately, the SGR replacement package passed by the House is not sufficiently balanced; it asks too much from beneficiaries without providing enough in return. It asks nothing from pharmaceutical or insurance companies. It furthers Medicare’s march toward privatization by increasing costs for beneficiaries for traditional Medicare and Medigap plans.

Of the portion of the SGR package that will be offset, roughly half (approximately $35 billion of the total $70 billion over 10 years) would come from Medicare beneficiaries through changes that will increase their out-of-pocket costs for health care, including:

Adding deductibles to Medigap plans purchased by new Medicare beneficiaries starting in 2020;
Further means-testing premiums for higher-income beneficiaries; and
Overall increases in Part B premiums.

While the SGR package would make the Qualified Individual (QI) program permanent, which we strongly support, and would minimally increase and temporarily extend important funding for low-income education and outreach, it does not address other issues that serve as barriers to care for beneficiaries. For example, instead of repealing the annual outpatient therapy caps, the anemic exceptions process is merely extended for another two years, and instead of addressing hospital observation status, the bill simply further extends enforcement of the so-called “two-midnight” rule.

In short, Medicare beneficiaries would pay too much, with too little in return. Major industries pay nothing, and stand to gain a great deal. As the SGR bill now moves to the Senate, we hope further balance and improvements for beneficiaries can be made.

For more information, see the Center’s March 24th Press Release here: http://www.medicareadvocacy.org/analysis-of-sgr-legislation-from-the-center-for-medicare-advocacy/.

With billions in the bank, Blue Shield of California loses its state tax-exempt status

Score another one for CA!

http://www.latimes.com/business/la-fi-blue-shield-california-20150318-story.html

Authorities have revoked the tax-exempt status of nonprofit Blue Shield of California, potentially putting it on the hook for tens of millions of dollars in state taxes each year.

The move by the California Franchise Tax Board comes as the state's third-largest health insurer faces fresh criticism over its rate hikes, executive pay and $4.2 billion in financial reserves.

The highly unusual action comes after a lengthy state audit that looked at the justification for Blue Shield's taxpayer subsidy.

Now, a company insider has sided with critics. Michael Johnson, who resigned as public policy director last week after 12 years at the company, said the insurer has been "shortchanging the public" for years by shirking its responsibility to Californians and operating too much like its for-profit competitors.


Comment by Don McCanne of PNHP: Many of us in California were very upset when Blue Cross of California converted to a for-profit (WellPoint, then Anthem) and immediately changed its behavior to fulfill its responsibilities to its shareholders as a profit-making business. We immediately saw “insurance innovations” that redirected its business goals from taking care of patients to taking care of shareholders.

It was particularly disappointing to see non-profit Blue Shield of California adopt similar insurance innovations in order to remain competitive in the California insurance market. From the perspective of health care “consumers,” Blue Shield and Blue Cross remained virtually indistinguishable.

Blue Shield of California has annihilated the dream of those who believed that the United States could adopt a universal system of private, non-profit insurance companies like they have in Switzerland. There are many serious problems with the Swiss model, but some believed that a market of well-regulated, non-profit insurers would make optimal patient care a priority. Blue Shield of California has now demonstrated to us that this pipe dream would only become another nightmare in the saga of private insurance markets in the U.S.
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