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eridani's Journal
eridani's Journal
July 5, 2014

Retired Republican insurance exec comes out in favor of single payer


My party, the GOP, is running for election this year on the slogan “repeal and replace Obamacare.”

I agree, but the question is “what will be the replacement?” My answer is Medicare for all.

From a moral standpoint, due to expansion of access to health care, the Affordable Care Act is clearly better than what we had previously. The Medicaid expansion provision, which unfortunately was made voluntary by a politicized Supreme Court, does a lot to help very low-income people who cannot afford insurance premiums.

On the other hand, of the 8 million who signed up for Obamacare nationally through the exchanges, many just switched from existing “limited” insurance policies.

In Georgia (my home), 22 percent of the population (one of the highest rates nationally) was uninsured before Obamacare.

Even if all 8 million had been uninsured, tens of millions are still without insurance and will be for the near future. This fact is especially true in red states like ours that have inexplicably chosen to turn back federal money to expand Medicaid, a purely political decision.

Further, because the Affordable Care Act is built on the defective private insurance model, it will never be very effective or efficient.

And with no Affordable Care Act public option, insurance companies will take advantage of consumers. For example, in the Albany, Ga., area, there is only one insurance company available via the exchange, Blue Cross. Incredibly, rates there are higher than they are in Beverly Hills, Calif.


So why do I want to see more government involvement in our health insurance system via Medicare expansion to everyone? Because as opposed to many government programs, Medicare works well. Based on their experience, taxpayers (especially senior citizens like me), like Medicare.

And it is efficient, cutting out marketing and overhead expenses. Medicare has overhead expenses of only 3 percent compared to 20 percent-plus for private insurance companies.

June 26, 2014

A Secret Plan to Close Social Security's Offices and Outsource Its Work


or months there have been rumors that the Social Security Administration has a "secret plan" to close all of its field offices. Is it true? A little-known report commissioned by the SSA at the request of Congress seems to hold the answer. The summary document outlining the plan, which is labeled "for internal use only," is unavailable from the SSA but can be found here.

Does the document, titled "Long Term Strategic Vision and Vision Elements," really propose shuttering all field offices? The answer, buried beneath a barrage of obfuscatory consultantese, clearly seems to be "yes." Worse, the report also suggests that many of the SSA's critical functions could soon be outsourced to private-sector partners and contractors.
June 11, 2014

Health Insurers backing cheap plans with inadequate coverage


While millions of Americans have the peace of mind that health insurance provides, more can be done to maximize choice and affordability for individuals and families. As a solution to bring more families into the marketplace:

Health plans support the creation of a new, lower-premium catastrophic plan.

Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury.


We believe a new catastrophic plan would further the public policy goal of affordability and call upon policymakers to expand consumer choices by allowing this lower-premium option to be offered.

Comment by Don McCanne of PNHP:

One of the worst failures of the Affordable Care Act (ACA) is that, even with subsidies, the premiums and out-of-pocket expenses are unaffordable for far too many people. AHIP now proposes to make the premiums slightly more affordable by offering catastrophic plans with very high deductibles that would make accessing health care truly unaffordable for even more people (cost sharing subsidies are available only for silver plans, but coverage of the proposed catastrophic plans would fall even below the lowest-level bronze plans).

Why would they do this? Could it be that they want to capture a portion of the market of the 31 million people who will still remain uninsured after ACA is fully implemented?

Who would actually select these plans with very high deductibles but lower premiums? Those with very low incomes who would struggle even with subsidized premiums might choose these plans if they consider their subsidized premiums to be “all that they can afford.” These are individuals who would be much more likely to forgo essential health care simply because they couldn’t afford their portion of the deductibles.

Very high income individuals might select these plans to insure against catastrophic losses while deciding to self insure against more modest medical costs. The problem with this is that this is a form of regressive financing of the insurance risk pools. Since average health care costs are well beyond the means of middle income families to pay for them, wealthier individuals need to contribute more to the collective insurance pools (as they would in a single payer financing system). The AHIP proposal for low-premium catastrophic plans would allow them to contribute less than average instead.

For healthy middle-income families there is a preference for the tradeoff of lower premiums for higher-deductibles - an observation confirmed by behavior in the individual insurance market before the enactment of ACA.Families that remain healthy will come out ahead, but those families that later face significant health problems often find that they will face severe financial hardship as well - even bankruptcy.

So the insurance industry is taking a position that they can increase their market, that they will not have to pay for routine medical expenses, and that they can lower their medical losses by paying only for the comparatively few individuals with high medical expenses. Little does it matter that they have the health coverage function backwards in that the healthy and wealthy do very well but the sick and poor suffer. Limiting essential protection for the most vulnerable demonstrates again why the private insurance industry should be dismissed.

The insurance industry has been very successful in getting innovations that benefit themselves. This release by AHIP suggests that this is the beginning of another self-serving public campaign - this time to allow individuals to have (in marketing terms) "the choice of purchasing only the insurance they need” - a high-deductible catastrophic health plan.

Social solidarity takes another beating.

May 30, 2014

London Economist: Health-care fraud in America--

--That’s where the money is

How to hand over $272 billion a year to criminals


Medical science is hazy about many things, but doctors agree that if a patient is losing pints of blood all over the carpet, it is a good idea to stanch his wounds. The same is true of a health-care system. If crooks are bleeding it of vast quantities of cash, it is time to tighten the safeguards.

In America the scale of medical embezzlement is extraordinary. According to Donald Berwick, the ex-boss of Medicare and Medicaid (the public health schemes for the old and poor), America lost between $82 billion and $272 billion in 2011 to medical fraud and abuse (see article). The higher figure is 10% of medical spending and a whopping 1.7% of GDP—as if robbers had made off with the entire output of Tennessee or nearly twice the budget of Britain’s National Health Service (NHS).


But the broader point is that American health care needs to be simplified. Whatever its defects, Britain’s single-payer National Health Service is much simpler, much cheaper and relatively difficult to defraud. Doctors are paid to keep people well, not for every extra thing they do, so they don’t make more money by recommending unnecessary tests and operations—let alone billing for non-existent ones.

Too socialist for America? Then simplify what is left, scale back the health tax-perks for the rich and give people health accounts so they watch the dollars that are spent on their treatment. After all, Dr Berwick’s study found that administrative complexity and unnecessary treatment waste even more health dollars than fraud does. Perhaps that is the real crime.

May 29, 2014

Medical expenses, stagnant wages mean trouble for American employees

2014 Aflac WorkForces Report

American workers are at the edge of a financial cliff

The economy is showing signs of improving, but Americans’ bank accounts are in need of resuscitation: Put simply, anemic pay raises combined with sharp increases in out-of-pocket health care costs have creditors knocking on many consumers’ doors.

* 66 percent of employees would not be able to adjust to the large financial costs associated with a serious injury or illness.
* 13 percent of workers are currently dealing with high medical bills.
* 49 percent of employees have less than $1,000 on hand to pay out-of-pocket medical expenses.
* 53 percent of workers would need to borrow from a 401(k) and/or use a credit card to cover unexpected medical costs.
* 8 percent say high medical bills have hindered their ability to save.
* 10 percent say high medical costs have negatively affected their credit scores.
* 13 percent have been contacted by collection agencies about outstanding medical bills.

Comment by Don McCanne of PNHP: A well functioning health care system should make all appropriate health care accessible to everyone, and paying for the system should not lead to financial insecurity. The sector of health care financing that the Affordable Care Act was designed to protect was employer-sponsored coverage, based on the belief that this was the sector that was functioning well. Yet the 2014 Aflac WorkForces Report shows that this sector often is not providing the financial security that patients need.

We should quit trying to finance health care though a multitude of private and public plans that apply to individuals based on their continually evolving personal circumstances. That approach creates tremendous costly and wasteful administrative inefficiencies. Worse, even what are supposedly the best programs - employer-sponsored health plans - too often fail to provide the financial security that patients want and need.

Medical bill related financial insecurity would disappear for everyone if we would replace our current fragmented financing system with a single payer national health program that included first dollar coverage. Since it would use progressive financing, each of us would be able to afford it.

This is a simple concept. We don’t need the Aflac duck to explain it to us.

May 16, 2014

More Insured, but the Choices Are Narrowing

The New York Times
More Insured, but the Choices Are Narrowing

In the midst of all the turmoil in health care these days, one thing is becoming clear: No matter what kind of health plan consumers choose, they will find fewer doctors and hospitals in their network — or pay much more for the privilege of going to any provider they want.

These so-called narrow networks, featuring limited groups of providers, have made a big entrance on the newly created state insurance exchanges, where they are a common feature in many of the plans. While the sizes of the networks vary considerably, many plans now exclude at least some large hospitals or doctors’ groups. Smaller networks are also becoming more common in health care coverage offered by employers and in private Medicare Advantage plans.


Nonetheless, for people who are directly picking plans in the open markets, insurers say price is turning out to be critical. People “are weighing affordability and breadth of network,” said Karen Ignagni, the chief executive of America’s Health Insurance Plans, an industry trade group. “What we’re finding is individuals are experiencing a preference for affordability,” she said.

White House defends cost-containment efforts in health-care reform bills


Critics of the Democratic bills point to cost control as a chief deficiency. Karen Ignagni, president of America's Health Insurance Plans, said the Senate bill includes only "pilot programs and timid steps" to reform the health-care delivery system, "given the scope of the cost challenge the nation faces."

Unless lawmakers institute changes across the entire system, Ignagni said in a statement Wednesday, "Health costs will continue to weigh down the economy and place a crushing burden on employers and families."

Comment by Don McCanne of PNHP: During the health reform process, AHIP health insurance lobbyist Karen Ignagni stated repeatedly that health insurance is not going to be affordable unless lawmakers do something to control health care costs. So is health care cost containment a function of the government or a function of private insurers? Let see how this is playing out.

According to Ignagni, in 2009 the Senate bill - the Affordable Care Act - contained only timid steps to control costs. It was clear that the government was not going to play any major role in controlling costs - certainly not in regulating health care prices, as they do quite successfully in most other wealthy nations.

The public sector uses administered prices. The private sector depends more on price competition within the marketplace. Because the government did not act, the insurance industry has to depend on private market approaches, even though Kenneth Arrow had shown long ago that market dynamics do not work in health care.

In markets, price competition is an important tool. But in health care, only at the margin can price shopping be effective. The private insurers have been inserted as our price shopping intermediaries. They force hospitals and physicians to compete on price, and they then exclude from their plans those that fall short of the lowest bids. Even though they claim that they select their networks based on quality, it is the lower prices that allow them to keep their insurance premiums competitive.

This process is not new. Establishing plan networks with contracted payment rates was the most important innovation during the managed care revolution. That did slow temporarily the rate of increase in health care costs. What is new is that the plans are trying to drive much harder bargains with providers that want to be part of their now narrower networks. In response, hospitals and physicians are now consolidating in order to be “must have” providers that insurers need for their networks. Of course, that weakens the negotiating position of the insurers. So we are seeing a loss of choice of health care professionals and institutions in exchange for only very modest reductions in health insurance premiums.

More recently, Karen Ignagni is claiming that consumers are choosing “affordability” (lower premiums) over “breadth of network” (greater choice of providers). According to the industry, it is the patients who elect to go the cheap - a classic example of blaming the victim. Most people buying insurance are relatively healthy but are concerned about the very high premiums, so they will choose plans with lower premiums, often not even knowing which providers are in the networks. But that does not mean that they would prefer to give up access to physicians and hospitals whom they trust and where they believe that they could get the best care.

Thus we can have distorted price competition in the dysfunctional health care marketplace with the self-serving insurers functioning quite ineffectively as our price shopping intermediaries as they take away our choices in health care, or we can have a single government entity that uses administered pricing in a system that allows us free choices in health care and makes it affordable for all through progressive public funding. Price competition in establishing provider networks is a very weak tool to contain costs, and losing choices in health care is too great of a price to pay.

We do not have to choose between affordability and breadth of network. We can make health care affordable for all of us while getting rid of the insurers and their restrictive networks, that is if we’re willing to quit playing the victim role.

May 16, 2014

Why Obamacare can't lower costs


The ACA cannot cut costs because its proponents subscribed to the wrong diagnosis of the U.S. health care crisis. They accepted the conventional wisdom that overuse of health care services is the most important reason why per capita health care costs are double those of the rest of the industrialized world, and that overuse is caused by two chronic failings among American doctors: They routinely order services patients do not need and fail to provide them with obviously beneficial preventive ones that would keep them healthy and minimize later need for medical interventions.

This diagnosis is wrong. First, underuse is far more common than overuse, even among the insured. To cite one example, 80 percent of insured Americans showing telltale symptoms, such as shortness of breath, do not see a doctor. Second, preventive services usually raise spending because they cost more to supply than they save.

Predictably enough, the mistaken “overuse” diagnosis led ACA proponents to the wrong solution, namely, that doctors can be forced or induced to stop ordering unnecessary services and provide more preventive services if they are subjected to more control by insurance companies. But the premises upon which this solution is based are also false. It is not true that the methods that the insurance industry uses to control doctors are so precise that they reduce overuse without aggravating underuse. It is also not true that the insurance industry’s methods are so inexpensive compared with the savings due to reduced overuse that, on balance, costs go down.


Let us consider first the evidence on overuse. Overuse does exist. The overuse of antibiotics is a good example. But underuse is rampant, and not merely among the uninsured, but among the insured as well, and not just with respect to inexpensive preventive services, but to expensive procedures like heart surgery. Here are some examples of underuse taken from papers published in the peer-reviewed literature. Note that the subjects of these studies all had insurance.

Eight in 10 insured Americans who suffer serious symptoms such as unexplained loss of consciousness, unexplained bleeding, or shortness of breath from climbing a flight of stairs do not see a doctor. Six in 10 seniors insured by Medicare who have been told they need gall bladder surgery don’t get it done. Half of all insured Americans who should have an angiogram to detect blocked coronary arteries don’t get one, and one-fourth of those who do have an angiogram that indicates they have dangerously blocked arteries do not undergo surgery to treat the blockages. Half of all insured people with high blood pressure are not being treated for it.

According to the best study of the rates of both under- and overuse (a 2003 paper in The New England Journal of Medicine), underuse occurs at about four times the rate of overuse – 46 percent versus 11 percent. Here is how the authors summarized their findings: “Underuse of care was a greater problem than overuse. [P]atients failed to receive recommended care about 46 percent of the time, compared with 11 percent of the time when they received care that was not recommended and potentially harmful.”

Once you realize underuse is far more serious than overuse, the claim that reducing overuse can cut costs loses its seductiveness. The question naturally arises, if our goal is to lower costs through better health, how do we improve the overall health of the populace while leaving all that underuse untouched? The logical answer is we can’t (and the moral answer is we shouldn’t). And if we decide we must eliminate or reduce underuse to improve health, how do we do that without spending a lot more money to provide the underused services? The answer is we can’t eliminate or even reduce underuse without spending a lot more money.

May 15, 2014

Ignoring a Solution to Chronic Drug Shortages--government manufacturing


Since shortages of critical drugs became a fixture of the American medical landscape a decade ago, pundits have proposed an array of incentives to encourage more production from pharmaceutical companies. But an obvious alternative or supplement — having the government manufacture the drugs — appears not to have made it to anyone’s list.

A factory designed, built and run by Uncle Sam could manufacture drugs in short supply — not least the older, low-profit but still highly effective generic medications that drug makers cannot, or simply will not, produce. And yet, when Remapping Debate raised the possibility, the initial reactions of economists, physicians, industry analysts, and others ranged from stammering, chuckling and long, sometimes awkward, pauses, to bewilderment and shock.

Several people we interviewed struggled to explain their reservations by pointing out that the government has no experience in medicine making. Some flatly rejected the idea because, in their view, it was a long shot to gain political traction. Others said the concept gave them pause because it ran afoul of their beliefs of how a free market system ought to operate.


Actually, Himmelstein says, “it’s even ridiculous to think of this as a market. The very fact that drugs are patented means that there is no market, right? Drug companies are given a monopoly. They control the market. So, by definition, there is no market. They are not in business to do good; they are in business to make money. Milton Friedman said many years ago that the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible is a dereliction of duty. So the problem isn’t that they’re misbehaving, it’s that they are behaving. They are behaving exactly as they’re supposed to.”

The pharmaceutical industry manages to make “enormous profits,” he adds, “so you ought to be able to undercut the prices charged for medicines and still do very well. And if government was not in search of a profit, it seems to me that you could make back the initial investment pretty readily.”

May 13, 2014

Vertical Integration: Hospital Ownership Of Physician Practices Is Associated With Higher Prices

--And Spending


The share of US physician practices owned by hospitals more than doubled from 2002 to 2008. This trend toward vertical integration between hospitals and physicians means that more producers of complementary services that were once independent are now either commonly owned or related by contract.


Our study had two key findings. First, in its tightest form, vertical integration appears to lead to statistically and economically significant increases in hospital prices and spending. This is consistent with the hypothesis that vertical integration increases hospitals’ market power. We found that a one-standard-deviation increase in the market share of hospitals that own physician practices was associated with significant increases in prices and spending of 2–3 percent. In comparison, a one-standard-deviation increase in the hospital Hirschman-Herfindahl index increased prices and spending by 4–6 percent.

Second, the consequences of looser forms of vertical integration were more benign and potentially socially beneficial. Increases in these forms of integration did not appear to increase prices or spending significantly and may even decrease hospital admission rates. This finding is consistent with the hypothesis that vertical integration can improve the coordination of care.

However, the effects on volume associated with these types of integration were small — so small that they did not generate a significant reduction in hospital spending. In addition, although our estimates of the effect of contractual integration on price were statistically indistinguishable from zero, the imprecision of our estimates limited our ability to confidently assess their true impact.

Comment by Don McCanne of PNHP: An intent of the Affordable Care Act was to reduce health care spending through the establishment of more efficient integrated health systems, operating as accountable care organizations. The ultimate integration is for hospitals to assume ownership of physician practices. This study demonstrates that this form of vertical integration does not reduce prices and spending but rather increases them, likely through the anti-competitive effects of such consolidation. Looser forms of vertical integration (contracts rather than ownership) also failed to achieve a reduction in hospital spending.

One important aspect of this study that will likely escape the attention of the policy community is that they used data from Truven Analytics MarketScan - a data base of claims filed by privately insured people who obtained insurance through a participating employer. Thus the ineffectiveness in recovering through lower prices the efficiencies of the consolidated systems represents a failure of the private insurance industry, whether functioning as insurers or as administrators for self-insured employers.

So maybe vertically integrated systems, in which the hospitals own physician practices, have the market clout to prevent efficiency savings from being passed on to the purchasers of health care, but if we had a single payer financing system, our public stewards would ensure that we paid the right amount through administered pricing rather than being victim to unfairly leveraged market negotiations. We need to replace marketplace oligopolies with our own public monopsony - an improved Medicare for all.
May 9, 2014

Obamacare might save 24,000 lives a year, but why stop there?

Changes in Mortality After Massachusetts Health Care Reform: A Quasi-experimental Study


Results: Reform in Massachusetts was associated with a significant decrease in all-cause mortality compared with the control group (?2.9%; P = 0.003, or an absolute decrease of 8.2 deaths per 100 000 adults). Deaths from causes amenable to health care also significantly decreased (?4.5%; P < 0.001). Changes were larger in counties with lower household incomes and higher prereform uninsured rates. Secondary analyses showed significant gains in coverage, access to care, and self-reported health. The number needed to treat was approximately 830 adults gaining health insurance to prevent 1 death per year.

Conclusion: Health reform in Massachusetts was associated with significant reductions in all-cause mortality and deaths from causes amenable to health care.

From the Discussion

Although we cannot rule out unmeasured confounders, it is challenging to identify factors other than health care reform that might have produced this pattern of results: a declining mortality rate in Massachusetts since 2007 not present in similar counties elsewhere in the country, primarily for health care–amenable causes of death in adults aged 20 to 64 years (but not elderly adults), concentrated among poor and uninsured areas and not explained by changes in poverty or unemployment rates.

Could Obamacare save 24,000 lives a year?

The absolute numbers are also striking. The Congressional Budget Office estimates that ACA will reduce the ranks of uninsured adults by something like 20 million people. I rather heroically extrapolated the authors’ 1/830 estimate to the entire uninsured population across the U.S. This back-of-the-envelope calculation implies that ACA will prevent something like 24,000 deaths every year. That’s almost the number of Americans who die in auto crashes. It’s more than the number who die of AIDS or the number who are murdered every year.

That’s a crude calculaton, of course. The authors understandably avoided such a calculation in their paper. One study of Massachusetts can hardly pin down the mortality reduction we can expect from a huge national policy. Still, the findings allow us to glimpse an order of magnitude, which is pretty impressive.

Comment by Don McCanne of PNHP: This highly credible study of the changes in mortality before and after health care reform was implemented in Massachusetts indicates that one death was prevented for each 830 adults under age 65 gaining health insurance. The deaths that were prevented were concentrated in conditions most likely to be amenable to health care. Health insurance does save lives.

Prior international studies of deaths due to conditions that a well functioning health care system should prevent have shown that the United States has one of the worst rates of preventable mortality. Using the results of this study, it would be easy to conclude that the fact that we have the lowest rate of insurance coverage of all wealthy nations is a major contributor to our high rate of preventable mortality.

Although the authors of this paper state that other confounders cannot be excluded as causes, nevertheless, they write, “it is challenging to identify factors other than health care reform that might have produced this pattern of results.” Conservative critics are already discrediting this study, yet they certainly are not providing any other reasonable explanation for the improved mortality.

Professor Harold Pollack of The University of Chicago has extrapolated the ratio of one life saved for each 830 insured and applied that to the estimated 20 million additional people who will be insured when the Affordable Care Act (ACA) is fully implemented. He estimates that 24,000 lives will be saved.

Using the same extrapolation for the roughly 30 million people who will remain uninsured after full implementation of ACA, we can estimate that about 36,000 people will die each year who would not have had they been insured. Do we really have the gall to passively accept these 36,000 deaths each year just because a few audacious individuals keep telling us that an improved Medicare for all is not politically feasible? Come on! It’s an imperative!

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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: 51,907

About eridani

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