June 27, 2015

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

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.

June 26, 2015

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.

June 22, 2015

Medicare Part D has not saved money for Medicare

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.

June 16, 2015

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

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.

June 9, 2015

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.”

June 1, 2015

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.