Kaiser Health News - Columns

Proposals To Forbid First-Dollar Coverage For Medicare Beneficiaries

Tue, 02 Aug 2011 18:54:00 GMT

While it appears that major policy changes to Medicare are absent from the first stage of the debt-ceiling deal approved by Congress this week , it's inevitable that Medicare "restructuring" will surface, if not in the second stage of the deficit reduction process this year, then sometime soon thereafter.

The usual laundry lists of proposals for Medicare savings are already being circulated throughout official Washington. Most of these ideas have been around for years, and have never gotten past the talking stages because of political opposition or because they are simply bad ideas. But one especially pernicious proposal appears to have increasing traction among both politicians and policy analysts: the prohibition of first-dollar coverage in Medicare supplemental insurance, whether purchased in the individual markets or provided as a retiree benefit.

This proposal is based on a simple and seemingly self-evident syllogism. Medicare beneficiaries with supplemental insurance that provides them with first-dollar coverage by paying their deductibles and co-payments use more services than the small minority of beneficiaries without such coverage. Hence, forbidding such coverage would reduce use, thereby saving Medicare a pile of money.

Sometimes this poison pill is sugar-coated, as in the recent proposal from Sen. Joe Lieberman, I-Conn., and Sen. Tom Coburn, R-Okla. In their plan, the structure of Medicare out-of-pocket liabilities would be altered to create protection against catastrophic out-of-pocket expenses for some, in exchange for higher out-of-pocket liabilities for most beneficiaries. But whatever form the proposals take, they would have seriously adverse consequences for the sickest and most needy Medicare beneficiaries.

American policymakers, and the health economists who enable them, are obsessed with issues of consumer demand, and the notion that health care is so expensive because Americans are so eager to consume it. In fact, insured Americans already have the highest out-of-pocket liabilities in the developed world, and use fewer services initiated by consumers. In the absence of supplemental coverage Medicare beneficiaries would have still higher out-of-pocket liabilities than other insured Americans, which is why essentially every beneficiary who can afford it seeks extra coverage. But while overuse of some services in some communities is inarguably a part of the Medicare cost problem, there is no compelling evidence that consumer-generated demand is a significant part of the problem. Whatever the political rhetoric, Medicare beneficiaries simply aren’t banging down the doors of physicians' offices demanding extra MRIs and surgical procedures.

Quite the contrary: during the past decade, Congress has eliminated cost-sharing for most Medicare preventive services in response to concerns about the underuse of such services, and because of evidence that out-of-pocket costs were a significant deterrent, especially for less affluent and minority beneficiaries. More generally, while the evidence has been clear since the RAND experiments of the early 1970s that out-of-pocket costs reduce health care use, it's also been clear that their effect is inversely related to disposable income: the less income a person has, the greater the effect of copayments and deductibles, not to mention the greater likelihood of poor health.

That's why Medicaid historically forbade deductibles, and now permits them at only nominal levels. More importantly, the growth in out-of-pocket costs for health care consumers during the last decade or so has provided an abundance of illustrations of the basic fact that consumers deterred from seeking health care for economic reasons are just as likely to forego needed services as "discretionary" ones, and that that phenomenon is further correlated with income. Faced with higher out-of-pocket expenses, consumers may get fewer Botox treatments or buy fewer laxatives, but they also skip visits for management of their heart disease and diabetes, and don't fill their prescriptions for hypertension medication.

The reason health insurance exists in the first place, after all, is to relieve individuals who are not medical experts of the need to figure out whether they can afford any particular medical service. In a rational world, policymakers worried about unnecessary or inappropriate use of specific services would just refuse to pay for those services. But in the contemporary American political environment, they might be accused of "rationing" or "death panels," so they stay away. Instead, they appear to be willing, once again, to impose the consequences of their inability to control costs on those least able to bear them.

Bruce Vladeck, PhD, is Senior Advisor to Nexera, Inc. He was administrator of the Health Care Financing Administration (now Centers for Medicare and Medicaid Services) from 1993-1997, and was subsequently appointed by President Clinton to the National Bipartisan Commission on the Future of Medicare.

An Unreasonable Expectation…

Tue, 02 Aug 2011 18:54:00 GMT

As the country has struggled to raise the debt ceiling, there have been periodic expectations that the current fiscal distress would produce the "right environment" to finally reform entitlements -- particularly Medicare. This has seemed quite astounding to me, 15 months before a presidential election year, given the presence of a divided Congress and our highly charged political environment. And, while the weight of this expectation now falls to a congressional panel, which will be created as part of the debt-ceiling compromise and charged with recommending by late November spending reductions totaling more than a trillion dollars, the need to reform Medicare is no less important, both as a strategy to reduce the debt as well as to strengthen the program for future generations.

Even in this context, though, getting politicians and the public to engage seriously in discussing Medicare reform won't be easy.

As important as entitlements may be to ultimately resolving the debt and deficit challenges, it's critical to remember that the need to put Medicare on a fiscally sustainable path predates the current fiscal environment. The biggest problem in Medicare is the same as it is for all of health care -- spending that has been growing two to two-and-a-half percentage points faster than the economy. The retirement of the baby boomers, which officially started last January, will increase the number of people on Medicare from the current 44 million to around 78 million and will produce added stress.

To be sure, figuring out a way to slow spending on Medicare has been a part of the Medicare program almost from its very beginning. The general strategy has been to place all of the pressure on providers, primarily by controlling their payments. But through the program's history, this emphasis has not provided a sustained ability to control costs. Nonetheless, it appears that, as part of the debt deal, payments to providers will again likely be among the principal sources of savings.
To a lesser extent, Medicare has also tried to slow spending by changing the incentives embedded in its reimbursement structure.

The Affordable Care Act, for instance, seemed to follow this model. The health law makes some limited attempts to change provider incentives such as the provisions for value-based purchasing, accountable care organizations and other yet-to-be developed projects that will be funded by the Center for Medicare and Medicaid Innovation.

But the measure also introduced a "fail-safe" mechanism to enforce spending reductions -- the Independent Payment Advisory Board. This panel will be responsible for making recommendations to the Congress for reductions needed to produce the spending rates established for Medicare. In keeping with the past exclusive focus on providers, the IPAB's recommendations are limited to changes in provider reimbursement and cannot consider changes in benefits or eligibility.

The question of whether to involve Medicare beneficiaries more directly in strategies that slow spending is being discussed more explicitly than it has been in the past. This is the rationale underlying the premium support proposal included in the Dominici-Rivlin Debt Reduction Task Force recommendations, where a variety of private plans would be offered to seniors along with traditional Medicare, with a fixed subsidy from the government to purchase a plan. It was included in the more controversial proposal by House Budget Committee Chairman Paul Ryan, R-Wis., that would limit the choices to private plans. It is also the motivation that underlies proposals to limit or ban first dollar wrap-around insurance to traditional Medicare.

Congress has previously shied away from encouraging seniors to be concerned about the cost of Medicare-covered services -- especially the vast majority with supplementary insurance. Whether the continuing need to slow spending or the failure to achieve desired spending rates by only focusing on providers will encourage the Congress to move in this direction is not yet clear.

Slowing spending is not the only issue that will need to be considered to ensure Medicare solvency. Increasing the eligibility age, as was being considered early in the debt reduction talks, reducing benefits for higher income beneficiaries or modifying Medicare's funding sources are all likely to be up for discussion. All of these decisions will be challenging for the country and the Congress to consider.

Gail Wilensky, Ph.D, is a senior fellow at Project HOPE. She was the administrator of the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services) during the George H.W. Bush Administration and the chair of MedPAC.

Different Takes: What's Next For Medicare Cost Controls? Vladeck And Wilensky Offer Their Views

Mon, 01 Aug 2011 18:34:00 GMT

During the course of negotiations to rasie the debt ceiling, proposals to reduce Medicare costs had an on-again, off-again presence at the table. We asked Bruce Vladeck and Gail Wilensky which of these ideas could have a positive or negative impact on the program.

A 'Pernicioius' Idea: Proposals To Forbid First-Dollar Coverage For Medicare Beneficiaries

Bruce Vladeck, who oversaw Medicare and Medicaid from 1993 to 1997, writes about "one especially pernicious proposal" to rein in Medicare savings -- the prohibition of first-dollar coverage in Medicare supplemental insurance.

An Unreasonable Expectation...

Gail Wilensky, who ran Medicare ane Medicaid during the George H.W. Bush administration, writes that, although there has been an expectations that the current fiscal crisis "would produce the 'right environment' to finally reform entitlements -- particularly Medicare," it won't be easy to get lawmaker and public to seriously engage in Medicare reform.

Why IPAB Is Essential -- A Timely Review (Guest Opinion)

Thu, 28 Jul 2011 19:31:00 GMT

This column is a collaboration between KHN and The New Republic.

A little over two weeks ago, while most of you were paying attention to the debate about how to raise the debt ceiling, those of us who study health care policy were following hearings before the House Budget Committee. The purpose of the hearings was to scrutinize the Independent Payment Advisory Board, a commission that the Affordable Care Act created as part of its apparatus to control health care costs. And the hearings produced some genuinely interesting testimony on everything from the scope of the board's authority to the limits of its legal power. If we were in the middle of a dialogue about how to improve the board's structure and function, that testimony would be extremely useful.

But we're not having a discussion about whether to reform the IPAB. We're having a discussion about whether to repeal it. Opponents of the Affordable Care Act see the IPAB as an instrument of, and metaphor for, everything that is wrong with the new health care law. The problem with this law, they keep saying, is that it tries to solve the health care cost problem through "central planning." At best, they say, this strategy will misallocate resources in ways that stifle innovation and make access to care more difficult. And at worst? It will ration care in ways that deny life-saving treatment to people who need it. As one Republican lawmaker put it recently, "It will destroy the very core of what has made our medical system the best in the world."

Yes, these arguments should sound familiar. They are the same ones critics began making in the summer of 2009, when enactment of the law first seemed imminent. And since neither the argument nor the people making it are going away, maybe it's a good time to take a step back and remind everybody what the IPAB is; how it will work; and why it (or something very much like it) is essential to making health care accessible to all seniors and, eventually, all Americans.

Despite the fanciful attacks from some conservatives, the IPAB will not be a modern-day Politburo that brings Soviet-style management to American health care. It will be, instead, a board comprised of 15 experts on health care policy, including consumer representatives. The president will appoint the members, subject to Senate confirmation, and they will serve six-year staggered terms. Their job will be to issue recommendations on how Medicare can spend its money more wisely.

A similar commission already exists. It's called the Medicare Payment Advisory Commission, or MedPAC. But its recommendations, however intelligent, usually end up collecting dust on the bookshelves of policy wonks like me. IPAB's proposals shouldn’t meet the same fate. Whenever the cost of Medicare grows faster than the targets set by the law, IPAB will make proposals that would reduce the program's spending by as much as to 1.5 percentage points, depending on the circumstances. At that point, Congress would have three choices: Allow the recommendations to take effect, come up with alternatives that would achieve the same savings or opt to let Medicare costs grow up faster than planned. The one key caveat is that the final course of action, allowing Medicare to grow without further restraint, would require a three-fifths vote in the Senate.

The thinking behind this structure reflects a long-standing consensus among health care experts that Medicare needs better, smarter management. Relative to private insurance, the program has actually done a pretty good job of managing costs overall, thanks to the natural efficiencies of such a massive program and the lack of investors to satisfy with profits. But Medicare is still getting too expensive, too quickly -- and there's a ton of data to suggest it doesn't do a very effective job of fostering good quality. Probably the best known evidence along these lines are the Dartmouth Atlas studies, which show that Medicare spends far more in regions like Miami than in regions like Minneapolis, but without achieving better results.

If we want to keep providing seniors with comprehensive coverage, while still getting the program's costs under control, the obvious way to do it is to operate the program more carefully. One way to do this is to adopt payment models that reward quality and efficiency. And that's not something Congress is likely to do on its own, particularly with lobbyists for every health care special interest, from device makers to local hospitals, crawling all over Capitol Hill. The hope is that an independent commission of experts, insulated from politics but still accountable to the president and Congress, can succeed where our lawmakers have failed.

The more extreme critics of IPAB claim it will abuse its power -- that it will issue treatment edicts that keep the sick and elderly from getting cancer drugs, expensive surgeries and the like. But the new health law explicitly prohibits IPAB from changing the program’s benefits or imposing anything that would amount to "rationing." Besides, all insurance plans, public and private, must choose what to cover and what not to cover. That includes Medicare, which already exercises this power routinely. At most, IPAB would increase the influence of scientists and reduce the influence of lobbyists over these decisions. Would critics really prefer it the other way around? (Actualy, maybe some would. Many IPAB critics, including Democrats, have benefitted from large health industry donations.)

The less extreme, more honest criticism of IPAB is that it will encourage payment schemes that lead to indirect rationing, by restricting access to the people who provide care. According to this argument, doctors are already turning away patients because of low reimbursements. Once IPAB ratchets down payments further, they'll turn away even more patients. But the stories about doctors turning away Medicare patients turn out to be mostly anecdotal, at least at this point. The best data available, from MedPAC among others, suggests most doctors still see Medicare patients -- and are more open to them than they are to privately insured patients. Particularly given the Affordable Care Act's other reforms, which provide financial incentives that reward efficient styles of care, providers should be able to offer care as good if not better than what they offer now -- while charging less money per patient.

But what if the critics are right? What if IPAB changes really did make it more difficult for seniors to see providers? That would be a problem, obviously. But the alternative is to cut spending on Medicare in ways that will affect beneficiaries more directly and more severely. The House Republican budget, which most of these critics support, is a prime example. Instead of introducing a commission to manage Medicare more efficiently, it eliminates the government program and hands seniors a voucher that, according to every reliable estimate, would provide far less financial protection. Even if competition among plans reduced the cost of care, seniors would still have a far tougher time getting care -- with large numbers forced to choose between health care and other necessities, much as they were in the days before Medicare came into existence. Somehow I think that's not a reality most seniors would like.

Jonathan Cohn is a senior editor at The New Republic .

The Questionable Lure Of Free Long-Term Care Placement Services (Guest Opinion)

Thu, 28 Jul 2011 19:14:00 GMT

They have enticing names that communicate understanding in regard to finding a home for an aging parent -- names that use words like "mom," "help" and "care." They advertise expertise in the field of elder care, promising the assistance of "senior care specialists" or "personal family consultants." Best of all, they promise "FREE" advice in selecting appropriate long-term care arrangements, particularly for people whose needs are less than those of nursing home residents.

These companies, which fall under the catch-all category of long-term care referral services, are the cyberspace era's quick fix solution for the growing number of Americans seeking non-nursing home institutional care for their aging parents, relatives and significant others. Unfortunately, this purported expert assistance in navigating this bewildering world of assisted living is, at best, a hit-or-miss proposition.

Unlike nursing, social work and psychology, there are no formal education, training, regulatory or professional ethics standards for people hired as "long term care specialists" by Internet placement services. Granted, a small number of universities -- the University of Southern California's Davis School of Gerontology and the University of Florida's College of Public Health are two examples -- offer certification programs in geriatric care management. However, even this impressive title is not yet subject to formal state licensing or regulation. As a result, referral services are free to hire whomever they choose, irrespective of training and prior job experience. The primary job requirement -- to use industry lingo -- may simply be the marketing skill of "putting a head in the bed."

Meanwhile, the services these Internet agencies provide may not be violating any laws, but their advice should be viewed with caution. Beyond the questionable expertise of the employees, their financial allegiances also can raise issues for consumers. For example, a company's assistance often may be free to the consumer, but the placement agency typically receives a handsome payment from assisted living facilities for each successful referral. This amount can be 50 percent or more of the resident's first monthly rent payment. According to the most recent MetLife Market Survey of Long-Term Care Costs, the 2010 national average monthly base rate for assisted living facilities was $3,293. High-end facilities charged upwards $6,000. Thus, the commission for a single referral to one of these facilities may be $3,000 or more. Since the salary of placement service employees often consists of a percentage of the employer's compensation, there is an obvious incentive to steer consumers to the highest bidder. Or, at the very least, to refer only to those facilities with which the placement service has reimbursement contracts.

Because it is unlikely that the free placement agency's employees will be a nurse or social worker -- a professional who has ethical and regulatory strictures requiring the disclosure of third party fees -- they will be under no obligation to reveal this fee structure. Some placement services do in fact disclose in their Internet advertising how they are paid. However, a casual Web search shows that many do not, preferring instead to use the word "free" as a lure.

The alternative to free referral services is to hire a brick-and-mortar geriatric care management agency. These agencies typically employ licensed professionals with training in geriatric issues who typically meet with both the prospective resident and his or her caregivers as part of a comprehensive multi-hour evaluation process. A listing of these agencies, arranged by region, agency name or zip code, can be found on the website of the National Association of Professional Geriatric Care Managers.

According to Kaaren Boothroyd, the NAPGCM's executive director, costs of this type of assessment will vary between $300 and $800. Unfortunately, many consumers may find the free and quick Internet fix more attractive than this more traditional approach.

"My advice about Internet placement services is 'buyer beware,'" says Eric Carlson, the director of the Long Term Care Project of the Senior Citizens Law Center and the author of a legal treatise on institutional care issues. "Even though it's tempting to delegate a decision to such a service, you can't assume there's quality control behind their recommendations. You have to understand that the service will have a motive to refer based on its agreements with facilities."

In the end, hype notwithstanding, the services of free long-term care referral agencies are not unlike those of a real estate broker or an apartment locator service. Like these businesses, the referral agency provides choices to consumers. However, the existence of choices is only the first step in a long process. It is not an end in itself.

David R. Spiegel is a Federal Trade Commission attorney who focuses on consumer protection issues affecting seniors. The views expressed in the article are solely those of the author and do not in any way represent the views of the FTC or its individual commissioners.

Washington's Rebate Tax Would Be Paid By Seniors (Guest Column)

Mon, 25 Jul 2011 17:24:00 GMT

Leading congressional Democrats appear ready to impose a new tax on prescription drugs for seniors -- a tax that would increase Medicare drug plan premiums for some seniors by as much as 40 percent.

Those lawmakers wouldn't describe their plan that way, of course, but that would be the effect of their proposal to require drug companies to pay Medicaid-style rebates to Medicare.

Pharmaceutical companies already are required to pay rebates to states for the right to sell their products to Medicaid patients. A proposal by Rep. Henry Waxman, D-Calif., and Sen. Jay Rockefeller, D-W.V., would require drug companies to pay a rebate to the federal government for prescription drugs sold through Medicare Part D for those low-income seniors who also qualify for Medicaid or who are eligible for subsidies. This proposal, which is now in play as part of the negotiations to increase the government’s debt ceiling, would collect up to $112 billion over the next 10 years.

Supporters of the rebate proposal say the money would come from the pharmaceutical companies, but the logic is flawed. Experience with the Medicaid rebate programs already has been shown to increase costs for prescription drugs sold in the private sector. And ultimately, the rebate costs are shifted to consumers.

If the new Medicare rebate tax were imposed, more than 17 million seniors who don't qualify for low-income subsidies would face drug benefit premiums that would be 20 to 40 percent higher than they are paying now, and they would face an average of $200 a year in higher out-of-pocket costs.

These are the findings of a study conducted by Douglas Holtz-Eakin, former director of the Congressional Budget Office who is now president of the American Action Forum, and his associate, Michael Ramlet, the forum's director of healthcare policy.

Holtz-Eakin and Ramlet studied government data to determine the impact that the rebate plan would have on prescription drug costs. While lower income seniors are protected by government subsidies from paying higher premium costs, they find that millions of other seniors would be forced to pay higher premiums for their drug coverage as a result of the rebate tax.

"This proposal would be a bad deal for Medicare and a raw deal for millions of seniors," Holtz-Eakin said. "This is a price-fixing scheme that will take money out of the pockets of senior citizens and greatly reduce customer choice."

The proposed rebate tax also would undermine the most successful health program the government operates -- the Medicare prescription drug program.

The prescription drug program, which began in 2006, requires private companies to compete on benefit design and price in offering drug coverage to seniors.

The program is popular because it gives seniors a wide range of choices of prescription drug plans, with different cost points and drug offerings. And it is has the remarkable distinction of costing taxpayers much less than expected. The Medicare Part D program is coming in at 46 percent below projected costs, according to the CBO.

And Part D's competitive model is saving seniors money as well. The average monthly beneficiary premium for Part D coverage will be $30 in 2011, far below the $53 forecast originally.

But the proposed rebate tax, which also has been endorsed by President Barack Obama, would undermine the gains that competition and consumer choice have brought to the Part D drug benefit program by forcing higher costs on seniors.

"The Medicare prescription drug benefit is one of the only bright spots on the entitlement landscape, costing less than projected and delivering real value for seniors. The last thing the president and Congress should do is turn it into a Medicaid-style program," Ramlet said.

The rebate plan is not a way to cut government spending but is simply a ploy to shift higher costs to seniors. Congress should look elsewhere for real savings rather than resorting to gimmicks that will trick seniors into paying the bill.

Grace-Marie Turner is president of the Galen Institute, a non-profit research organization that focuses on market-based health policy solutions. She is a co-author of Why ObamaCare Is Wrong for America (Broadside/HarperColllins, 2011).

As The CLASS Act Comes Under Fire, The British Propose A New Model for National Long-Term Care Insurance (Guest Opinion)

Wed, 20 Jul 2011 20:17:00 GMT

Howard Gleckman is a resident fellow at The Urban Institute and author of Caring for Our Parents.

Since the 1990s, nearly every developed country on the planet has reformed the way it finances long-term care for the frail elderly and adults with disabilities. Among the handful of exceptions: The U.S. and the United Kingdom.

In 2010, Congress took a small step in the direction of reform when it passed the Community Living Assistance Services and Supports Act, a voluntary public insurance program that would provide a modest daily benefit for life. But even before the first policy is ever issued, a bipartisan group of senators has targeted it for repeal as part of a broad-based deficit reduction plan that has already won the support of President Obama.

While repealing CLASS would represent a lost opportunity, the program's vulnerability highlights the challenges the U.S. faces as it tries to find a way to finance long-term care for its aging population, as well as younger people with disabilities.
Currently, the U.S. model is built on the means-tested Medicaid program, which pays for more than 40 percent of all long-term care costs and is itself under tremendous financial pressure. Only about 7 million Americans own private long-term care insurance, which is costly and unattractive to many. CLASS would take a small step toward a public insurance-based system where people would be responsible for financing a share of their own care. But because CLASS is both voluntary and open to nearly all who want to buy, regardless of their medical status, its premiums may be unaffordable for many and the program may not be sustainable.

The problem is that while Congress seems on its way to both dumping CLASS and further shredding the already-tattered Medicaid safety net, it has no ideas for an alternative. Meanwhile the U.S. struggles with the fate of CLASS, a high-profile government commission in the U.K. laid out a reform plan July 4 to address its long-term care needs. And this blueprint heads in a very different direction.

The panel, chaired by economist Andrew Dilnot, ripped Britain's existing Medicaid-like system as "confusing, unfair, and unsustainable." Echoing the sentiments of studies over the past 13 years, the Report of the Commission on the Funding of Care said the means-tested system is "not fit for purpose" and needs "urgent and lasting reform."

As an alternative, it proposed a new universal social insurance plan. This one, though, would provide only catastrophic benefits for many middle-class and wealthy seniors. Those with limited assets would continue to receive Medicaid-like assistance while everyone else would be expected to pay about the first $55,000 in personal care costs. In addition, those living in nursing homes would be responsible for their room and board, on the theory that they'd have these expenses wherever they lived. This approach, by the way, is a common feature in most European systems and the panel estimated it would increase the cost to seniors by about $15,000 a year.

While British middle-class and wealthy seniors would receive only catastrophic assistance, the number of people eligible for unlimited public long-term care support would increase. Currently, the eligibility cutoff for such benefits is about $37,000 in personal assets. In the new proposal, public support would be available to seniors with assets of as much as $160,000 -- including, importantly, their home. Young people with disabilities would be eligible for first-dollar benefits, no matter what their wealth.

The panel estimated the new system would increase government spending by about $2.5 billion, or about 0.25 percent of current outlays. In the U.S. budget, that would be equal to about $80 billion.

While the Dilnot panel said very little about how those needing care would finance their share, I could imagine them using home equity, annuities or private long-term care insurance. Although such an insurance product barely exists in the U.K., it should be relatively inexpensive to purchase a basic $55,000 policy that would cover would cover about nine months of nursing home care.

The Dilnot plan is in stark contrast to the CLASS Act. Instead of full coverage after a big deductible, CLASS would provide modest first-dollar insurance (probably about $50 to $75 a day) for life. Such a "long-and-skinny" benefit is also very different from a typical private long-term care insurance policy, which normally includes a 90-day deductible and has a more generous daily benefit for three to five years.

Could such a catastrophic plan work in the U.S.? Several researchers, including Christine Bishop at Brandeis University, Anne Tumlinson at Avalere Health, and Bill Galston at the Brookings Institution, have proposed similar ideas. But they've never gotten much traction.

Dilnot's plan would protect those who most need financial support -- the poor and those with true catastrophic costs, such as people with dementia. But by requiring those who can finance some of their own care to do so, it could hold down public costs, making the plan both fiscally and politically more acceptable. As universal insurance, it would avoid all of the problems that go with a voluntary program such as CLASS.

The plan's biggest downside is probably the opportunity for people to game the system by shifting assets so they can claim those generous public benefits. And its failure to recommend a specific source of funding is a huge omission.

I don't understand enough about British politics to know if this idea has a chance, although the government response has so far been noticeably cool. Still, advocates seem to like it, and given the jeopardy CLASS is in on this side of the pond, some form of a catastrophic insurance system might be worth a look.

Congress can repeal CLASS but it can't slow the aging of America and the growing need to provide personal care for the frail elderly or others with disabilities. Much as it might try, it cannot walk away from the problems of long-term care by trashing the only options available to many Americans.

It's Not Just The Money: Cost Control In Cancer Care (Guest Opinion)

Fri, 15 Jul 2011 18:07:00 GMT

Health reform raises central ideological questions about the size and scope of government, about progressive taxation, about the individual mandate and more. It's easy to forget that cost control will be a huge challenge, no matter how these ideological matters are resolved, indeed under any health system. Finding the right combination of humanity and restraint will be particularly hard in addressing life-threatening or life-ending illness. Economic incentives, American culture, a changing doctor-patient relationship and fundamental uncertainties at the boundaries of clinical care conspire against our efforts to provide more humane, more financially prudent care.

The necessity and the difficulty of these tasks were underscored by a beautiful New England Journal of Medicine essay, Bending the Cost Curve in Cancer Care, by Thomas Smith and Bruce Hillner. Their essay received favorable attention from health policy journalists. Yet because it didn't push the usual partisan buttons, it didn't receive much wider attention. That's too bad, because Smith and Hillner raise many issues that apply beyond the realm of advanced cancer care. For instance, they offer a brave model of skilled providers identifying specific opportunities to reduce costs within their own specialties. They also present suggestions to address the burdens imposed by cancer overtreatment and undertreatment on patients and society as a whole.

Their first, deceptively simple recommendation is to target cancer testing and imaging to situations of proven benefit. Measured at the population level, the survival benefits of such imaging -- routine mammography screening for asymptomatic young women or early lung cancer screening, for example -- are often minimal or unproven. Such imaging is also quite costly. The annual direct costs run into the billions of dollars. Indirect costs include patient anxiety and follow-up treatments that can be expensive and intrusive. And, at the other end of the life spectrum, physicians are performing annual mammograms in patients who have quite limited life expectancy. Providers also implement follow-up scans searching for relapse, such as frequent PET-CT scans, that are not supported by guidelines or by clinical trial evidence.

In part, these problems reflect powerful incentives on providers, device manufacturers, and others which promote aggressive care. The problems go deeper, too.

Dr. Vivek Murthy, president of Doctors for America, e-mails that physicians spend less time with patients (not always for reasons of their own choosing) and are less likely to have important discussions with patients and families about priorities or tradeoffs in care. It takes less time to consent to an intervention or to prescribe a medication than it does to persuade a patient that an intervention or procedure is unwise. Murthy notes that one cumulative effective of millions of missed conversations is to reinforce the intervention mindset among patients. So, alongside efforts to alter physician incentives, medical schools and health care settings must equip physicians with the knowledge, the interpersonal skills and other supports to conduct these important conversations well.

Another problem may be even more challenging. We, the public, display a strong bias toward the most aggressive and costly care, often at the expense of other things. The proliferation of $100 million proton beam cancer facilities, even as basic cancer prevention efforts go unfunded, exemplify the imbalance in urgency and priorities. Continued Medicare reimbursements for costly yet dubious medications such as Avastin for breast cancer raise inevitable questions of cost-effectiveness. Whatever your ideological perspective, Medicare should not and cannot provide a blank check to the supply-side of the medical economy, especially in a political and regulatory context in which private payers are under strong pressure to follow suit.

Smith and Hillner's essay also raises sensitive issues regarding overly aggressive chemotherapy for patients who face fatal metastatic cancers. Given anxieties captured in the crystalline phrase "death panel," I would not commence a national cost-control discussion within the frightening and divisive arena of end-of-life care. On the merits, though, Smith and Hillner cite much evidence that both patients and American society would benefit from less toxic and less aggressive care. When further chemotherapy is unlikely to be successful, they suggest that symptom-directed palliative care provides a better treatment course.

Ironically, the inclusion of palliative care elements within standard care may also prolong life. As Atul Gawande noted in the New Yorker, a randomized trial found that metastatic non-small-cell lung cancer patients assigned to early palliative care lived almost three months longer, on average, than their counterparts receiving usual care. The earlier palliative care group experienced higher quality of life, was less likely to display depressive symptoms and was more likely to be spared toxic side-effects of futile therapies. Some imperfectly understood combination of these benefits prolonged survival through provision of more cost-effective, less-punishing care.

Here again, we, the general public, must alter our own mindset to improve the quality of care. Metastatic lung cancer may be the most straightforward case. The majority of patients with this condition die within one year. Inclusion of palliative care and the turn away from further futile therapy are thus most compelling. Even here, though, many families hesitate to embrace palliative care because they regard loss of hope as the entry ticket. A definitive bleak diagnosis should not be required to receive services commonly associated with palliative care. All patients require effective pain management. All patients require open communication about prognosis and, often, advance care directives.

Such discussions aren't easy, especially when families don't fully trust the care team. Years ago, my father-in-law was diagnosed with advanced lung cancer. At one point, his doctors discussed the possibility of a punishing thoracic surgery. They were unenthusiastic. Yet our family wasn't really ready to give up on the prospect of substantially life-prolonging care. Moreover, we weren't very confident in his doctors. They had done a pretty poor job in the early stages of his care. They lacked the authority to say: "There's nothing more we can do."

Fortunately, one of my own physician colleagues mapped the options with me. He explained that surgery was unlikely to prolong my father-in-law's life and the most likely outcome was that he would spend his few remaining months in recovery from a painful and failed surgery. A different path was chosen. He died soon after, at home, under dignified and humane circumstances in the care of his family and a local hospice.

We all must face these issues to control costs, and for other reasons, too. We can treat our loved ones, and ultimately ourselves, more effectively, more efficiently, and more decently than we often do.

Medicaid's Moment (Guest Opinion)

Wed, 13 Jul 2011 20:29:00 GMT

If there is a piñata in American health care politics, it is Medicaid, the essential coverage program for more than 52 million low-income and vulnerable Americans, with 16 million more scheduled to enroll beginning in 2014.

In recent years, Medicaid has been the target of unrelenting attacks from Republicans and conservative think tanks. During the Senate debate on the Affordable Care Act, Sen. Robert Corker, R-Tenn., called Medicaid "probably the worst health care program in America." Sen. Richard Burr, R-N.C., said it was "the most dysfunctional delivery system that exists in the American health care system." Sen. John Cornyn, R-Texas, labeled it a "health care gulag." And, back in March, American Enterprise Institute Fellow Scott Gottlieb, a physician, penned a Wall Street Journal op-ed entitled "Medicaid Is Worse Than No Coverage At All."

Disappointingly, while Democrats are effusive in their praise of Medicare, their silence in response to public attacks on Medicaid has been deafening -- during the fight over health reform legislation and since.

All the more important, then, is the study released this month by the National Bureau of Economic Research, "The Oregon Health Insurance Experiment: Evidence From The First Year," written by a distinguished panel of health care economists.

I remember learning in 2008 that the state of Oregon had decided to hold a lottery to determine which uninsured Oregonians would be permitted to enroll in a limited expansion of their state's Medicaid program. A total of 89,824 persons applied for 10,000 slots.

Although at the time I rolled my eyes at the sad and ludicrous spectacle of a lottery for health security, my colleague at the Harvard School of Public Health, Kate Baicker, and MIT economist Amy Finkelstein, had a different reaction. They saw this as a fleeting and historic opportunity to conduct the gold-standard of empirical research, a randomized controlled trial, to evaluate the benefits of Medicaid coverage versus no coverage at all.

In the U.S. (Europeans, of course, have no reason to study uninsurance), only one significant randomized controlled trial has been done -- ever -- to study health insurance. It was the 1970s RAND health insurance study, which examined consumer behavior under varied insurance designs (the lead investigator in that effort, Harvard's Joseph Newhouse, also was involved in the Oregon study). Lack of health insurance was not part of the RAND study design. Now, the Oregon health insurance experiment will join RAND in the pantheon of essential health services research.

There will be many more results, reports and studies to come, but the first report already includes vital findings. The lucky Oregonians newly enrolled in Medicaid experienced:

 A 30 percent increase in the probability of a hospital admission.
 A 15 percent increase in the probability of taking a prescription drug.
 A 35 percent increase in the probability of having an outpatient visit.
 A 25 percent decline in the probability of having an unpaid medical bill sent to a collection agency.
 A 35 percent decline in having any out-of-pocket medical expenditures.
 Across-the-board improvements in self-reported physical and mental health, including "a general sense of improved well-being."

The study population -- new Medicaid enrollees and their unlucky uninsured counterparts -- was not healthy: 18 percent had diabetes compared with 7 percent of the general population; 28 percent had asthma compared with 14 percent of the general population; 56 percent had been screened for depression versus 28 percent of the general population. Happily, researchers found a significant increase among the new enrollees in seeking basic recommended preventive care tests. For instance, data showed a 20 percent increase in cholesterol screening, a 15 percent increase in diabetes testing, a 60 percent jump in mammograms and a 45 percent hike in pap tests.

All four measures of financial strain -- out-of-pocket medical costs, medical debts, refusal of treatment because of the cost of care or skipping payment of other bills to pay medical expenses -- showed significant declines for these new enrollees. No wonder, then, that researchers found "an overwhelming sense from the survey outcomes that individuals feel better about their health and … their interactions with the health care system. … The evidence suggests that people feel better off due to insurance."

Naysayers are already out in force charging that the study results fail to identify actual improvements in enrollees' health status. Those kinds of results are down the road. Though in this case, their beef is not with Medicaid or the Oregon study, it is with health insurance generally. Critics should try to convince non-poor Americans these services are unnecessary and unhelpful before foisting this straw-man on the poor.

The authors are careful not to predict from their research the likely outcomes of the 2014 Medicaid expansion built into the health reform law. They did not need to. From now on, those who allege that Medicaid is "worse than no coverage at all," or who refer to it as a "health care gulag," face a higher burden of proof. No one denies that Medicaid is full of flaws and deficiencies, and needs improvement -- but its greatest detractors never propose improvements, only abandonment.

This new study is the second piece of solidly good news this year for Medicaid's legions of supporters. According to the May 2011 Kaiser Health Tracking Poll, Americans oppose Republican proposals to block grant Medicaid to the states by a 60 to 35 percent margin -- even 39 percent of Republicans oppose the idea. Americans increasingly recognize the importance of Medicaid, not just for the poor, for everyone.

All the more perplexing, then, is the near total silence of the Obama administration and congressional Democrats in talking publicly in support of America's most vital health care safety net. And all the more discouraging are the reports of Medicaid on the chopping block for deficit-related cuts.

We can improve Medicaid and we should be bold in defending it. Thanks to the Oregon Health Study Group for making the job easier.

John E. McDonough is a professor at the Harvard School of Public Health (jmcdonough@hsph.harvard.edu).

A Medicare Reform Model Everyone Can Love (Guest Opinion)

Fri, 08 Jul 2011 18:22:00 GMT

Democrats and Republicans may not be able to agree on whether to increase taxes as part of a deal to raise the federal debt ceiling. But they can at least agree on this much: Congress must restrain Medicare spending. The trick is how to do it without sacrificing access to necessary care?

As luck would have it, we have a home-grown model for Medicare reform that would contain spending and improve the quality of care. This model appeals to both Republican and Democratic ideals: it satisfies the Republican desire for individual ownership and control, but emulates a social insurance program revered by Democrats. The key to improving health care for seniors is … to make Medicare look more like Social Security.

Consider: Medicare subsidizes the elderly and disabled by giving them a health plan designed and typically administered by government. Social Security does a better job of meeting seniors' individual preferences because it gives them cash and lets them decide how to spend it. They can spend more on housing and less on food, or vice versa.

Medicare enrollees have little incentive to avoid wasteful spending, because the savings revert to the government. Seniors spend their Social Security subsidy more carefully, because they themselves keep the savings.

Medicare issues endless regulations that dictate prices and other terms for 1.2 billion health care transactions each year. It's tempting to think this micromanagement is necessary because health care is special. Yet a steady stream of research shows this command-and-control approach leads to mispricing, rampant medical errors, unnecessary hospital readmissions, uncoordinated care and massive waste. It also blocks innovations, such as accountable care organizations, that would solve these problems.

If Social Security subsidized food the way Medicare subsidizes health care, seniors would dine out every night; they would go to a separate restaurant for each course; portions and waistlines would be enormous; everything would be overcooked; the bills would make your jaw drop; and tipping more than 9.25 percent would be illegal.

"Medicare gives very good health care very inefficiently," says Sen. Chuck Schumer, D-NY. At least he's half right.

Suppose that rather than send $574 billion to providers and insurers, Congress divvied it among Medicare's 48.9 million enrollees and send each of them a check. The average enrollee would get $11,700 -- more if they're sick, poor or disabled. Call it a "bundled payment to enrollees."

Enrollees could use that cash to purchase medical care or any health insurance plan licensed by any state. Whatever they saved by being prudent shoppers, they could keep and pass to their kids and grandkids.

If 50 million high-end health care consumers suddenly started caring about every dime they spent, they would wring unnecessary services and administrative costs out of the health care sector.

One concern would be that these Social Security-like subsidies would not be large enough for enrollees to purchase decent coverage. The evidence shows they would.

First, they would come with a built-in margin of safety. The Dartmouth Atlas of Health Care estimates that 30 percent or more of Medicare spending is pure waste, meaning that enrollees Medicare checks would include what Medicare currently spends on worthwhile medical care, plus an additional 40-50 percent. That cushion would also protect against inadequate risk- and income-adjustments.

Second, 77 percent of enrollees have Medicare supplemental coverage that they purchase directly or through an employer. That often amounts to thousands of dollars that they could use to supplement their Medicare check.

Third, these 50 million Medicare enrollees would demand cost-saving innovations -- in the immortal words of George Costanza – "like an old man trying to send back soup at a deli."

There's a lot more to be said about why Congress should reform Medicare in the image of Social Security. But the most important reason may be that it is the only way to restrain Medicare spending while meeting the Democratic goal of preserving Medicare benefits. Again, Sen. Schumer: "there are savings to be wrought out of Medicare … [but] actual cuts in the benefits, are not something we would want to entertain."

Cutting Medicare spending through a command-and-control approach, such as by reducing provider payments, may inadvertently eliminate access to services that enrollees really want.

If Congress wants to preserve what matters most to Medicare enrollees -- you know, the people the program is supposed to serve -- then there's no better way than to give them the money and let them decide which benefits are most important. Who better to judge what benefits seniors than seniors themselves?

That's how FDR subsidized them, anyway.

Michael F. Cannon ( @mfcannon ) is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It.

Are You Better Off With Medicaid Than No Insurance? A Landmark Study Says Yes (Guest Opinion)

Thu, 07 Jul 2011 13:57:00 GMT

This column is a collaboration between KHN and The New Republic.

Are you better off with Medicaid than if you had no insurance at all? The answer seems like a no-brainer: Of course you are. But, for the last few months, a cadre of conservative writers and intellectuals has argued that the program doesn't actually help beneficiaries and may actually hurt them. To prove their point, they've cited a handful of studies in which Medicaid recipients ended up in worse health than people with no coverage whatsoever. According to Medicaid's critics, this evidence suggests that expanding the program, as the Affordable Care Act would, is a bad idea.

Most social scientists I know reject these arguments. The reason: When you're comparing people on Medicaid to people with no health insurance, there's no simple, sure-fire way to account for the underlying differences in the two populations. For example, if you know you suffer from serious medical problems, you're more likely to sign up for public insurance when it's available. As a result, the Medicaid population may be fundamentally sicker than the uninsured population -- and end up with worse medical outcomes, even if they're benefiting from the program's coverage.

The best studies attempt to account for this possibility. And, mostly, they show that people on Medicaid benefit from the program: They have an easier time getting medical care and, as a result, they end up healthier. But even their adjustments aren't perfect. There simply hasn't been a way to conduct an experiment that cleanly and randomly separated the Medicaid population from the uninsured population. At least until now.

In 2008, officials in Oregon decided to make Medicaid available to more of the state's residents. But they appropriated only enough money to add 10,000 people to the rolls -- and 90,000 people applied. To cull the list, officials held a lottery, creating the sort of random experiment that would be impossible to create under different circumstances. After all, the only obvious difference between those who ended up on Medicaid and those who didn't was that 10,000 of them got the right lottery number.

Experts have been watching to see what happens and, on Thursday, they published their initial findings through the National Bureau of Economic Research. Their conclusions? The past studies, like the intuition about Medicaid, appear to have been correct. People with Medicaid really are better off than people without insurance. A lot better off, in fact.

Among the most obvious differences that researchers observed in the two populations was what wonks call "health care utilization" and everybody else calls "getting medical care." Compared to people who did not get Medicaid, most of whom remained uninsured, the Medicaid beneficiaries were 15 percent more likely to use prescription drugs, 20 percent more likely to get cholesterol monitoring, 35 percent more likely to use outpatient care, and 60 percent more likely (!) to get mammograms. The people on Medicaid also reported that they were healthier because of the program: According to the paper, 25 percent said in surveys that they were in "excellent" health, rather than "fair" or "poor."

Of course, more health care services don't always lead to better health. And people don't always assess their own medical status precisely. The truth is that more objective measures of health probably won't show big changes, in one direction or the other, for some time. The benefits of taking high blood pressure medicine, for instance, might not show up until many years in the future, when (hopefully) fewer people suffer heart attacks and require expensive medical interventions.

But the study demonstrates clearly, and persuasively, a different benefit of Medicaid: It provides beneficiaries with economic security. The Medicaid population was 40 percent less likely to borrow money or avoid paying other bills because of high medical expenses. The likelihood that unpaid medical bills ended up with a collection agency was also 25 percent lower. Not coincidentally, people on Medicaid were 55 percent more likely to report having a doctor they see regularly and 70 percent more likely to report they had an office or clinic for care.

To be fair, not all of the findings in the new paper make the case for expanding Medicaid easy, at least in the political sense. Emergency room use does not appear to have declined, confounding a promise reformers frequently make, although such a decline might also take time to materialize. And the study found that the total spending on health care for the new Medicaid beneficiaries increased by 25 percent, even though reformers say that expanding health insurance will lead to reduced spending on health care overall.

Then again, that last finding makes sense: These new Medicaid recipients got more medical care and, from the looks of things, they needed it. It was bound to cost more money at the outset. But getting these people into more stable health insurance arrangements can make the health care system as a whole more efficient. And by lowering the overall burden of charity care that doctors and hospitals must provide, expanding Medicaid can create political support for reforms that will effectively pay these providers of care less over the long run. That, more or less, is how the Affordable Care Act is supposed to control health care costs in the long run.

Might future research show this study, too, has flaws? Sure. No research project is foolproof and even the study's authors caution about extrapolating too much from this one study. But it's not just this study's design that makes it unusually significant. It's the all-star team of scholars that produced it. Among the paper's authors are Harvard's Joseph Newhouse, whose analysis of the 1970s Rand "Health Insurance Experiment" is still the gold standard for health policy research, and MIT's Jonathan Gruber, arguably the nation's most respected authority on modeling the outcome of health care policy interventions. And although Gruber is a well-known advocate for Medicaid who advised Democrats during the Affordable Care Act debate, one of his co-authors is Harvard's Katherine Baicker. She served on the Council of Economic Advisers during the Bush Administration.

Oh, did I mention that the paper's principal co-investigator is Amy Finkelstein, also of MIT. Conservatives frequently cite her research on Medicare as evidence of that program's limits. I've always thought conservatives misinterpret those particular findings, but it speaks to the respect her work commands. And her conclusion about Medicaid seems pretty unambiguous. "Some people wonder whether Medicaid coverage has any effect. The study findings make clear that it does."

I'm not naïve enough to think this paper will make Medicaid's most ardent critics rethink their position. But it should.

Jonathan Cohn is a senior editor at The New Republic .

Why It's Okay That EHR Adoption Will Fall Behind 2011 Goals (Guest Opinion)

Wed, 06 Jul 2011 17:58:00 GMT

2011 will be a disappointing year for the Centers for Medicare and Medicaid Services and the Office of the National Coordinator's electronic health record incentive programs. We predict that few doctors and hospitals will meet the objectives set for the "meaningful use" of certified EHR technology. Meaningful use is, of course, the term that describes the objectives and measures providers and hospitals must meet in order to receive financial bonuses authorized by Congress in the HITECH portions of the economic stimulus bill of 2009. David Blumenthal, the former national coordinator, had hoped large numbers of doctors and hospitals would adopt EHRs starting in 2011, the first year bonuses are available. But, in reality, by the end of the year the percentage of physicians using EHRs won't likely rise much above the current 20 to 25 percent rate.

This isn't necessarily a bad thing. This year and, to a lesser extent, 2012, could be for "cleaning house." Many older, costly and difficult-to-implement legacy EHRs will be replaced by less expensive, more agile systems that have been developed specifically for meaningful use and are deliverable in the cloud as Software-as-a-Service. Transitions like these take time, but the dynamics are foreseeable.

Consider this example: We know a seven-physician family medicine practice that has used an EHR since 2005. Though their current system includes many features and functions that are outside the scope of the meaningful use objectives and measures, it also is missing some key attributes. These include the ability to collect, analyze and report clinical quality measures; as well as engage patients and facilitate interoperable data exchange. Also, because the product is hosted in the practice’s own data center, it is staffed by a full time IT professional, which makes it expensive to maintain.

And this brings to light one of the main dynamics in play: money. The cost of updating the software licenses to meet the first round of meaningful use objectives will knock the practice back $104,000. This price tag doesn't include the expense of the related hardware upgrades that will be necessary for the updated system nor training costs. In addition, the practice may need to add the vendor's "patient site" for another $25,000 per year. Taken together, these upgrade costs wipe out the entire $18,000-per-physician EHR incentive bonus possible should all seven of the physicians achieve meaningful use certification by the end of 2011.

But it gets worse. The practice will find that the delivery and installation of the new software cannot be guaranteed before the effective cut-off date of October 1. If that deadline is missed, the physicians can't complete a 90-day period of continuous meaningful use before the year's end. So, the practice will likely need to postpone this part of the process until 2012. But at that point, the physicians will already have spent nearly 40 percent of their Medicare EHR bonus.

Contrast this with another small group practice that plans to adopt a Web-based, already certified EHR that works with tablets. They will indeed face the expense of digitizing records and other start up costs, but they will not face the degree of complexity. Here's how their transition could play out: The doctors will purchase the system and start using it in late 2011, but will not attempt the 90-day meaningful use period until the first or second quarter of 2012. The EHR will cost about $250 per doctor per month. Add to this the cost of the laptops and/or tablets, as well as additional training, which should be minimal because the product is relatively simple, designed around the meaningful use objectives and measures. Upgrades are included in the subscription price. The practice calculates that the total cost of the new EHR technology per physician will be approximately $6,000, which will leave them a "profit" of $12,000 per doctor should they qualify for meaningful use in 2012, and a net boost of approximately $25,000 per physician during the five years of the Medicare EHR incentive program.

Why doesn't the first practice simply start over with a newer generation of EHR technology? It almost certainly will, eventually. But for now the "switching costs" seem overwhelmingly high. The biggest one involves moving data from the older system to the new one. This task is often complicated because the databases aren't interoperable. The only recourse is to begin from scratch and type the old data into the new EHR. Painful and costly, this discourages many doctors from even considering a switch to newer products.

Both early and recent EHR adopters have reason to delay completing meaningful use until 2012 or 2013. The common themes are the time the process will take and the costs that will result. For example, the early adopters' feature-rich legacy systems were not designed for meaningful use, and will need significant upgrades. Meanwhile, the later adopters won’t be able to just buy a system that allows them to achieve meaningful use. They'll need to convert from paper to electronic records, and that will take a little time.

Breaking out of this situation is going to take time. We have described before how actions taken by the Office of the National Coordinator, CMS, the National Institute of Standards and Technology and the White House "unfroze" the EHR technology market, primarily by redefining its features and functions with this new set of objectives and measures. Because it opened up the market to hundreds of innovative new EHR products, it will eventually make EHR adoption and ownership by providers easier and more affordable.

So 2011 isn't big in the way some thought it would be. But it is creating real, lasting, positive change, and we think that's just fine.

David C. Kibbe, MD, MBA , is senior advisor to the American Academy of Family Physicians and an industry advisor on Health IT. Brian Klepper, PhD , is a health care analyst, editor of Care & Cost and chief development officer of onsite clinic firm, WeCare TLC, LLC .

Letter To The Editor: Hospices Are Serving A Critical Need

Tue, 05 Jul 2011 17:47:00 GMT

The author is responding to a recent KHN story: Concerns About Costs Rise With Hospices' Use (Rau, 6/27).

As Congress works to come to terms with the economic challenges facing our nation, it's inevitable that discussions focus on health care. With an estimated one third of Medicare spending going towards care of beneficiaries in the last year of life, attention has understandably turned to the rising costs of hospice care. Hospice is the leading provider of palliative care services for those facing serious and life-limiting illness.

Admittedly, there has been much growth over the past decade, from 700,000 patients receiving care in 2000, to more than 1.5 million people now. Current Medicare spending on hospice has increased to nearly $12 billion. Utilization of hospice and the costs of care have increased due to a variety of factors affecting the field.

In 2000, the majority of those served by hospice had some form of cancer, where the expected trajectory of the illness -- and the associated costs -- was more predictable. Today, less than 40 percent of hospice patients have cancer. Hospice providers are serving more patients with complex illnesses -- such as those with late-stage dementia -- who have uncertain trajectories making prognosis much more difficult.

A decade ago, a patient's home was almost always the primary place where care was provided. While the private residence is still the primary location of most care in the US, today, hospice care also is provided in nursing homes, assisted living facilities, hospitals and residential facilities.

And perhaps most importantly, in 2000, for every person that received hospice care, there were two other dying Americans who would have benefitted from this compassionate, quality care but did not get it.

We've made progress in caring for the dying. Yes, costs have increased, but so has the number of dying Americans cared for by hospices.

Hospice leadership has repeatedly called for more consistent and timely oversight of providers. Currently, hospices are surveyed on average every six to 12 years. NHPCO supports legislation introduced in the Senate mandating CMS surveys of hospice programs at least every three years.

Additionally, despite the significant administrative burdens and additional costs imposed on hospice providers, NHPCO, along with other hospice membership organizations and providers across the nation, worked in a cooperative fashion with CMS to ensure the orderly and timely implementation of the new Face-to-Face Encounter Rule. NHPCO supported the new regulatory requirement that a patient's record include a physician narrative. Additionally, there was support for the new requirement for enhanced medial review of claims for patients with stays exceeding 180 days.

These additional requirements, coupled with reimbursement cuts, strain the ability of hospice programs to be able to keep their doors open, yet the hospice community continues to support their implementation.

Well before health care reform, a voluntary Quality Partners program with self-assessments and other resources and tools to assist providers with quality measures and performance improvement was created by NHPCO. The hospice community has supported CMS efforts to collect more patient-level data and has gone on to specifically request collection of a broader range of data.

In addition, NHPCO has consistently supported the "aggregate financial cap" which places a limit on the amount of Medicare payment for all Medicare beneficiaries served by a hospice in a year.

The focus by MedPAC, Congress, and CMS on patients with longer lengths of care is certainly understandable given the need to cut our nation's health care expenditures (NHPCO research shows that in 2009, 11.8 percent of patients remained under hospice care for longer than 180 days). However, there are concerns that MedPAC, Congress and CMS have ignored the other end of the spectrum, offering no solutions to the incredibly short median length of stay of 17 days which has not changed in a decade.

Blogwatch

Are Rising Hospice Costs A Concern?
Bloggers respond to the original KHN story.

Far too many Americans begin hospice care too late in the course of their illness. We know the reasons why people are referred to hospice so late. Besides the reluctance of physicians to "give up" on their patients, there is confusion surrounding Medicare's "six month" eligibility requirement for hospice enrollment. This requirement is often misinterpreted to mean that Medicare expects a patient to have six months or less of hospice care. The Medicare benefit does not place a limit upon how long a person can receive care. If a physician certifies that a patient is likely to die within six months, they are eligible for hospice care as long as they need it.

Some who question the growth of hospice use illustrations of outliers, such as those providers who have failed to meet compliance standards or the case of patients who may have stayed under the care of hospice for multiple years. However, it's dangerous to paint the entire field by the actions or experiences of a few, as it gives an inaccurate perception to the public and to policy makers. Are there some hospices that are "bad apples"? Yes. But that is the outlier, not the norm. NHPCO and the overwhelming majority of providers in the field want to see bad providers closed down.

Quality and cost -- those are two drivers of all our talks about fixing health care. The overwhelming majority of hospices are committed to providing the highest quality care possible. And research has shown that for every Medicare beneficiary that utilizes hospice, Medicare saves about $2,300. In an atmosphere of reimbursement cuts, with average net margins of less than three percent (according to MedPAC statistics), the hospice community remains a costs effective and fiscally responsible high quality end-of-life provider.

J. Donald Schumacher, PsyD, is the President and CEO of the National Hospice and Palliative Care Organization.

Medicaid: Extending The Enhanced Federal Match Makes Sense (Guest Opinion)

Thu, 30 Jun 2011 17:06:00 GMT

June 30 was the day when Medicaid's enhanced federal matching rates -- part of the 2009 stimulus package -- expires, leaving states struggling to sustain health care's safety net.

A recent New York Times editorial called attention to the risks of allowing a single-minded focus on deficit reduction -- a goal critical to the nation’s economic future -- to obscure spending needs that are equally critical in the too-slowly-recovering economic present.

Medicaid is a prime example of this danger.

This is a program where long-term savings and short-term spending come together to make fiscal and humanitarian sense. Clearly, Medicaid spending will have to grow more slowly in the future. But, for now, federal support for it is key not only to states' ability to meet the health and long-term care needs of tens of millions of Americans, but also to help prevent state economies from further deterioration.

Here's a solution: Congress can simply extend these expiring supplements to federal Medicaid payments -- and require states to pay the money back later, when the economy's recovered.

And here's why the approach makes sense.

States face a twofold problem when economic recession hits: the demand for Medicaid services goes up, as people lose job-based health insurance; and states' ability to match federal funds to support those services goes down because their revenues decline. To mitigate those human and economic hits, the stimulus package established an enhanced federal match rate for state Medicaid spending -- increasing the minimum federal contribution from 50 percent to 56.2 percent and targeting additional support to states based on increases in unemployment. In 2010, that "enhanced match," initially committed through December 2010, was extended, on a declining basis, through June 2011. In the first quarter of 2011, actual matching rates ranged from just less than 62 percent of total costs in wealthier, less-hard-hit states, to just less than 85 percent in states facing greater burdens.

What did states do with that money? Over a period when millions of Americans lost work-based health insurance, Medicaid was able to pick up the slack. Enrollment increased for both adults and children, particularly the latter.

Extra federal support not only protected people in need of services, it also provided a much-needed boost to flagging state economies. Although hard-pressed states reduced the revenues they committed to Medicaid, the enhanced matching rate substantially increased the bang for each buck they did invest, and total spending increased. According to the Council on State Governments, enhanced matching increased the total spending from every dollar a state invested by 40 percent -- from $1.61 to $2.68. The amount varied by state, with more support for the poorer, harder-hit.

The enhanced match had an indirect or multiplier effect -- as the dollars spent on services supported incomes that supported purchases that expanded economic activity.

In short, the enhanced match worked. But at the end of June, it came to an end. Meanwhile, with unemployment still at record levels, demand for Medicaid remains high. Although the Affordable Care Act prohibits states from restricting Medicaid eligibility, states are resisting this "maintenance of effort" requirement, and will clearly have less federal support to sustain it. Without the federal cushion the enhanced match created, the prospect of major Medicaid cuts looms large. Not only will many people lose coverage, the economies they live in will struggle even more to recover.

This should not happen. Extending the enhanced match can support weak state economies and support vulnerable populations -- and can buy the time we need to reform Medicaid to become more efficient. And, as the economy improves, the time will then come when states can repay the federal government for the help they get now, say with somewhat smaller federal matching funds in the future. That's fiscally responsible. But right now, at time of continuing economic and human vulnerability -- it's fiscally and morally responsible to continue federal support to sustain Medicaid, for the people and the economy that depend on it.

Judy Feder is an Urban Institute fellow and professor, and former dean of the Georgetown Public Policy Institute. John Holahan is the director of the Urban Institute's Health Policy Center.

The Most Commonsensical And Hopeless Reform Idea Ever (Guest Opinion)

Mon, 27 Jun 2011 19:38:00 GMT

The way that Michael Long and Sandeep Green Vaswami want to change hospital care may well rank as both the most commonsensical and most hopeless health reform proposal ever. The real question is whether they can show the same tenacity in pursuing their goal as an elderly Jewish woman from Munster, Ind., who has invested nearly two decades in a similar effort.

What the two men are advocating is simple: hospitals should offer the same level of professional staffing and patient care on weekends as during the rest of the week. They should do this, the two men write in the Health Affairs blog, because trying to cram seven days of care into five leads to a cascade of problems that harm and even kill patients. It also costs a lot of money.

That's the commonsense part. The hopeless part is that Long and Vaswami, both affiliated with the Institute for Healthcare Optimization, seem to believe that doctors, nurses and hospital execs will read their article and then spontaneously volunteer to work the weekend shift.

American hospitals are complex entities, but at heart they remain the doctor's workshop, dependent upon the goodwill of physicians who admit and care for patients. Maintaining that goodwill requires treading carefully. For instance, telling a neurosurgeon, "You're working Wednesday through Sunday this week" would rank high on the list of what a friend of mine calls a "career-limiting event."

Long and Vaswami are aware they're tampering with long-standing tradition, but as justification they offer a disturbing catalog of the effect of care controlled by the calendar.

To begin with, bunching scheduled admissions in midweek often overwhelms the staff, leading to "significant" increased risk of patient death or admission to the Intensive Care Unit. Filled beds force emergency rooms to discharge patients to "inappropriate care locations," with the hospital relying on specialized teams to ride to the rescue "when patients deteriorate because of inadequate care." At the same time, "medically appropriate transfers … may also be delayed or rejected."

And that's when hospitals are operating normally. Patients admitted over the weekend face an increased risk "because critical diagnostic or therapeutic modalities are not available," while patients staying over the weekend experience "delays at best and deterioration in clinical condition at worst."

Finally, peak-and-valley scheduling is inefficient, causing hospitals to build expensive new facilities instead of efficiently using existing capacity. With an aging population and new access to health insurance, that approach will cost "billions of dollars."

For all their indignation, however, Long and Vaswami pull their punches on both causation and remediation. So, for instance, in a 1,000-word essay backed by citations from The New England Journal of Medicine and similar sources, they never once use the words "doctor" or "physician" when referring to those whose behavior needs to change. Indeed, Long, an anesthesiologist, and Vaswami, an MBA, seem to run away from the implications of their own words. Avoiding either practical recommendations or moral outrage, they conclude: "Health care professionals have no choice but to carefully consider [emphasis added] whether weekends off are more important to us than the quality and cost of care we provide to our patients."

I'm surprised they didn't just write, "Take a few days off to think about it."

Of course, the two men understand they are opening a Pandora's box. The kind of compromises hospitals make to keep the medical staff happy is not a topic anyone wants to openly discuss. Let's look at a few examples.

In a just-released survey by the American Association of Critical Care Nurses nearly nine of 10 nurses said they've seen doctors make mistakes or take dangerous shortcuts. Yet only four in 10 nurses felt empowered to speak up. In a similar vein, 3 to 5 percent of hospital physicians are estimated to be outright disruptive, with a strong correlation between their misbehavior and problems ranging from nurse turnover to outright errors. Researchers bemoan the unwillingness of doctors to discipline colleagues or hospitals to risk alienating big admitters.

In that kind of environment, it takes a special person to question who the hospital is really set up to serve. Myra Rosenbloom, the elderly lady I mentioned earlier, is that kind of person.

Myra first called me back in 1993. Jack Rosenbloom, her husband of 45 years and her partner in a kosher catering business, had been admitted to a local hospital the previous September after suffering a heart attack. Jack was in stable condition when Myra visited him on Saturday evening but then started suffering chest pains. The hospital declared a code-blue emergency, but on a weekend night no doctor was available. Jack died that night in the ICU.

That's when Myra discovered that in Indiana, as elsewhere, no law required a doctor to be on duty, only that one be available within a certain time. (Typically, that's 15 to 30 minutes.)

Myra initiated a one-woman crusade to require hospitals over 100 beds to have a doctor other than the one in the emergency room on duty at all times. During Indiana's 1994 legislative session, she slept for five cold nights on a hard wooden bench inside the Capitol before the legislature passed a watered-down bill requiring a doctor, but letting an ER doc count towards the requirement. An ER physician was on duty at the hospital where Jack died, but he’d been too busy with other patients to answer the code-blue call.

Facing tenacious opposition from hospital groups that said her idea would cause them economic hardship, Myra has since then failed to win approval of a tougher law in Indiana, failed to pass a law in Illinois and failed to win even a hearing on similar federal legislation called the Physician Availability Act. It was first introduced in Congress in 1976, was reintroduced for a few years, vanished and then resurfaced in 2009 with the backing of Rep. Jan Schakowsky, a Democrat from suburban Chicago. At the time, Myra was 85 years old.

I called Myra the other day, and she said Schakowsky wants her to find some Republican co-sponsors so Schakowsky can reintroduce the bill. "I won't give up till the day I die," Myra told me with the same spirit as when we first spoke 18 years ago.

Perhaps if the nascent specialty called "nocturnists" had existed back in the early 1990s, there would have been someone to save Jack Rosenbloom that Saturday night. But the larger point made by Long and Vaswami remains. The distortions caused by giving provider convenience a greater priority than clinical necessity is exacting a fearful and avoidable toll of deaths, injuries and expense that far outweighs the cost of addressing the problem.

If Long, Vaswami and colleagues are serious about how hospitals operate, they would do well to act seriously. They could start by showing even a smattering of Myra Rosenbloom's persistence and courage.

A(nother) Bad Month For Obamacare (Guest Opinion)

Fri, 24 Jun 2011 17:33:00 GMT

Obamacare passes two milestones this month. It has been exactly two years since the first version of the legislation appeared in Congress. And it has now enjoyed exactly two years of solid public opposition. Yet this month has been harsher than most.

Supporters of the law went apoplectic, for instance, when a survey by McKinsey & Co. found that up to 30 percent of firms may respond to Obamacare's incentives to drop health benefits by -- get this -- dropping health benefits. McKinsey stands by its survey.

In addition, the Centers for Medicare and Medicaid Services' non-partisan chief actuary last week revealed that the law opens Medicaid to 5 million middle-class retirees, a change that "just makes no sense."

But even as these revelations emerged, a cascade of stories showed Obamacare's approach to cost control -- letting government planners manipulate prices and dictate other terms of health care transactions -- doesn't work.

A federally chartered study found that Medicare's price controls are based on "inaccurate, unreliable data," resulting in "deeply flawed" price levels, according to The New York Times.

A study in the New England Journal of Medicine revealed that children on Medicaid were refused appointments by 66 percent of specialists and had to wait 22 days longer for an appointment than kids with private insurance. The main culprit is Medicaid’s price controls, which one survey reports 24 states plan to ratchet down even further.

Obamacare expands coverage mostly by cramming another 25 million Americans into that program.

President Obama says that strengthening his new Independent Payment Advisory Board, whose "recommendations" on Medicare's price controls will already have the force of law, would contain federal spending. But this month saw Democratic members of Congress and the National Committee to Preserve Social Security and Medicare, typically allies of the president, line up with Republicans to repeal IPAB.

Former House Majority Leader Dick Gephardt, D-Mo., lambasted IPAB as "an unelected and unaccountable group [that] will be able to set payment rates for some treatments so low that no doctor or hospital or other healthcare professional would provide them."

Government planners are no more competent when dictating other terms of health care transactions, like whether providers receive a payment for each individual service or for bundles of services, than they are when setting prices.

For instance, experts fault Medicare's fee-for-service "payment system" (I prefer "exchange controls") for encouraging wasteful spending. This month, a federal study found over-use of dangerous double-CT scans among Medicare enrollees.

Massachusetts' attorney general reported that state's "global payment" system, which dictates that providers receive a fixed fee per patient, failed to produce any savings. In some cases, global payments ended up costing more than fee-for-service.

Senior health economist Alain Enthoven dumped on one Obamacare program that tinkers with how Medicare pays providers in the hope of creating "accountable care organizations" -- and that saw its own spate of bad news this month and last. "A better way to encourage accountable care," Enthoven wrote, "is the 'premium-support' model proposed by House Budget Committee Chairman Paul Ryan, R-Wis., among others."

Translation: let market forces set prices and other terms of exchange.

Obamacare saw rough sailing in the courts, too. Acting Solicitor General Neal Katyal literally tried to sell an appeals court on the idea that the individual mandate isn't all that oppressive because Americans can choose poverty as an alternative to complying.

Before another appeals court, Katyal implicitly admitted that, if the mandate were deemed constitutional, Congress could force Americans to buy non-health care products too, like long-term care insurance.

Various other reports and studies this month highlighted the costs of Obamacare. The Government Accountability Office revealed that the administration denied waivers to firms whose premiums would rise by as much as 9 percent due to just one (!) of the law's coverage mandates.

In related news, the administration announced it would stop accepting waiver applications September 22. Forcing workers to pay higher premiums is, evidently, more palatable than the embarrassment the waivers generated.

Medicare's chief actuary announced that under reasonable assumptions -- as opposed to those contained in Obamacare -- the law increases Medicare’s unfunded liabilities by trillions of dollars.

Obamacare's $1 trillion of new entitlement spending also became harder to defend when the Congressional Budget Office projected the national debt could exceed the size of the U.S. economy within a decade. Ditto when Moody's Investors Service threatened to downgrade the U.S. debt rating unless Congress made serious progress toward deficit reduction.

How many months like this can a law endure before it becomes a former law?

Michael F. Cannon ( @mfcannon ) is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It .

About That McKinsey Report… The Critics Were Right (Guest Opinion)

Thu, 23 Jun 2011 17:32:00 GMT

This column is a collaboration between KHN and The New Republic.

McKinsey and Company has finally released the details of its controversial paper on the likely effects of health care reform. And it looks like the paper's critics (including yours truly) were right to raise questions about it. Based on what the company has said, the paper offers no new reason to think Americans with employer-sponsored insurance will lose that coverage because of the Affordable Care Act.

Politically, that's good news for President Barack Obama, since he told insured Americans that the law wouldn't take away the coverage they already had. But what does it mean in terms of policy? Should we be happy that health care reform is unlikely to reduce substantially the current system's dependence on employer-based insurance? That's another, much more complicated question.

Let's start by looking closely at the paper, which suggested that as many as half of all employers would seriously readjust their employee benefits and as many as a third would drop coverage altogether once the health law took full effect in 2014. The theory behind the claim was that employers would find it financially advantageous to stop offering insurance because workers could instead get subsidized coverage through the new insurance exchanges. In other words, workers would happily take salaries -- instead of insurance -- from their employers. Even though firms that employ more than 50 employees -- which account the majority of American jobs -- would have to pay a penalty for failing to offer health benefits, the McKinsey consultants said, the financial advantages of dropping coverage would more than offset that cost.

But the basis for that prediction was a survey of high-ranking corporate officials. And it turns out the survey had a few weaknesses. For one thing, a quarter of respondents didn't know the salary breakdowns of their companies -- in other words, how many workers were making high salaries and how many were making low salaries. In addition, more than half of respondents weren't even aware of what their companies spent on health benefits. The survey didn't ask respondents about the ages of their employees. Were they relatively old? Young? A mix of the two? And when survey administrators "educated" respondents about the health law, they didn't remind them about the effects of the employer tax exclusion, which makes job-based health insurance worth a lot more to employees.

Surveys asking employers to predict behavior are never that reliable. But these issues make the McKinsey study a particularly poor forecasting tool. In general, younger and poorer workers might be better off getting insurance through the new exchanges, because they will get bigger subsidies from the government and because they benefit less from the tax exclusion. It is a different story for older and richer workers.

More sophisticated studies of employer behavior account for these and other variables, typically by creating "synthetic" firms and predicting how employers will act, based on data on past employer behavior. Sure enough, these studies have consistently shown a very different result: that the majority of employers will continue to offer health insurance, even after health care reform. In fact, just this week, new analyses by Avalere Consulting and the Robert Wood Johnson Foundation came to the same conclusion. (The basis for the Robert Wood Johnson prediction was another projection from the Urban Institute's model.)

While these predictions could be wrong, obviously, their findings are consistent with what happened in Massachusetts, where a similar coverage scheme actually bolstered employer-sponsored insurance. Indeed, even McKinsey itself now acknowledges that its study couldn't make projections as reliably as these other efforts. In its official June 20 press release, it stated flatly that its prediction was "not comparable to the health care research and analysis conducted by others such as the Congressional Budget Office, RAND and the Urban Institute."

But here's the irony: Most people like the insurance they get from their employers, which is why you hear politicians from both parties constantly promising to keep that coverage in place. In the long run, though, workplace-based insurance is probably not an arrangement worth preserving.

Private, employer-based coverage became the norm in the U.S. in the 1940s and 1950s because the arithmetic of health insurance works only with large groups of relatively randomly selected people, and large businesses naturally create such groups. But employer-based coverage makes workers too dependent on their bosses while saddling employers with a financial liability over which they have only partial control. More importantly, it leaves out people who don't have steady, full-time work.

An ideal health care system would not merely include everybody. It would also give everybody access to the same set of coverage arrangements, regardless of their place of employment (or lack thereof). It would also liberate employers from the responsibility of administering health benefits for workers, allowing them to concentrate on other, more productive activities. Let the car companies make cars and the grocery stores sell groceries and the software firms design software. They don't need to be running health insurance plans, too.

A single-payer system, with a combination of basic government insurance and private supplemental coverage, would be a much better alternative. So would a "competition" system that looks like what is currently in place in the Netherlands or Switzerland, or what Sen. Ron Wyden, D-Ore., first proposed back in 2007. The Affordable Care Act could evolve into such a system, particularly if the new insurance exchanges work well and workers feel comfortable the insurance available there is as good as what they'd get from employers. But that transition would probably take a lot of time, no matter what corporate officials were telling the survey-takers at McKinsey.

Jonathan Cohn is a senior editor at The New Republic .

Letter To The Editor: The Best Hope For Controlling Health Care Costs Is 'Innovation' By Insurers And Providers

Mon, 20 Jun 2011 17:30:00 GMT

The author is responding to a recent KHN story: Blue Shield Of California Sets Profit Cap Other Insurers May Not Imitate (Appleby, Weaver and Galewitz, 6/9).

To The Editor:

On Tuesday, June 7, 2011 Blue Shield of California announced at the Commonwealth Club in San Francisco that it "will limit its annual net income to no more than 2 percent of revenue" and the cap will be retroactive to include its 2010 profits. In their announcement, BSCA also challenged others in the healthcare system "to identify creative ways to deliver more value for each healthcare dollar" and that this profit cap is "we believe, the first of its kind in the country." As the president of a FirstCarolinaCare Insurance Company and chairman of the Hospital Health Plan Association, I can attest that investing profits in the community is a challenge that has already been met by the 80 hospital owned or affiliated health plans (HHPs) across the country.

As a not-for-profit hospital-owned health insurer based in North Carolina, I can categorically state that BSCA is not the first to cap its profits. Many HHPs have provided similar innovation for many years. My company has had a voluntary cap (1.5 percent of operations) since 2005, returning a check to our clients with no strings attached when we exceeded that cap.

Limiting our profits is a quintessential part of the responsibility HHPs have to keep their community healthy and employers strong. Our parent hospitals' tax exemption under Internal Revenue Service Section 501(c)(3) requires that the hospital hold and use all of their assets and earnings for tax exempt, charitable purposes. This requirement includes and applies equally to the equity and earnings of wholly owned/controlled taxable subsidiaries, such as those providing commercial health insurance. The profits and equity remaining in our plan after taxes and above statutory reserve requirements must be used consistent with the 501(c)(3) status of the health system, resulting in reinvestment in the charitable mission of providing healthcare for the benefit of the community we serve.

Affiliation with a health system has quality of care benefits for consumers as well. This week, the nonpartisan Commonwealth Fund issued a report showing that provider-sponsored plans serving Medicaid beneficiaries generated a significantly higher quality score on measures of chronic illness care (64 percent vs. 56 percent) and preventive care (71 percent vs. 63 percent). In addition, provider-sponsored plans were also shown to have much a lower administrative cost ratio than non–provider-sponsored plans (8 percent vs. 12 percent) -- meaning fewer state dollars are supporting overhead costs in plans like FirstCarolinaCare and other HHPs.

The news is often dominated by what the large insurers are doing, both good and bad, but mostly what is bad. Fees on insurers to be implemented in 2014 are intended to reduce the profits of the large carriers but will work to the detriment of HHPs, taxing away resources we currently invest in programs to meet the needs of our local or regional communities.

HHPs have provided value to our communities by limiting margins and administrative fees. Many HHPs raised dependent coverage ages prior to any state or federal mandate. Our plans have integrated and coordinated our provider communities and improved services for the underserved and Medicaid populations.

Like other small businesses, HHPs are the engines of innovation who strive to be more focused and respectful of businesses, providers, communities and members whom they serve. As part of integrated health care delivery systems, HHPs are vital to the future of health care in America. A local community approach to health care delivery and health insurance yields lower costs, better outcomes for patients and savings to the system. It also contributes to local economic development.

The large carriers like BSCA are so far removed from their customers it is hard for them to meet that not-for-profit mantra at times. These companies want to put a check in the mail instead of engaging at a local level with the community members who have a stake in addressing health care's challenges.

The best hope for slowing growth in health care costs and insurance premiums is innovation by providers and insurers working with their customers to share responsibility for improving the health status of communities. HHPs have been on this track for some time. We are happy that Blue Shield of California is boarding the train.

Ken Lewis, President
FirstCarolinaCare Insurance Company

Low-Income Families’ Rx For Health Reform (Guest Opinion)

Fri, 17 Jun 2011 18:13:00 GMT

When it comes to health care, who should be driving system change?

Since the passage of national health reform, politicians and pundits have dominated the debate. But for health reform to truly take root, we should take our cue from the millions of low-income Californians who have the most at stake -- and let their expectations inform implementation.

People who fall into this category generally earn less than 200 percent of the federal poverty level, which is about $45,000 a year for a family of four. They also tend to be health-stressed. Evidence indicates a significant amount of their medical needs go unmet. But, as a result of the law, this circumstance could change. The vast majority will either qualify for Medicaid or be eligible for health insurance subsidies to purchase coverage from the state health insurance exchanges.

Findings released this week from a survey of low-income adults in California offer such cues as well as insights into how the ranks of these newly insured might take advantage of expanded access to care, and how the health system will accommodate the resulting increased demand for care and quality. The statewide survey was conducted by Langer Research Associates for Blue Shield of California Foundation.

For starters, more than half of low-income adults are less than "well satisfied" with their current health care, and more than four in 10 say they have no choice of healthcare provider today. This points toward a potentially vast transformation in the delivery of health care as key elements of the federal health law take effect, giving patients greater access to coverage and a choice of providers.

In addition, low-income Californians are ready to exercise the expanded choices that health reform might offer them. Fifty-eight percent -- the equivalent of more than 3.8 million state residents -- are very or somewhat interested in changing their primary care provider.

The healthcare system, particularly the primary care providers currently caring for low-income patients, must prepare for a world of expanded coverage and expanded choice. Their patients tell us they will vote with their feet to have a regular personal doctor and to access care in a facility with perceived high quality.

So, based on these findings, what are the prescriptions for change that will ensure that the healthcare system is ready to respond to the expectations expressed here?

First, when health reform is fully implemented, simple math suggests that there will not be enough doctors or existing health facilities across the state to meet the additional demand. Existing care models will not be able to sustain a diverse population of low-income Californians who will have health insurance -- and want to use it.

Delivering primary care will have to expand from single patient-physician visits at one facility. Solutions include improved processes for primary care practices to increase efficiency and improve quality; team-based care that leverages the skills and experiences of non-physicians; and greater online communication between the patient and provider between office visits.

Secondly, the survey findings indicate that the low-income adults most likely to change primary care providers are those least satisfied with their current quality of care. If existing providers want to hold onto their patients as they gain insurance coverage -- and choices, they must improve their own quality of care.

They can do this by improving the courtesy of staff and keeping the facility clean; assigning a highly regarded personal provider for all patients; incorporating greater patient involvement in decision making; and allowing patients more time with their providers.

Lastly, studies done by the California HealthCare Foundation and others have shown that low-income individuals face tremendous barriers in receiving specialty care and continuous care for chronic conditions. The health overhaul presents an opportunity to improve both, but providers must fulfill this promise through strategies such as real-time information sharing between county health facilities, private community health centers, and other safety net providers. Another approach would involve enhanced communication between primary care doctors and specialists, and expanded use of telehealth and telemedicine for diagnoses, procedures, and consultations to reduce the need for in-person specialty appointments.

Based on evidence from the private and public sectors, the number one prerequisite to bring about these important systemic changes -- in other words, to fill these prescriptions -- is the identification of effective leaders who are committed to providing the best healthcare experience possible.

Far from the Supreme Court or Washington, D.C., how well our state and local health leaders respond to the expectations of low-income Californians will ultimately determine the success of national health reform for this population.

Peter Long, PhD, is president and CEO of Blue Shield of California Foundation. Ian Morrison is an author and independent healthcare consultant.

Built To Fail: Health Insurance Exchanges Under The Affordable Care Act (Guest Opinion)

Wed, 15 Jun 2011 17:26:00 GMT

The House of Representatives voted last month to repeal funding for the state health-insurance exchanges, which are required under President Barack Obama's Patient Protection and Affordable Care Act. The House GOP's vote reflects a grassroots revolt: Republican governors and legislatures from New Mexico to Georgia have also moved to kill or stall legislation establishing exchanges. A better approach might be to rally around the original tenets of the health exchange model.

Republican hostility to the exchanges was not inevitable. The concept has been endorsed on the right, by groups such as the Heritage Foundation and officials such as former Minnesota Governor Tim Pawlenty, and exchange like-programs have been used successfully in the Federal Employee Health Benefits Program and Medicare Part D, which covers prescription drugs. The argument for insurance exchanges is relatively simple. By setting up Web sites where consumers and small businesses can easily compare insurance options (including quality, price and coverage), states will spark competition, driving insurers to offer more affordable plans to consumers.

The health law, however, takes this simple idea and makes it extraordinarily complicated -- if not impossible -- to execute. By adding a litany of new minimum-insurance requirements and regulations to the original bipartisan idea, health insurance purchased through an exchange will likely end up more expensive than it is now.

For instance, mandates on the minimum share of health care costs that insurers must cover for all plans, along with a richer new federal "essential benefits" package, will drive up insurance costs for individuals and small businesses. Federal premium tax credits and cost sharing subsidies on the exchanges will also "bid up" premiums as individuals gravitate toward more expensive coverage.

Overall, the Congressional Budget Office expects that non-group premiums will go up by nearly 30 percent. This cost increase may be offset by the administrative efficiency of buying coverage through exchanges, and if many young and healthy uninsured can find affordable coverage. Conservatives, though, remain worried (and rightly so) that insurance choices on the exchanges may become "rigged" in favor of more expensive plans, driving up costs for taxpayers and driving healthy consumers to remain uninsured.

The health law's defenders may dismiss these concerns as partisan politicking, but it's harder to dismiss another criticism: that its exchanges are too heavily prescribed to actually operate. Without clarification or changes from the Obama administration, it will be nearly impossible for them to be fully operational in all 50 states by 2014, as the law demands. Consider what needs to be put in place.

In order to qualify for federal financing, the state exchanges must be able to ensure that premium-support recipients are living U.S. citizens -- a requirement to protect against fraud -- and are not felons. They must have household incomes between 133 percent and 400 percent of the federal poverty line (about $90,000 for a family of four). They also cannot be recipients of other health benefits from another source, such as an employer.

Logistically, these requirements present a massive challenge. For the first time, secure data feeds from the Departments of Homeland Security (establishing legal immigrant or US citizen status), Justice (for felon history), Treasury (for tax return information to impute income) and the Social Security Administration (establishing that the recipient is not deceased) would have to be combined. These data feeds would then have to be securely coordinated by the Department of Health and Human Services. There is no history of these agencies ever bringing their data together at this scale. It would qualify as the largest IT integration project in U.S. history.

Next, all 50 states would have to integrate this data into 50 different versions of a Travelocity.com for health insurance -- all while seamlessly shifting millions of recipients back and forth between private insurance and public programs like Medicaid and CHIP; allocating subsides; and collecting insurance premiums.

What if many -- or even most -- states can't establish a compliant exchange by January 1, 2014? Under the health overhaul, the federal government reserves the right to operate exchanges on behalf of those states that fail to meet the deadline. If dozens of states default to the feds, the administration would have to concede that the law's central component is unworkable.

But conservatives shouldn't cheer at that prospect, since states would miss the opportunity to create market-friendly exchanges that offer more affordable insurance options. Even if the health law is eventually overturned by the Supreme Court or repealed by a future Congress, conservatives would still have to find better ways to expand access to affordable health insurance. Exchanges would undoubtedly be part of that solution.

A grand compromise might be possible. If the administration gave the states more flexibility -- in particular, giving conservative states more leeway in certifying "qualified" insurance for sale on the exchanges and using Medicaid funds to support private coverage -- it might encourage those states to set up market-friendly exchanges. Other, more liberal states might appreciate extending the health law's exchange deadline from 2014 to 2015 or later.

Republicans might resist this option, because it's not as ideologically clean as "repeal and replace" and would allow Obama to claim some measure of victory. But if the GOP can lift the overhaul’s heavy-handed insurance regulations, get the states more Medicaid flexibility and slash the legislation's trillion-dollar price tag through market-based insurance reforms, wouldn't that be a compromise worth making?

Paul Howard is the director of the Manhattan Institute’s Center for Medical Progress. Stephen T. Parente is the Minnesota Insurance Industry Chair of Health Finance at the University of Minnesota.