Medicaid Cuts: Where’s the Outrage?

If Medicare services or provider rates were cut, or threatened to be cut to balance the budget, the firestorm would be epic.  Republicans would accuse Democrats suggesting such cuts of stealing from the elderly.  Democrats would accuse Republicans suggesting such cuts of trying to abolish Medicare.  AARP would express outrage, and if it didn’t do so loudly enough tea partiers would urge seniors to burn their AARP cards in an incongruous support of a government health care program.  So where’s the outrage when states faced with budget cuts look first to cut Medicare’s sister program, Medicaid?

A front page story in the New York Times on Tuesday describes cuts in Michigan’s Medicaid budget, resulting in the elimination of some services and reductions in provider fees.  As Medicaid fees were already absurdly low in Michigan, as in many states, the predictable response was that the pool of doctors available to Medicaid beneficiaries shrank even further.  Those lucky enough to find a doctor willing to take the low Medicaid reimbursement must be willing to travel long distances, and give up days of work to get necessary care for their sick children.  The Times described one such case:

Medicaid enrollees in Michigan’s midsection have grown accustomed to long journeys for care. This month, Shannon M. Brown of Winn skipped work to drive her 8-year-old son more than two hours for a five-minute consultation with Dr. Mukkamala. Her pediatrician could not find a specialist any closer who would take Medicaid, she said.

Later this month, she will take the predawn drive again so Dr. Mukkamala can remove her son’s tonsils and adenoids. “He’s going to have to sit in the car for three hours after his surgery,” Mrs. Brown said. “I’m not looking forward to that one.”

Those who can’t locate a participating physician either do without or wait for the condition to become emergent, at which time they seek more expensive hospital care.  How can this program be so dysfunctional?   The Kaiser Family Foundation, in a report posted last month, described the countercyclical nature of Medicaid’s finance structure:

During an economic downturn, unemployment rises and puts upward pressure on Medicaid. As individuals lose employer sponsored insurance and incomes decline, Medicaid enrollment and therefore spending increase. At the same time, revenue losses make it more difficult for states to pay their share of Medicaid spending increases. Specifically, a 1 percentage point increase in the national unemployment rate is estimated to result in 1 million more Medicaid and CHIP enrollees and an additional 1.1 million uninsured at the same time as state revenues are projected to fall by 3 to 4%.

So, states need to increase funding for Medicaid just when they are losing tax revenues and are facing pressures in other public service settings.  As KFF describes in the report, the problem this year was lessened somewhat by the addition of federal stimulus funding; the funding was apparently not enough to support the program in Michigan, and in any event will not persist nearly as long as states’ projected budget problems.

This is not a new problem.  It has often been noted that a health care system for poor people is a poor health system.  The reasons are, unfortunately, quite clear.  Medicare serves (mostly) the elderly of all income groups.  This is a politically powerful bloc: its members vote, and enough of them are financially and socially powerful to protect their turf.  Medicaid covers low-income people, including our lowest wage-earners, poor children, and people with permanent disabilities.  They have little social clout, by definition little money, and not much in the way of a lobby.  So, when times get hard, their programs are on the line.

That brings us to health reform.  The current bills rely heavily on Medicaid to bring coverage to the uninsured.  That is, as the above discussion makes clear, a risky proposition.  In its several forms, current reform bills have promised some increases, often temporary, to the federal share of states’ Medicaid costs.  And in a letter to Congressional leaders following a summit earlier this month, the President acknowledged the precariousness of the network of providers on whom we’ll rely to render that expansion more than a charade:

At the meeting, Senator Grassley raised a concern, shared by many Democrats, that Medicaid reimbursements to doctors are inadequate in many states, and that if Medicaid is expanded to cover more people, we should consider increasing doctor reimbursement. I’m open to exploring ways to address this issue in a fiscally responsible manner.

That would be a good step.  So would increasing the federal share of Medicaid’s costs.  If the current fiscal crisis has shown us anything about our federalist system, it is that the federal government, with its ability to borrow,  is much better at responding to emergencies than are the states, with their obligations to balance budgets annually.  But ultimately, a program for poor people will always have political, and therefore fiscal problems.

For reform to stick, for expansion of coverage to the poor and near-poor to genuinely serve their health needs over time, we have to tend structurally to our funding system.  The achievement of expansion to near-universal coverage would be a statement of solidarity, proclaiming that we’re all in this together.  To make that stick, we have to be in our health care financing system together.  There will be a list of clean-up work and next steps if and when reform passes.  High on that list should be the repair of Medicaid’s shaky fiscal foundation, integrating the interests of Americans across class and income levels.  When they’re considering reductions in access to health care, legislators should be just as cautious about harming kids in Flint as they are about harming elders in Scarsdale.

While Medicaid Enrollment Rates Increase, States Face Financial Pressure to Decrease State Medicaid Spending

Last week, the Kaiser Family Foundation released a report indicating a large jump in state Medicaid enrollment from June 2008 to June 2009.  The report said that the 7.5 percent increase was the greatest one-year jump in enrollment rates ever, with over 3 million people joining the public health program funded jointly by the federal government and individual state governments.  The reason for the increase  is thought to be that because more people became unemployed due to the economic crash, more individuals turned to Medicaid for health coverage.  However, because the economic downturn meant less revenue entering into state budgets, state Medicaid programs have not been able to keep up with the rise in new enrollees.

During a convening of state governors at the White House this week, state officials will likely raise the issue of Medicaid spending. The issue is pressing in light of the impending funding cut when stimulus money from the American Recovery and Reinvestment Act of 2009 will expire in December of this year.  The governors will likely ask that the stimulus funding be continued until states can somehow make up for their large current budget deficits.  In addition to asking for more money, the governors will also likely discuss the feasibility of health care reform efforts.  With both House and Senate versions of health care reform proposing increases to state Medicaid programs to ensure the coverage of more uninsured individuals, the state governors would, understandably, like to know where the money for such expansion would come from.

The National Association of State Medicaid Directors estimates that states’ budgets will fall  short  $140 billion in the next fiscal year.  This means even less money for the likely further increase in Medicaid enrollment to come this year, as Medicaid enrollment generally lags behind unemployment.  To account for the deficit, many states are planning to reduce their Medicaid programs. USA Today finds that three categories of such reductions exist:

• California, Arizona and Virginia propose reducing who’s eligible. In Arizona, 310,000 people would lose coverage. California also wants to increase premiums.
• Michigan, Tennessee, Massachusetts and others propose eliminating benefits. Masachusetts’ elimination of restorative dental services would save $56 million, says Medicaid director Terry Dougherty.
• Texas, Pennsylvania, Louisiana and others propose cutting payments to hospitals, doctors or nursing homes. Several states are considering new taxes on hospitals as a way to avoid cutting these payments.

States that accepted stimulus money to expand their Medicaid programs in 2009 are restricted from any such cuts that would affect low-income enrollment.  However, if the stimulus funding is not extended, some states are planning on heightening eligibility requirements.  For other states, while decreasing hospital and doctor reimbursement seems like the worst possible option– given that many doctors have already stopped accepting  Medicaid patients due to what they deem to be an insufficient rate of reimbursement– many states’ officials find that the only other viable option they have is raising taxes.  Many state leaders refuse to increase taxes in fear of the political backlash come November.

Realizing the need for health care reform to help manage the burden of paying for health care, state governors have stated a desire to be part of the health care reform conversation.  Many have already expressed their dislike for individual mandates, which they believe will drive more individuals to state Medicaid programs.  For the most part, however, the governors want reform and they want it now, finding that they simply can’t afford to wait another year.

It is also worth noting that an underlying issue from these new numbers is whether the Medicaid program is actually a good prototype for expanding health care coverage.  Drew Altman, President and CEO of Kaiser, put in perspective Kaiser’s report as well as the concerns of public spending that were sparked by the Centers for Medicare and Medicaid Services’ projections for 2009-2019– which forecast that public spending on health care will surpass private spending.  He noted that while spending in public health insurance programs would increase, the cost-benefit would be better, since per capita costs on health care were lower in government-run programs than in private insurance programs.  According to Altman, such numbers did not undermine health reform efforts, but instead denoted “the need to control health care costs in the public and the private sectors alike.”

Senator Joseph Lieberman “Regrets Any Misunderstanding”

Senator Joseph Lieberman says that he “regrets any misunderstanding.” Lieberman, who according to NPR’s All Things Considered “has angered a lot of people,”  also said  “I thought I made myself clear all along.”

All Things Considered characterized Lieberman’s rejection of the Senate’s Gang of Ten Compromise as follows: Lieberman “rejected both an expansion of Medicare to cover uninsured people down to age 55, as well as its revamping of a Public Option so that users would be covered by private rather than government insurance.”

Joe Lieberman “regrets any misunderstanding.” All Thing Considered noted “But as critics were quick to point out, this was the same Joe Lieberman who told the Connecticut Post just three months ago that he’d been a supporter of expanding Medicare to age 55.”

Lieberman said, regarding the video we posted yesterday,

“I finally got to see that on TV last night and it looked to me like I was referring back to things I had supported in the past to make the point that though I was against the Public Option, I was not against health reform.”

And there you have it– just a big, “regrettable,” misunderstanding.

In addition, Senator Lieberman said: “I haven’t received any pressure from Insurance Companies. I mean it!”

And I believe him. One rarely pressures a man who does everything one wants.

Maybe Instead of a Dollar We Should Send Joe Lieberman Instructions on How to Use YouTube

A little while back Senator Joseph Lieberman stated that, seemingly contrary to his prior positions, he would not–and could not– support a bill which contained a public option–nor would he join in a vote to end a filibuster against the same. Relying heavily on the underlying analysis of Tim Noah, I opined at the time that perhaps we all needed to send Joe Lieberman a dollar so that he could vote his conscience as opposed to the will of Private Insurers: that the financial constraints involved in being an Independent (i.e., little or no infrastructural help from either the Democratic or Republican Parties) meant that Senator Lieberman, if he wished to continue being Senator Lieberman, would have to curry favor among donors to finance a bid for re-election.

I also noted that Chris Dodd, by virtue of his support for a public option and health reform in general, had alienated said Private Insurers and seemingly vacated his seat as “the Senator from Aetna.” I also noted that, as one might imagine, considering the sudden advent of available Aetna money, that a man (or Senator) from Aetna’s home town seeking money (such as Mr. Lieberman) might, somewhat understandably, look to align himself with the will and desires of that money. As much as it pains me to say, my antidote–sending Joe Lieberman a dollar with the words “Public Option” written on it– did not work. Sadly, the efforts of Yale students, who took a concilliatory approach in beseeching Senator Lieberman to back health reform, have seemingly not worked either.

Since then, Mr. Lieberman has come out in opposition to the plan to allow  people from 55-64 years old to buy into Medicare. Unfortunately for Mr. Lieberman, he seems to be unaware of YouTube as a means of chronicling statements made on video. Back when he was attempting to explain his desertion of the Public Option he said (thank you Merril Goozner) this:

The Cost of Dying, 60 Minutes

In case you missed it.

Watch CBS News Videos Online

Medicare and Health Reform: Part II

In his closing remarks to the Senate Finance Committee last week, Senator Baucus pointed with special pride to the effect the Committee’s reform bill will have on shaping the health care system in the longer run:

One point I want to make… is about delivery system reform.  We are starting here in this bill to finally reform our delivery system so it’s based much more on quality and patient focus, moving ever so slowly, but inexorably, from fee for service….which causes a lot of the waste in our system. We’re not going to see savings, the benefits, to the system for a while… but after four, five, six years from now, we’re going to see the real benefits of reform.

There is no doubt that the Committee’s America’s Healthy Future Act devotes considerable attention to fixing what’s wrong with the existing delivery “nonsystem” and improving government oversight. Title II (Disease Prevention and Wellness), Title III (Improving the Quality and Efficiency of Health Care), Title IV (Transparency and Program Integrity) and Title V (Fraud Waste and Abuse) of the Act consume 143 pages of the 259-page Chairman’s Mark.

And well it should.  As Professor Bill Sage’s aphorism, “It’s the delivery system stupid,” suggests, changing the structure and interactions of health care providers has long been seen as critical to efforts to control cost and improve quality.  Given serious questions about the strength and effectiveness of competition among private health insurers, especially without a public plan option to spur them, Medicare reform stands as the only viable means to bring about delivery system change.  Policy analysts have made the point that “Medicare is the place to start delivery system reform,” recommending payment reforms that reward accountable health organizations and move toward bundled payments  as a means to spur needed integration in health care delivery.

But how quickly can all this be accomplished? Read more

Health Reform and Medicare: Part I

Here’s a pop quiz on health reform:  Which prominent Republican said the following:

And if you don’t [oppose this health care legislation] and if I don’t do it, one of these days you and I are going to spend our sunset years telling our children, and our children’s children, what it once was like in America when men were free.

OK, it’s a trick question: the answer is Ronald Reagan, paid spokesman for the American Medical Association’s Women’s Auxiliary, speaking in 1961 against the bill that ultimately emerged as Medicare.  (A recording of his “coffee klatch” talk, “Ronald Reagan Speaks Out Against Socialized Medicine,” is here.

Although what political scientist Jonathan Oberlander has termed “a politics of consensus” lasted for some thirty years after Medicare’s enactment, bipartisanship broke down in 1995 when Newt Gingrich targeted Medicare for cuts of 30% and urged privatization using managed care.  By the lights of conservative Republicans, severe cuts in traditional Medicare would encourage flight to managed care alternatives, so that, in the famous phrase of Newt Gingrich, Medicare would “wither on the vine.” (1 St. Louis U.J. Health L. & Pol’y 5-43 (2007), Abstract). Although President Clinton used the Republicans’ Medicare reform to his own benefit (polls showed that his defense of Medicare helped him secure re-election), ultimately much of the Republicans’ agenda for reform was adopted in 2003. Since then Republicans have not relented in their criticism of the program– with some in leadership positions even questioning the government’s role in health care for seniors. (See Rachel Maddow’s cable television show featuring a parade of video clips of Republicans bashing Medicare, including former Speaker DeLay –echoed by Representative Roy Blunt–asserting that “Medicare shouldn’t be a government program”).

Last week Republicans on the Senate Finance Committee opposing health reform switched gears and adopted a much more enthusiastic view of Medicare.  After long decrying the program’s faults and fiscal problems, they were now soberly warning that any cuts in the program will hurt Medicare beneficiaries.  A related tack has been to characterize the plan as a straightforward transfer from seniors to the uninsured. As Senator Kyle recently put it, “Seniors should not foot the bill for the uninsured. Medicare should not be the piggy bank for new non-Medicare spending, a new entitlement.”

To be sure, there is no small irony in the Republicans’ new-found enthusiasm for Medicare.  However politically astute exposing this hypocrisy may be, Democrats still find themselves on the horns of a serious policy dilemma.  Their problem is the result of the ingenious design of the Medicare Advantage program. Adopted with virtually no Democratic support in 2003, the Medicare Modernization Act of 2003 (MMA) took a variety of steps designed to encourage migration to private HMOs and PPOs (Medicare Advantage plans).  Although deploying a heavy dose of government subsidies and creating a deeply flawed competitive bidding system, the MMA succeeded in encouraging large numbers of seniors to join Medicare Advantage plans.

Elsewhere, I’ve analogized the design of  the MMA to “nation building”: an ambitious attempt to create markets and competition where little existed before, but funded by enormous public subsidies. Viewed less charitably, the new laws seem more like an insurgency. Incentives contained in the Medicare Modernization Act are geared to undermine traditional Medicare: large subsidies are given to private payers that in turn produce extra service benefits, a structure designed to lure seniors into private plans, while doing little to improve traditional Medicare.

For today’s reformers, there is both opportunity and risk.  Medicare pays far more to private plans than it would pay if they stayed in traditional Medicare.  (The Commonwealth fund estimates that these extra payments will amount to $11.9 billion, or $1,100 per enrollee, in 2009).   Some private plans do little to contain costs: so-called “private fee for service” plans offer no provider networks and simply funnel higher payments to intermediaries.  But other plans, primarily HMOs, do provide care at lower costs than traditional fee for service plans. Such plans introduce market pressures on providers that are sorely lacking under fee for service payment. Importantly, under the MMA one must return a large part of that differential to beneficiaries in the form of additional services (such as vision or hearing) or reduced cost sharing or reduced premiums.

So what is the net of cost control incentives, subsidies to private plans, and enhanced benefits?  Economist Austin Frakt’s study of extra payments to Medicare Advantage plans suggests that on balance they have not produced net benefits:

[F]or each additional dollar spent by the federal government (taxpayers) on the program since 2003, just $0.14 of it can be attributed to additional value (consumer surplus) to beneficiaries …What do we make of the other $0.86? That goes to the insurance companies but doesn’t come out “the other end” in the form of value to beneficiaries. In part it is accounted for by the costs of the additional benefits and in part it is captured as additional insurer profit.

But undermining all Medicare Advantage programs is bad policy and bad politics.

Health reformers hoping to capture some $400-500 billion in savings by eliminating subsidies to Medicare Advantage plans face a difficult political dilemma. Over 22% of Medicare beneficiaries are enrolled in a Medicare Advantage plan and are happily receiving “extra” benefits from them. While cutting subsidies will eliminate large amounts of wasteful spending that can be used to finance expanding insurance to all, some reductions in benefits will occur and in the future private plans may offer fewer additional benefits.  Adding another horn to the dilemma is the fact that many Medicare HMOs are delivering cost-effective alternatives in their markets and helping to encourage changes in medical practice.  Senator Nelson of Florida has sought to “grandfather” (i.e. protect) HMOs that deliver care below the cost of fee for service providers in their markets.  Yet even here, this sensible exception has run into political headwinds.  Pitting equity against efficiency, members of the Senate Finance Committee were eager to point out that the grandfather clause would be applied primarily in regions with the highest costs.

Reformers will need a fine scalpel and steady hand in order to perform surgery on Medicare Advantage.

In my next post I will discuss some other–and arguably more important in the long run– reforms to Medicare: those seeking to move away from fee for service payment and to nudge providers to adopt new forms of delivering care.

Rationing or Cost Effectiveness?

In today’s Wall Street Journal, Scott Gottlieb, a former senior official with both the FDA and the Centers for Medicare and Medicaid Services (CMS), warns that “Government Health Plans Always Ration Care.” Aside from recasting the same old aspersions about “rationing,” Gottlieb warns that if reform efforts can’t tame health care costs, the “government will turn to a less appealing but more familiar tool to cut costs: the regulation of access to drugs and medical services.”

Of course, “access” can mean many things. Theoretically, Americans have “access” to the best medical technologies in the world. But practically, most Americans-including those with health insurance-don’t actually access this type of care and couldn’t even if they tried. The bottom line is that every health insurer in the world, public or private, has to “ration” for the simple fact that health care resources are not unlimited. Only wealthy citizens truly have “access” to the best medical care money can buy, regardless of the country they live in or the health system they live under. That won’t change with or without major health reform.

Gottlieb is worried that reformers might formally embrace recommendations by the Medicare Payment Advisory Committee (MedPAC), which currently has a broad statutory mandate to advise Congress on the Medicare program. He also warns that rationing is “a European import,” as if no health insurer in the United States has ever had to draw the line somewhere and decide what not to pay for. For example, Gottlieb warns about organizations like the Committee for the Evaluation of Medicines in France and the Institute for Quality and Efficiency in Health Care in Germany. He doesn’t mention the National Institute for Health and Clinical Excellence (NICE) in the United Kingdom, but it drew similar scorn after the economic stimulus package funded comparative effectiveness research here in the United States. Gottlieb cautions that European countries “aren’t shy about rationing.”

Gottlieb is correct in one aspect: these organizations are prevalent in Europe. However, he misses three important points.

First, the countries in Europe that Gottlieb warns about spend considerably less than we do on health care (and don’t suffer negative health consequences for it).

Second, wealthy residents in pretty much all of these countries can purchase services and technologies over and above what the organizations that Gottlieb warns us about approve.

And third, we’re not exactly strangers to these organizations in the United States. Gottlieb is concerned about European imports, but he’s ignoring our home grown organizations, like the Agency for Healthcare Research and Quality (AHRQ), which makes new technology assessments for Gottlieb’s old agency, CMS, and supports comparative effectiveness research. Or the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC), which also performs new technology assessments. In fact, it’s no secret in Washington that Medicare has long considered some amalgam of cost effectiveness and comparative effectiveness in its coverage decisions, even if nothing in the Medicare statute explicitly allows it to do so. (CMS has long stretched the definition of “reasonable and necessary” in section 1862(a)(1)(A) of the Social Security Act to fit its fiscal realities, even if CMS or its precursor, HCFA, haven’t been successful in cementing cost effectiveness as a formal criterion, as evidenced through failed rulemaking in 1989 (54 Fed. Reg. 4,302) and 2000 (65 Fed. Reg. 31,124)).

And just as importantly, private insurers make cost and comparative effectiveness determinations too, either by following Medicare’s lead, as expressed through national and local coverage determinations (NCDs and LCDs), or by setting up their own new technology evaluation systems, like BlueCross BlueShield has with its Technology Evaluation Center. Though the offical duties and decisionmaking processes of these organizations differ, the health care community generally understands these decisions as implicitly factoring in cost effectiveness or at least clinical effectiveness-thus doing precisely what the anti-reformers like Gottlieb warn about.

Making the Case for the Public Plan, Part II: Public Option as Private Benchmark

Ezra Klein has given a nice explanation of the advantages of public options in our health insurance ecosystem. He summarizes three different types of options that could develop, including a “trigger plan” (which be “triggered into existence [where] the private insurance market” failed), a “weak public plan” (which “couldn’t use the low rates that Medicare sets” and would just act as another insurer) and a “strong public plan” (which would basically be modeled on Medicare). Klein argues that, whatever public plan were adopted, “The existence of another option changes the market. Individuals will have access to private insurers, but they’ll no longer be stuck with them.”

I agree with Klein that a public option can help us achieve the trifecta of health reform–increasing access, reducing costs, and improving quality. Tyler Cowen challenged Klein today, and I’ll try to answer Cowen.

First, Cowen argues that the public plan will be very expensive, for if “public and private plans are to coexist, the public plan must be attracting the higher-cost customers, namely the higher medical risks.” Even if that’s the case, other industrialized nations have used prospective and retrospective risk adjustment to level the playing field between plans. As I noted yesterday, even private health insurance lobbies have conceded that “spread[ing] costs for the highest-risk individuals” is necessary to guarantee coverage for all. Risk-adjustment should not be seen as a subsidy—rather, it’s a way to keep a level playing field between the public and private plans.

Private insurers’ apparent acceptance of risk-adjustment may seem irrational if you think that they are only in the business of trying to gain the healthiest customers and shed the sickest. Tempting as it is, that cream-skimming is only one part of the broad range of things that insurers do. Many large insurers make substantial “administrative services only” revenue–for example, by administering self-insured employers’ plans. (In that way they avoid financial risk from sick insures–that risk is assumed by the employer funding the plan). Risk adjustment would further reduce their incentives to avoid people with pre-existing conditions. In terms of quality, private insurers can compete with the public plan on several dimensions, including identifying good providers, incentivizing best practices, and fairly determining access to treatment and payments for providers.

It’s that last function—coverage and payment determinations—where the public plan really has a chance at improving insurance for everyone. Today’s default for private insurers is secrecy in pricing, and opaque “gotchas” buried in thick plan documents. As Uwe Reinhardt has noted,
Read more

HHS OIG Report Finds “High Risk” of Medicare Fraud in South Florida

A report released Tuesday by the HHS Office of Inspector General identifies South Florida as “a high risk area for fraudulent billings to Medicare” by suppliers of durable medical equipment. According to the report, South Florida accounts for 17% of Medicare’s total spending on inhalation drugs, but is home to only 2% of the nation’s Medicare beneficiaries.

While warmer climates are known to cause a variety of respiratory problems, that alone does not explain the “aberrant claim patterns” identified in the report.

In 2007, Medicare spent $143 million on claims for costly drugs to treat respiratory ailments in Miami-Dade County.

That’s 20 times more than the amount Medicare spent in the Chicago area, which has twice as many beneficiaries,

reports the Miami Herald.

The Herald explains the root of the alleged abuse is that two-thirds of the patients in South Florida listed on Medicare claims for expensive inhalation drugs did not have office visits with the physician who prescribed the treatment in the previous three years.

Additionally, medical equipment suppliers and pharmacies are alleged to have recycled the offending doctors’ names for ongoing patient billing, and billed far beyond the Medicare guidelines for inhalation drug therapy. As a result, the Herald says,

Medicare has spent five times more per patient on inhalation drugs in South Florida than the rest of the country — $4,400 versus $815 per beneficiary[.]

Read the HHS Office of Inspector General’s full report here (PDF).

Health Care Reform and the Public Insurance Plan: “Framing the Debate,” and Fording the Corporate Dam of Shareholder Wealth Maximization

Kaiser.org has recently noted that “Liberal and conservative interest groups ‘have begun a fierce ideological battle, with each side trying to shape the public’s perception of a public insurance plan,’ the Christian Science Monitor reports.”

Kaiser states:

The Health Policy Consensus Group, a coalition of conservative interest groups spearheaded by the Heritage Foundation, listed the creation of a public insurance option as the No. 1 “deal killer” for health care reform. The group argues that the government would use its “regulatory, pricing, and taxing authority” to make it nearly impossible for private insurers to compete, leaving U.S. residents without a private alternative.”

Let’s attempt to understand the argument against a public insurance plan. To do so, I would suggest that it will be of some help to understand the nature of a “public plan,” and, perhaps just as importantly, where the interests lie.

When we speak of “a public insurance plan,” we speak essentially of expansion, not creation: Medicare, Medicaid and SCHIP are “public plans,” as are those administered by the Veterans Administration and the Indian Health Service.  At present, however, these plans are tailored to bring medical care to people who meet certain criteria. At present, this country is estimated to have close to 50 million people who are uninsured: primarily people who either lack the money or employment requisite to obtain private health insurance or who fail to meet the criteria requisite for enrollment in any of the public plans as they are presently configured.

The “public plan” proposal would expand the criteria for enrollment in extant “public plans” and perhaps constitute other service providers to administer to the need.   So…the argument against a public plan is essentially an argument against making these plans (or very similar plans) available to a greater number of people. Why? Simply put, those who would be serviced by an expanded “public plan” would thereby be rendered unavailable to Private Insurers as customers and generally speaking, less customers = less profit.

Understandably, those who oppose a “public plan,” such as America’s Health Insurance Plans (AHIP), have proposed that as a means of achieving universal coverage, all Americans should be forced (”mandated”) to purchase health insurance from, well, Private Insurers. The plan calls for the Government to subsidize this purchase of private insurance. Given that there are close to 50 million uninsured, this would result in an increase of tens of millions of paying customers for Private Insurers.  This proposal has been rather aptly compared by Jeff Emanuel of The American Spectator to an automaker bailout which would require each American to buy a car.

The Heritage Foundation’s Health Policy Consensus Group, opposed to a public plan, is said to argue that with the advent of an expanded public plan

“the government would use its “regulatory, pricing, and taxing authority” to make it nearly impossible for private insurers to compete….”

Read more

Insurance Exchange May Help Solve Insurance Coverage Problem

Modern Healthcare reports that Nancy-Ann DeParle, director of the White House Office of Health Reform, has discussed the possibility of creating a national health insurance purchasing exchange directed towards Americans aged 50 to 64 years of age.  This particular age group is said to struggle with the procurement of affordable health insurance; they are not yet eligible for Medicare but are often subject to increased medical expenditures which accompany aging. Private insurers can be reluctant to take on such  risks, or may assign far greater premiums to people in this group in an attempt to make up for those greater risks.

Modern Healthcare states:

The meeting underscored the struggles of Americans ages 50-64 to get health insurance. “Half the calls we’ve received today” were from people of this age group who faced barriers to coverage either because they had a pre-existing condition, or couldn’t get coverage through their employer, David Certner, legislative counsel with AARP, informed reporters.

DeParle stated in a teleconference that the “Obama administration was working with Congress on a new plan to set up an insurance exchange, which would offer a range of private insurance options as well as a new public plan that would allow individuals and small businesses to buy affordable health coverage.”  Deparle further commented that “the goal was to build upon the existing healthcare system.” Those satisfied with their current coverage “shouldn’t be affected at all, except you’ll see your costs get lower over time.”

Annals of Internal Medicine has also weighed in on the prospect of  a health insurance marketing exchange and reports that such an exchange could be part of a greater restructuring of the health insurance marketplace.

The Annals states:

An effective insurance exchange (a new agency that would offer Americans a choice of health insurance plans while also regulating insurers) can lower the high administrative costs that are typical in the current individual and small group insurance markets (31). In addition, the Obama platform proposed more direct limits on insurance overhead.

The Annals article reports how programs similar to an insurance marketing exchange have worked internationally, and how the move to such would bring the U.S. closer to “the international standard.” The Annals states:

President Obama’s proposal for an insurance exchange also mirrors international experience with systems in which multiple organizations pay for medical care (often referred to as multipayer systems). Requiring common benefits; similar payment standards; and other simplifying rules, such as prohibiting medical underwriting, can reduce administrative expenses well below those of the United States, as demonstrated by Germany’s sickness funds (34). The Obama campaign’s planned prohibition of medical underwriting and its adoption of new insurance regulations would move U.S. insurance arrangements closer to the international standard (34).

Considering our recent post, “Surprise, Surprise: Older Americans are Sicker than their European Counterparts,”  this might be something to look forward to.

Quality of Care Differences by Insurance Status at Community Health Centers

On the heels of President Obama’s announcement designating $155 million to establish 126 new community health centers across the country, a study recently published in the American Journal of Public Health found that these centers do not provide the same quality of care to all their patients.  These centers, also known as Federally Qualified Health Centers or safety net providers, are intended to “enhance the provision of primary care services in underserved urban and rural communities.”  Unfortunately, studies appear to indicate that even within the confines of the same community health centers, quality of care received by patients varies depending on insurance status — those with private insurance receiving the best quality of care and those without insurance at the opposite end of the spectrum.

In their article, Insurance Status and Quality of Diabetes Care in Community Health Centers, Zhang et al. found that uninsured patients were the least likely to satisfy specified diabetes quality of care measures and Medicaid patients’ quality of care closely resembled that of the uninsured.  It might be tempting to explain away this phenomenon by pointing out that this study is limited only to diabetes care and may not be representative of quality of care overall.  This assertion, however, may be at least somewhat quelled by a study published last year in Inquiry, where Bradley et al. found a similar pattern in breast cancer patients treated in a safety net setting.  In that study, Differences in Breast Cancer Diagnosis and Treatment:  Experiences of Insured and Uninsured Women in a Safety-Net Setting, researchers found that within the same safety net setting, “insured women with breast cancer were diagnosed with smaller tumors and at earlier disease stages, and received surgery and initiated chemotherapy considerably faster than otherwise similar uninsured women.”

So, how could quality of care disparities exist in a safety-net setting whose very goal is to “enhance” care to the underserved?  Read more

Health Care Costs for Retirees Equals Second Mortgage

Often, the costs of health care can seem abstract: we speak in the aggregate of billions and co-pays and deductibles and the labyrinth which is the “donut hole” formula for Medicare prescription drug payments. But sometimes we get to a number which instantly makes sense and allows us to have some grasp of the actual cost and the impact that health care costs can have. Fidelity Investments has just released such a number. Kaiser.org reports that

Couples Retiring This Year Need $240,000 To Cover Medical Expenses, Study Finds

A 65-year-old retired couple this year would need $240,000 on average to cover medical expenses, according to a recent study by Fidelity Investments, the AP/Long Island Newsday reports. The study assumed that the couple is covered by Medicare and has no employer-provided insurance. It also assumed that the male partner would have a life expectancy of 17 years, while the female partner would have a life expectancy of 20 years. The estimate includes Medicare deductibles, copayments and certain services that might not be covered by Medicare.

That’s out of pocket. That’s a house.

Or at least a house mortgage (not for a particularly big house here in metro New Jersey, but a house nonetheless). And to think that one would have to face that expense– equivalent to the mortgage on a whole other house–after presumably realizing (though the presumption is not as solid as it once may have been)  the American dream of having fully paid off that 30 year mortgage on the “first” house– is daunting to say the least, and arguably unconscionable as part of a social compact.

Kaiser reports that

The $240,000 estimate is a 6.7% increase from last year’s projection. Since Fidelity first released its annual report in 2002, projected medical expenses have increased by 50% (AP/Long Island Newsday, 3/31).

Las Vegas Infectious Disease Specialists Accused of Fabricating Medicare Services

The Las Vegas Sun reports that the Nevada Medical Examiners Board is investigating into the falsification of medical records at HealthSouth Tenaya.  Raye Kraft, wife of a patient at this hospital, began to notice “infectious disease specialists Dr. Dhiresh Joshi and his then-employee, Dr. Fadi El Salibi,” writing in Kraft’s husband’s medical charts that they were examining him when they were not.  As her suspicion rose, Ms. Kraft took detailed notes of when the specialists charted activity on her husband, compared these notes with her insurance bill and her own notes of the times they actually examined him, and then sent these notes and comparisons along with a complaint to the Nevada Medical Examiners Board.

The Sun reports:

Her claim: that on an ongoing basis, Joshi and El Salibi were writing in the chart that they had examined her husband when they hadn’t, and then billing for it. One supposed exam was nothing more than the doctor’s friendly wave from the door, she said.

Ms. Kraft’s was not the only person suspicious.  The article notes that another patient “had complained a year earlier to the medical board of similar experiences.”  Additionally, nurses at MountainView Hospital Medical Center also filed complaints  “about El Salibi’s fly-by visits.”

In addition, the number of patients Dr. Joshi has claimed to have examined in the course of  a day has been deemed further cause for suspicion. According to the Sun, Elizabeth Neubauer, Dr. El Salibi’s former billing manager, “said that Joshi himself routinely billed for 70 patients a day. Other infectious diseases doctors say that’s double the number they could reasonably see in a long day of hospital rounds.”

The Sun also reports:

Indeed, a 2004 Medicare audit showed that in a single day, Joshi billed for an impossibly high number of patients - 104, according to Neubauer’s recollection. Joshi said it was 81 Medicare patients, and 20 of them were seen by medical residents under his supervision.

One might have thought that the audit would have served as a red flag for further examination for fraud and abuse at that time.  An  “impossibly high number of patients” is, after all, impossible– and therefore seemingly either the result of either inadvertence or knowing falsehood. If a pattern of such “impossible” billing emerges, “inadvertence” begins to seem less likely– especially when coupled with independent allegations of “overbilling.”

The articles reports that “[a]llegations about doctors fraudulently billing Medicare and insurance companies are whispered throughout the Las Vegas medical community . . . .” One might hope that the numerical evidence derived from audits in cases such as this would do more than whisper– and would occasion heightened scrutiny.

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