The Hum of Healthcare Reform

Shhhh.  Can you hear it?  Among all of that partisan pre-midterm election cheering and jeering? There’s a faint hum.  The cogs of healthcare reform have started to turn.

Thursday marked the six-month anniversary of the Patient Protection and Affordable Care Act (PPACA) and the implementation of several consumer protection provisions.  Can you believe it?  We now live in a society where:

• Children under 19 years old can no longer be excluded because of pre-existing health conditions;
• “Young adults” (19-25 years old “dependents”) can stay on their parent’s plan until they turn 26 years old;
• Insurers can no longer impose lifetime limits on benefits;
• Insurers can no longer deny payment for services once a consumer gets sick nor search for errors on a consumer’s application in order to deny payment for services once that consumers gets sick (a practice called “rescission”);
• Depending on your age, all new plans must provide certain preventive health services — such as colonoscopies, mammograms, routine vaccinations, and diabetes tests — without co-payments or deductibles;
• Annual limits on insurance coverage will be restricted; and
• Consumers are ensured the right to appeal coverage determinations.  If the insurer upholds its own decision, consumers can  appeal to an external review process.

Granted, these protections aren’t perfect.  For instance, “grandfathered” group plans do not have to offer coverage to young adults who qualify for group coverage at work nor do they have to offer the free preventive health services.  Mary Agnes Carey of the Kaiser Health Network points out that most consumers won’t benefit from these protections anyway until their new health year plan begins after January 1, 2011.  (Carey provides a basic Q&A on the provisions here.)

The greatest challenge for PPACA right now, though, seems to be the misperceptions circulating around the country.  A recent AP poll found that:

[m]ore than half of Americans mistakenly believe the overhaul will raise taxes for most people this year….

Many who wanted the health care system to be overhauled don’t realize that some provisions they cared about actually did make it in. And about a quarter of supporters don’t understand that something hardly anyone wanted didn’t make it: They mistakenly say the law will set up panels of bureaucrats to make decisions about people’s care — what critics labeled “death panels.”

The uncertainty and confusion amount to a dismal verdict for the Obama administration’s campaign to win over public opinion….

Yet, folks, PPACA provides long overdue protections that will have a tremendous positive effect.  The White House predicts that around 72,000 uninsured children with pre-existing conditions will gain coverage.  Getting Covered, a campaign dedicated to helping parents and young adults benefit from the healthcare reform, estimates that New Jersey has 209,000 uninsured young adults, but next year that number will have been reduced by almost 28,000.

These protections come in the nick of time, too.  Sabriya Rice of CNN reports that the impact of the bad economy has taken its toll on healthcare as:

[a] recent population report from the U.S. Census Bureau says there has been a dramatic increase in the number of people without health insurance in the United States. Between 2008 and 2009, the number of uninsured people increased by 16.7 percent, to nearly 51 million. An estimated 6.5 million people were no longer covered by private health insurance and equally as many had lost employment-based health benefits.

Patient advocates say Thursday’s changes are only the beginning. “The big resolutions will come in 2014 when you will start to see tens of millions of people getting coverage,” says Avram Goldstein, communication director for the Health Care for America Now, a liberal grass roots health advocacy organization.

Rice highlights a young man named Joshua Armstrong who took a break from school, lost his mom’s health insurance coverage and became one of the approximately 118,000 uninsured young adults in Alabama, and ran up a $10,000 emergency room bill after a car accident.  According to Getting Covered:

Alabama is actually one of ten states that have not required employers to expand dependent coverage at all. As a result, most family plans in Alabama currently only offer coverage to young adults up to age 19 or after college graduation. With the new law, young adults in Alabama will now be able to join their parent’s plan for longer even if they are financially independent, out of school, married, or live far away.

The new protection provision won’t help Armstrong with that emergency room bill — he’s worked out a repayment plan with the hospital — but it will help him secure insurance for the future.

AP reporter Carla Johnson similarly highlights three families affected by the PPACA protections: one whose son is uninsurable because he’s a cancer survivor, one whose son lost coverage when he maxed out the $1 million lifetime limit, and a man whose insurer retroactively canceled his coverage after he had a stroke.  The father of the latter summed up the situation quite nicely: “It’s despicable to leave a man who’s recovering from a stroke with no insurance.”  Yes.  Yes it is.  Keep on humming, PPACA.

How Much Does PPACA Really Benefit Women?

A recent article by the Commonwealth Fund entitled Realizing Health Reform’s Potential: Women and the Affordable Care Act of 2010¸forecast that “over the next decade, the Affordable Care Act (ACA) is likely to stabilize and reverse women’s growing exposure to health care costs.”  However, a review of the claimed benefits shows that many are equally important to men and women.

Such claims of gender-specific benefits without statistical support are also available from the White house.  That being said, there are some provisions that will greatly benefit women — and to supporters’ detriment — have not received the focus that they should.

Intended Benefits

Several portions of PPACA are intended to benefit women.  The prohibitions against gender-based insurance denials or premium pricing are aimed at combating blatant gender-discrimination in the insurance market.  7.3 million women (38%) in the individual insurance market reported that they were turned down, charged a higher price, or had a preexisting condition excluded from coverage (see graphic below).  As the White House reports, “Right now, a healthy 22-year-old woman can be charged premiums 150 percent higher than a 22-year-old man.”  Such gender-based rating is allowed in 42 states, with some plans charging women as much as 84% more than men for the same age group.  As Secretary Sebelius phrased it, “[b]eing a woman is no longer a pre-existing condition!”

S. Collins, S. Rustgi, and M. Doty, Realizing Health Reform’s Potential: Women and the Affordable Care Act of 2010, The Commonwealth Fund, July 2010.

The essential benefits standards require insurers to cover maternity care, eliminating previously reported pregnancy-discrimination.  Only 13 percent of plans sold in the individual market provide maternity benefits and “in 22 states, no plan covered costs related to pregnancy.”  Other plans impede access to maternity benefits by placing severe limits on costs covered or implementing long waiting periods before coverage begins.

Other services that must be covered by all non-grandfathered health plans beginning September 2010 include:

• Breast cancer screening every one to two years for women age 40 and older
• Cervical cancer screening
• Genetic counseling for the breast cancer (BRCA) gene
• Osteoporosis screening for all women 65 and older, and 60 and older for those at high risk
• Aspirin to prevent cardiovascular disease in women ages 55 to 79

PPACA has several other provisions focused on breast cancer–including, “a special provision directed at raising awareness of, and increasing screening for, breast cancer in young women,” and a directive to pursue breast cancer prevention research in younger women.

Section 4207 of PPACA amends Section 7 of the Fair Labor Standards Act (”FLSA”) by requiring employers to provide “reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk… [in] a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public…”  The Department of Labor Fact Sheet #73 further explains that a space temporarily converted or made available will be sufficient.

Unintended Benefits

The ban on pre-existing conditions exclusions will remedy a number of  unfair and discriminatory insurance industry practices. It will benefit women in the eight states and District of Columbia where insurers may legally reject a woman’s application on the basis of her prior experience as a victim of domestic violence.  It will also benefit women who would have been previously denied, on the basis of a previous cesarean section, either future C-sections or health insurance as a whole.

Also, the phase-out of the “doughnut hole” coverage gap in the Medicare prescription drug benefit )Part D) will incidentally help more women than men.  Of the 16% of Medicare beneficiaries that reach the doughnut hole each year, women (along with Alzheimer’s and diabetes patients) are the most likely to reach the gap in coverage.

Benefits for Men

So how do men benefit from PPACA?  For starters more men will benefit from the extended health insurance coverage mandated by PPACA.  Although women comprise 60% of adult Medicaid beneficiaries (in 2006), 54.6% of all uninsured are men (in 2007-2008).  The Medicaid safety net has caught more women than men.  However, that is a completely different social discussion to be had another day.

*Note: uncited statistics can be found in the Commonwealth Fund article, S. Collins, S. Rustgi, and M. Doty, Realizing Health Reform’s Potential: Women and the Affordable Care Act of 2010, The Commonwealth Fund, July 2010.

Everybody in the Pool — High Risk That Is

By Labinot A. Berlajolli

Individuals with pre-existing medical conditions may now begin applying for the Pre-Existing Condition Insurance Plan. Under the recently passed health care law (PPACA), the government set aside $5 billion to fund the plan from July 1, 2010 through Jan 1, 2014. Money is expected to be allocated based on each state’s population as well as its costs. Although, HHS officials said they might shift funding among states if the new $5 billion program to cover the uninsured runs out more quickly in some states than in others.

To qualify for coverage, individuals must be U.S. citizens or legal residents, have been denied coverage because of a preexisting medical condition, and have been uninsured for the past six months.  Administration officials said people who apply by July 15 will begin receiving coverage by Aug. 1.   States were required to let HHS know by April 30 whether they wanted to use federal grant money to set up a high-risk pool.  As of now, 21 states have chosen to join the federal run pools and 29 states and the District of Columbia have chosen to go it alone.  The 21 states that have chosen to opt into the federal plan are: Alabama, Arizona, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, and Wyoming.  Several of the largest states operating their own plans, including California, Illinois and New York, are not expected to begin enrollment until August. The administration expects that all states will begin enrolling people by the end of the summer.

Joining the plan will not be cheap. The Los Angeles Times reports that premiums, as well as benefits, are expected to vary greatly from state to state, with some plans charging as little as $140 a month and some as much as $900 a month. Independent experts, on the other hand, estimate premiums will average around $400 to $600 a month.

However, serious questions remain about the new risk pools.  Specifically, whether the $5 billion allocated will be enough. Many experts expect the $5 billion to run out well before 2014 because of high demand. The Centers for Medicare and Medicaid Services has estimated that the $5 billion will last for only two years. The Congressional Budget Office has estimated that the funding is not enough to cover all eligible participants, and that the administration will have to limit enrollment to only 200,000 people through 2013, though there are roughly 12.6 million with pre-existing conditions, according to the Miami Herald.   Others who advise Congress and the administration have warned the funds could be exhausted as early as the end of 2011.

Those interested in applying for the high-risk pools may visit the newly launched website, healthcare.gov, for more information and instructions on how to apply.

The House Democrats’ Health Care Plan Unveiled, Questions on Women’s Access to Health Care Remain

Last Thursday, October 29^th, House Democrats announced their bill for health care reform, the Affordable Health Care for America Act.  The House bill includes provisions such as a public option and employer mandates.  For women, the House bill has been a controversial issue; though the bill contains provisions that will expand women’s access to certain areas of health care, other areas have been neglected.

On the plus side is the bill’s prohibition of domestic violence being categorized as a pre-existing condition for health insurance purposes.  Ms. Pelosi was able to follow through on her promise to women that such a discriminative practice would be ended through the House bill.  Meanwhile, U.S. News attributes the inclusion of women’s health needs in the bill to the widespread women-led activism for health care reform.  Still, as significant aspects of women’s access to health are yet left unaddressed, some advocates wonder if we should have asked for more.

One issue of contention is that an amendment to the the bill allows for 12 years of exlcusivity for biologic drugs– some of which have been found particularly efficacious in the treatment of breast cancer. In addition to the 12 year exculsivity period, manufacturers will also be able still to engage in the process known as “evergreening,” the practice of changing a drug slightly–such as altering the time release mechanism– and thereby garnering additional periods of exclusivity. These periods of exclusivity prohibit cheaper generic versions of the drug– known as “follow-on biologics” or “biosimilars” from entering the marketplace. (To read more about the biologic exclusivity debate read here and here.) The end result would seem to point– if money matters (and when does it not?),  to a decrease in the availability of breast cancer biosimilars and thus a decrease in available efficacious treatment.  One of the bill’s sponsors, Anna Eschew of California, defends the proposal on the grounds that it does not interfere with women’s access to breast cancer treatment, and that it only curbs the ability of bio-pharmaceutical generic competitors to freely utilize the costly, extensive research and development of the original bio-pharmaceutical innovators.  Eschew believes that lesser periods of exclusivity will have a chilling effect on biologic research and development– as lesser exclusivity would make it more difficult for the original developers of the drugs to recoup the large expenses associated with such development.

Reproductive health care issues have also come to the forefront of the debate, but with a clear consensus yet to have emerged on what the bill does or does not cover within the various exchanges, options and subsidies within the bill.

While political groups are preparing to battle out these issues, one thing remains constant, women are a force that both democrats and republicans want on their side.  The House Democrats were paying attention when drafting their health plan, but the holes still left in women’s health care access might mean that women need to make themselves heard again–and this time, maybe a little louder.

Another Call for Women’s Action on Health Care Reform

Just a little over a month ago, Michelle Obama called upon women to take action to make sure their representatives would vote for health care reform.  This past week, Michelle made another request for women to respond to the national health reform debate during a breast cancer event at the White House.  As the debate seemingly winds towards a conclusion of reform, still, women are unsure that health care reform will actually accomplish that which really needs to be done to help women access better, more comprehensive health care.  While mom’s of America are saying the current health care reform proposals do not include their needs, the National Women’s Law Center exclaims “I am not a preexisting condition.”

The National Women’s Law Center released a second report this month on the affect of gender bias and discrimination in health insurance on women’s lives.  Their report includes an analysis of the discrepancies in health care access between men and women as well as an updated state-by-state comparative chart of states that still allow gender-rating and pre-existing condition discrimination in their health care plans.  Another interesting aspect of the report is the information on states that have, as of late,  reformed their health care systems to be more inclusive of women’s access to health care. One might wonder if the reformation was spurred or enabled in part as a result of the initial report’s publicity.

If you’re wondering about how your state fares in relation to women’s health care issues, be sure to check the most recent NWLC Report as well as Kaiser’s www.statehealthfacts.org.  Also, the Commonwealth Fund has just released a new report comparing the various Congressional health reform bills of 2009.  The report shows that the proposals which seem to pay most (though not enough) attention to women’s health care needs are that of the Senate Health, Labor, and Pensions Committee and the House of Representatives Tri-Committee, which both hope to establish an Office of Women’s Health.  All of these online resources are a great way to get more information and find out where holes in the health reform bills still need to be filled.

To be able to voice direct concerns, the organization Women of Color United for Health Care Reform is hosting a call-in day on Tuesday, October 27^th that will directly connect women to their respective Senators and Representatives.  The calls will be a chance for women to tell their Congress members what they want from health care reform and why allowance of pre-existing conditions denials and gender-rating are not acceptable.  Such calls worked well earlier this month in an event organized by Organizing for America, which enabled callers to tell Congress that they wanted health care reform– with many saying they that really wanted a public option.

Action needs to be taken– and the Obama Administration is asking for exactly that from women.  Though women are most often the health care decision makers in the family unit, men are also needed to voice their concerns:  why their mothers, daughters, wives, and sisters deserve a health care plan that serves their needs.  Call in on Tuesday, the 27^th and let Congress know what’s on your mind.

Preexisting Conditions & Wellness Incentives: A Horse of a Different Color?

The Washington Post has an interesting article which covers an aspect of pending health reform legislation that hasn’t received much attention as of late: wellness incentives tied to premium rates. As I have noted on this blog before, Senators Harkin and Baucus were both as of late said to have been considering legislative provisions which would enable employers to both reward and punish employees who fail to meet certain health goals. In pending legislation (and its practical application) it would seem the line between reward and punish has begun to blur.

The WaPo article relates how provisions passed by the Senate finance and health committees could more than double the allowable insurance premium increases tied to various conditions–or more precisely, to employee medical evaluations which fail to meet proscribed guidelines regarding weight, glucose and cholesterol levels, and other biometrics in addition to smoking cessation. Read more

Domestic Violence Victims Denied Coverage by Insurance Companies; Meanwhile, Verizon Takes a Stand of its Own

The thought of it might have kept Michelle Obama awake at night, but it’s a real issue that happens more often than is recognized.  Insurance companies can deny coverage to men and women who have been victims of domestic violence. They often do.  Through detailing the story of a 52-year-old attorney who was denied health insurance due to a past incidence of domestic violence, a recent article by Kaiser Health News helps to illustrate the prevalence of such practices among insurance providers.

Last Tuesday, House Speaker Nancy Pelosi addressed the treatment of domestic violence as a pre-existing condition before Congress.  She said that Democrats were no longer going to accept this practice and promised that such would be banned in forthcoming health care reform legislation. Another Democrat engaged in the fight is Senator Patty Murray of Washington, who is a member of the Health, Education, Labor and Pensions (HELP) Committee.  In 2006, Murray attempted the same type of reform by introducing an amendment to ban domestic violence as a pre-existing condition; the amendment did not pass. One of the “no” votes came from Senator Michael Enzi of Wyoming.  He’s still on the HELP Committee and sits there now as its  highest ranking Republican.

Some states have already taken the matter into their own hands, but 8 states and the District of Columbia still do not disallow insurance companies to reject coverage to men and women who have been victimized by domestic violence.  Read more

Making the Case for the Public Plan, Part I: The Difficulty of Private Health Insurance Regulation

As health reform moves to the top of the Congressional agenda, we will be hearing a lot about a possible “public option” in the plan. Earlier this Spring I began thinking about whether a public option was absolutely necessary to a successful reform. I started out hoping that it wasn’t, because Republican leaders despise it, and Democrats have sometimes let the “perfect be the enemy of the good” in health reform. But I’m now convinced that a public option is necessary, and I hope to spend a few posts explaining why.

To begin with, we should get clear on exactly what insurers do. I have tried to summarize it in a one page chart, which appears here. The right column focuses on the purely positive role of insurers–how they add value to the health care system. With massive amounts of data at their disposal, they can identify best and worst providers, good and bad treatments, and even spot dangerous side effects in drugs and devices. They can invest in new technology to better process claims. To the extent that they retain long-term relationships with customers, they have an incentive to reduce costs by keeping those patients healthy.

But the structure of the US health insurance market makes it difficult for most private insurers to respond to such incentives. About 21% of insurance policyholders cancel their plans in any given year, meaning that the average customer’s commitment to a plan lasts for about three years. That’s just not enough time for an insurer to gain much investing in the health of its members.* There are many more profitable strategies–which lead me to the left side of the column, bad insurer practices.

Health care costs are highly concentrated among a small portion of the population. As AHRQ notes, “Half of the population spends little or nothing on health care, while 5 percent of the population spends almost half of the total amount.” (The famed 80/20 rule also applies in health care expenditures.) This creates almost irresistible pressures for private insurers to “risk select;” i.e., to avoid covering those who need care most. While “pre-existing conditions” exclusions and recissions are most common in the individual insurance market, they and other tactics can undermine the idea of risk-pooling at the core of any feasible insurance scheme. Given that many private insurers began thriving by cherry picking (and lemon dropping) the healthiest (and sickest) customers, they have long resisted regulation of risk selection.

But now, as the chances for reform increase, leading private insurers are beginning to soften their approach in order to argue that a public plan is not necessary. They are promising to accept “guaranteed issue” coverage, “with no pre-existing condition exclusions.” They have even promoted plans for “risk adjustment,” which “spreads costs for the highest-risk individuals.” Would regulation like that preclude the need for a public option?

I don’t think so, because there are so many other ways for insurance companies to drive away the sickest customers. As noted in the chart, subtler selection can include refusal to respond to needs of high cost patients in order to drive them away, and attracting a disproportionate share of low‐risk individuals. For example, a plan might decide to increase coverage of gyms and cosmetic procedures (to attract fit customers) and devise complex forms to be filled out monthly in order for a patient to get oxygen or insulin (to repel customers with congestive heart failure or diabetes). These are not merely hypothetical concerns. The Netherlands is often held up as a model for US reform because of recent moves there to make their traditionally solidaristic system more market-oriented. But risk selection threatens to unravel the Dutch “middle ground:”

[After the Dutch moved in a more American direction, insurers] have more tools for managing care, which can also be used to select risks. . . . Insurers have more room to define the precise entitlements of their insured groups, which can be used to select favorable risks. Third, insurers are allowed to sell mandatory health insurance together with any other type of non–life insurance (such as supplementary health insurance, sick leave insurance, and car insurance), which prior to 2006 was not allowed.

In particular, supplementary health insurance can be an effective tool for risk selection, because insurers are allowed to reject applicants based on their health status. Fourth, insurers are free to give premium rebates to groups for the mandatory basic insurance, which prior to 2006 was not allowed. A group can have any risk composition, and the “organizer” of the group can selectively enroll preferred members only. Although the rebate for the basic insurance is at most 10 percent, insurers can give these groups any rebate on supplementary health insurance or other insurance products. . . . Given the increasing incentives and expanding tools for risk selection, further improvements of the risk-equalization method are necessary to prevent insurers from engaging in risk selection, which occurs, for example, in Switzerland.

US insurers are sure to import methods like that, and to continue along current lines of risk selection. As health policy expert Karen Pollitz has noted, all of the following tactics can be used to risk select:

–“Street” underwriting
–Selective marketing (including in competing markets)
–Renewal rating
–Closed blocks
–Benefit designs
–Payment practices
–Provider network design

Congress or HHS or state insurance commissioners could try to outlaw or restrict risk selection practices one by one. But as Pollitz has noted, as of 1997, the “US Department of Labor had resources to review each employer-sponsored group health plan under its jurisdiction once every 300 years.” The Bush years probably did not significantly address that shortage. Moreover, “state insurance department staff levels declined 11% in 2007 while premium volume increased 12%.” The personnel simply aren’t there, and when they are, they are as likely as not to be outgunned by private sector attorneys, lobbyists, and experts-for-hire. The right way to discipline private insurers is to have competition from a public option–not to allow them to continue a risk-selection race-to-the-bottom by deflecting regulation.

I have taught health care regulation at both Seton Hall and Yale Law Schools, and my students have always been dismayed by the cat-and-mouse games that regulators and insurers play to control (and evade control of) risk selection. I have very little faith that DOL, HHS, or their state equivalents (who are also often tasked with regulating life and auto insurance and banks) can really make private insurers accountable, no matter how ingeniously the insurance exchanges are designed.

So that’s a case for the public plan largely based on the problems with private insurance regulation. For a positive case, which I’ll develop in my next post, I’ll focus on the middle column of the chart–eternally contested insurer actions designed to ration access to providers.

*For recognition of this problem in the context of bariatric surgery, and a creative plan for solving it, see Ronen Avraham and K.A.D. Camara, The Tragedy of the Human Commons, 29 Cardozo Law Review 479 (”bariatric surgery is just one example of insurers’ failure to cover prospectively efficient treatments. A similar confluence of insureds switching insurers frequently, high transaction costs of individualized contracts, and medical-industry lobbying explain insurers’ failure to cover other prospectively efficient treatments.”).

X-Posted: Concurring Opinions.