Health News

Can health reform reduce costs?

By Jonathan Cohn, Senior Editor, The New Republic

  This column is a collaboration between KHN and The New Republic

  Here we go again, having yet another argument about whether health care reform can really reduce costs. The occasion this time is the recent announcement by several insurers of their intention to raise premiums on policies they sell directly to individuals. The increases are necessary, the insurers say, because the Patient Protection and Affordable Care Act forces them to enroll sicker patients and provide more benefits. And both charges will cost them money.

  The critics of health reform have been quick to cite this announcement as proof that their suspicions were right all along. They say it shows that the health overhaul will force us to pay more for our health care – via some combination of higher premiums, higher out-of-pockets payments and higher taxes – because that is what happens when government decides to expand coverage or strengthen benefits for everybody. ”These may be good things which consumers value,” conservative analyst Grace Marie-Turner wrote this week, ”but they are not free.”

  It’s an alluringly simple argument – and, if you’re among those people who are suspicious of government intervention anyway, an appealing one. Bit is it the correct argument? Don’t be so sure.

  Think of health care reform as two separate sets of changes, that, from a cost perspective will push in exactly the opposite direction. First there are the charges that (the act) will make health care more expensive. You got a taste of those this week on the six-month anniversary of the law’s enactment, when a set of new consumer protections went into effect – prohibiting insurers from, for example, refusing to pay emergency room charges just because a beneficiary went to a hospital outside of the normal provider network.

  But the really big changes come in 2014, when carriers begin selling policies to individuals directly through new regulated marketplaces called insurance ”exchanges.” At that point, the policies insurers sell through the cxchanges will have to include a basic set of benefits – and will have limits on how much out-of-pocket spending they can pass along.

  Of course, something else will take place in 2014. That’s the year that the vast expansions of insurance coverage happen. The government will start enrolling all poor people, rather than just women with children and other select groups into Medicaid. And it will start offering subsidies to people who buy coverage through the exchanges. More than 30 million additional people will end up getting insurance because of these changes in the health law, according to government projections.

  All of these changes will cause more money to flow into the health care system, usually as premiums on taxes. And you could make a pretty good case (in fact, I would make the case) that the benefits are worth the extra sxpense, since it means sparing millions of people from serious financial hardship and, in some cases, giving them access to medical care that could literally save their lives.

  But that brings us to the second set of changes – the ones that are designed to make health care less expensive. The law targets wasteful spending – that is, instances where either individuals or the government is paying too much for what some part of the health care industry is providing. An example of this is the requirement, soon to be enacted, that insurers spend a larger portion of premium dollars on actual medical care. (In wonk speak, that’s called setting higher ”medical loss ratios.”) Many experts believe this will act as a natural break on premiums in the private sector, since it will limit insurers’ abilities to raise prices if they’re not also providing more care.

  But particularly over the long term, the big savings in health reform will come from efforts to reduce wasteful care rather than wasteful payments. Scores of studies, dating back decades, have shown that our medical system routinely provides unnecessary treatment -by failing to administer routine preventive measures, by duplicating treatments because of miscommunication among providers, and by doling out care that is at best unproven and at worst harmful. the health overhaul attacks this problem, by, among other things, rewarding use of electronic medical records and creating an institution to study which treatments work best. It also imposes a tax on the most generous insurance policies – on the theory, widely supported by economists, that the tax will encourage insurers (and consumers) to find ways to save money.

  So what’s the upshot, once you add up the ways the health law will make health care expensive and the way it will make care less expensive? There’s obviously no way to be sure. but the best estimates we have, from government and independent authorities, is that over the first ten years or so total spending will be a little higher but by a trivial amount. That is, we’ll be spending pretty close to what we would have without the law. That’s actually quite impressive, given all of the new benefits and security these reforms will provide. More important, after ten years, according to these estimates, spending should actually start to rise a little more slowly. And it’s that long-term trend that really matters for our country’s future.

  You shouldn’t be satisfied with that outcome. In order to get the health overhaul through Congress, its proponents had to soften the cost control provisions – by, for eample, nixing a public option that could have helped bargain down payments to health care providers even more. If health care spending doesn’t come down more dramatically, then it’s going to siphon away more and more resources from our society. But that doesn’t mean health care reform can’t reduce costs. It simply means sthat, with some modifications, reform could reduce costs even more. 

GOP ‘repeal and replace’ strategy lacks merit

By Jonathan Cohn, Senior Editor The New republic

This column is a collaboration between KHN and The New Republic

  It will force a lot of people to pay higher premiums. It will lavish subsidies on the private insurance industry. It will put life-and-death decisions in the hands of bureaucrats. and it will add hundreds of billions of dollars to the federal debt.

  No, I am not talking about the health care reform law. I’m talking about the Republican proposals to repeal it.

  Since even before the Patient Protection and Affordable Care Act became law, Republicans have been vowing to get rid of it and to pass their own reforms instead. It makes a lot of sense politically. The voters are angry at Washington. The voters are also worried about their access to health care. By promising to ”repeal and replace,” as the slogan goes, Republicans sound like they’re giving the voters exactly what they want.

  But would the Republican plan make health care better – or worse? Consider, for starters, that the health overhaul will, staring in 2014, expand Medicaid and make subsidies available to lower and middle-income Americans who buy private insurance. Multiple estimates, including those from the Congressional Budget Office, suggest that an additional 30 million people will get insurance because of these changes.

  The Republicans say they have their own mechanisms for expanding insurance coverage. On the official website for congressional Republicans, party leaders propose such measures as allowing the purchase of coverage across state lines and creating special insurance plans for people with pre-existing conditions. But studies have repeatedly shown that proposals like these would, at best, bring coverage to just a few million Americans. So if the Republicans succeed in taking the recently-enacted reforms off the books, that means they are taking insurance away from a whole lot of people.

  Of course, advocates of repeal have made pretty clear that expanding coverage isn’t that big a deal to them. Their primary concern, they say, is with making health care cheaper for people who already have it. But it’s hard to see how getting rid of health care reform would accomplish that goal, either. The new law includes a bunch of measures designed to reduce the overall cost of care – first by a little bit, and then by a lot. It would also establish an insurance exchange that gives individuals and small businesses access to the kind of group policies large employers now have – complete with those subsidies, which will offset some or most of the cost for people who would otherwise struggle to pay the premiums on their own.

  Although the effect of these changes on idividual premiums will vary a lot from person to person, the CBO concluded that,  once you account for the subsidies, reform will mean lower average premiums for people with private insurance. Repeal reform and these people are stuck paying more (unless Republicans are willing to let benefits get a lot more skimpy). The official projections also suggest that ten years from now, government spending on health care will be lower than it might otherwise be. Repeal reform and the deficits go back up – by more than $100 billion over ten years. And while the nation as a whole will pay slightly more for health care over the next ten years, the rate of growth – which is the figure we care about most – will be lower. Take away reform and, according to the projections, health care costs will rise at a higher rate.

  Again, the Republicans have their own ideas about reducing costs. A few of them have merit (in principle, for example, malpractice reform makes sense, if done right.) But most experts believe the mainstream Republican proposals won’t significantly bend the cost curve. Rep. Paul Ryan, R-Wis, has famously put forward a more radical plan, to transform Medicare into a voucher system. But the Republican leadership had refused to back up that idea, perhaps because it would control costs only by dynamically reducing the insurance coverage that seniors get.

  But wait a minute – wouldn’t that all be worthwhile in order to get the government out of medical care? Given all the stories of ”socialized medicine” and ”death panels,” it might seem that way. But those things exist only in the imagination of dishonest and hysterical critics. On the other hand, the health overhaul does include a bunch of consumer protections, many of which are already taking effect. There are or will be standard benefits that all insurers will have to cover, requirements for more disclosure so that consumers will be able to shop intelligently and find the best plans, and guarantees of the right to appeal treatment denials. If you take away health reform, all of those protections go away – and consumers will be more vulnerable to the whims of faceless insurance company bureaucrats, whose goal may be to maximize profits rather than public health.

  The health law is far from perfect. Critics on the left and right can find plenty to criticize legitimately. But reform also promises a lot of benefits -to individuals and to the country as a whole. Can Republicans make the case that Americans would be better off without these benefits? It’s about time somebody forced them to answer that question.

Guide to health law, six months in

By Mary Agnes Carey, KHN, Sept. 15

  By Sept. 23, the six-month anniversary of the enactment of the health overhaul, some of the law’s key provisions will be in effect. Most consumers, however, won’t see any changes until after Jan. 1 when their new health plan year begins.

  In the meantime, employees will be getting ready for fall’s ”open enrollment” period, when they pick their health coverage for the following year. In addition, people who buy their own health insurance will be researching their options. And Medicare beneficiaries will be able to change their coverage later this year. If they want to. Here’s a look at how the law affects people who get their coverage at work, buy their own health insurance or are enrolled in Medicare.

Q. I get my coverage through work and the ”open enrollment” period for next year is approaching. I’d like to keep my current health plan. Will it be affected by the new law?

A. Your plan will feature some new consumer protections. For example, your plan won’t be able to set a lifetime limit on coverage. And if you have an adult child up to age 26 who can’t get health insurance at a job, you’ll be able to keep him or her on your health plan.

These changes kick in for plan years beginning on or after Sept. 23.

If your employer makes significant changes – like cutting benefits or raising your out-of-pocket costs beyond a specific amount – the plan is considered a new  plan (rather than an existing ”grandfathered” one) and must include a wider set of consumer protections.

Q. Like what?

A. Patients will get, for example, certain preventive services such as breast cancer screenings and cholesterol tests without paying deductibles or copayments. In addition they’ll be able to see obstetricians and pediatricians without getting prior authorizations. Recommended immunizations also must be provided at no cost.

Q. What if my employer offers a new plan, and I want to switch to that?

A. In that case, your coverage would include the wider set of protections.

Q. Will my health insurance cost less?

A. Probably not. Health insurance premiums have been increasing steadily over the last decade, and that trend is continuing. According to a new report from the Kaiser Family Foundation and the Health Research & Educational Trust, workers nationwide on average are paying 14 percent, or $482, more for family health insurance coverage in 2010 than in 2009. Employers, struggling with the recession, aren’t increasing their share. Instead, they’re shifting more costs onto employees, according to the survey. (KHN is a program of the foundation).

A recent study by the National Business Group on Health found almost two-thirds of employers planned to ask employees to contribute more toward their premiums.

Q. I’m a small business owner. Do I have to offer coverage to my workers this fall? And if I do, will the government help me pay for it?

A. No business owner – small or large – is required to offer coverage. But small businesses with 25 or fewer full-time employees who earn an average yearly salary of $50,000 or less will qualify for a tax credit up to 35 percent of the cost of premiums. The credit increases to 50 percent in 2014 for most small employers. To qualify for the credits, businesses must cover at least 50 percent of the cost of workers’ insurance.

Starting in 2014, businesses with 50 or more employees that don’t provide health care coverage and have at least one full-time worker who receives subsidized coverage in the health insurance exchanges will have to pay a fee of up to $2,000 per full-time employee. (The firm’s first 30 workers would be excluded from the fee). Businesses with 50 or fewer workers would be exempt from the requirement.

Q. I buy my own health insurance. How will the health law affect my coverage?

A. For policy years starting after Sept. 23, all health insurance policies in the individual market will be barred from canceling coverage once you get sick – a practice known as ”recission” – unless you committed fraud when applying for coverage. Insurers will be prohibited from setting lifetime limits on your coverage. The plans must allow you to keep an adult child up to age 26 on your health plan.

New policies can’t deny coverage for children up to age 19 based on a pre-existing medical condition. But ”grandfathered” plans can, they can also set annual dollar limits and require cost-sharing for some preventive services. Most people in the individual market are expected to move to a new plan by 2014. Analysts say that most plans in the group market also will have likely lost their ”grandfathered” status due to changes made to the plans.

Other provisions of the law will kick in later. For example, as of 2014, insurers won’t be able to refuse to cover adults with pre-existing medical conditions. That same year, individuals whose incomes are up to 400 percent of poverty – $88,200 for a family of four at the current poverty level – will qualify for subsidies to help purchase health insurance on exchanges, marketplaces where consumers can shop for coverage. At that point, most people will have to have health insurance of pay a fine.

Q. I’m on Medicare. Will my benefits change?

A. Your basic package of Medicare benefits won’t shrink, and in fact, will expand under the law. But if you’re in a Medicare Advantage plan – a private plan that offers Medicare benefits – you might lose some extra benefits at some point.

In terms of the overall Medicare program, let’s start with prescription drugs. As of late August, one million Medicare beneficiaries received a $250 check to help cover prescription drug costs in what’s known as the doughnut hole. That’s the gap in coverage where beneficiaries must pay the full cost of their prescriptions until catastrophic coverage kicks in. Starting next year, beneficiaries will receive a 50 percent discount on brand-name drugs and a 7 percent discount on generic drugs while they are in the coverage gap. The health law closes the gap entirely by 2020.

In addition, beginning next year, Medicare beneficiaries won’t have to pay copayments or deductibles on many preventive health care services, including diabetes and cervical cancer screenings. Medicare will also pay for an annual wellness visit to the doctor.

To help pay for the health overhaul, Congress is cutting payments to Medicare Advantage plans, beginning the year after next. Beneficiaries won’t lose any of their basic Medicare benefits as a result of the reductions, but some Medicare Advantage insurers could decide to stop offering additional benefits, such as coverage for eyeglasses or gym memberships.

Q. Many Republicans have criticized the health care law as too intrusive and too expensive. If they pick up seats in the November election, how could the law be affected?

A. Some Republicans have threatened to block funding for the implementation of the law; others have called for its outright repeal. But accomplishing either would be tough unless they win large majorities in both the House and Senate.

President Barack Obama would likely veto any legislation to gut the law, so Republicans would need a veto-proof majority – two-thirds of both chambers – to override such an action. Also, some Republicans might be reluctant to repeal provisions of the law that are popular with the public, such as keeping a child up to age 26 on their parents’ health care plan or outlawing recissions and lifetime and annual limits.

 

Primary care doesn’t always help

By Jordan Rau, KHN, Sept. 9

  A study released (today) challenges two widely-held assumptions about medical care: That people who see a primary care physician will end up healthier than those who don’t, and that having more primary care doctors in an area guarantees better access for patients.

  Dartmouth researchers found that people on Medicare who saw a primary care doctor at least once a year were just as likely to end up in the hospital for a chronic illness as those who didn’t have a regular checkup or visit. A visit to a primary care physician didn’t make it any less likely that someone with serious diabetes or peripheral vascular disease would get a leg amputated, their study concluded.

  The health reform legislation passed this year by Congress aims to improve access to primary care, in large part by expanding insurance coverage. But Dr. David Goodman, the study’s lead author, said the findings signal that the nation needs to do more than just get patients into a primary care doctor’s office – it also has to ensure physicians coordinate care with specialists and hospitals.

  ”While primary care may be necessary for good care, it’s not sufficient by itself,” Goodman said in an interview. ”Primary care is not always practiced effectively. It can be disorganized and disconnected from other parts of care.”

  The study also found that blacks were worse off than whites in a variety of ways: they are less likely to see a primary care physician, more likely to be hospitalized and more likely to have a leg amputated.

  Researchers with the Dartmouth Atlas Project looked at Medicare data between 2003 and 2007 and found that nationally, 77.6 percent of beneficiaries saw a primary care physician or nurse practitioner at least once a year. But that rate varied greatly depending on geography. Only about 60.2 percent of Medicare beneficiaries in the Bronx had an annual visit, while nearly 88 percent did so in Florence, S.C.

  The researchers found that some areas with relatively few primary care physicians, such as Wilmington, N.C., still had high rates of visits, while other areas with plenty of doctors, such as White Plains, N.Y., had lower than average rates for annual visits.

  The researchers did identify some benefits that came from annual doctor’s visits. Female Medicare beneficiaries between ages 67 and 69 who saw a primary care physician annually were more likely to get a mammogram once every two years. Diabetics were more likely to get A1c hemoglobin blood tests to measure how their blood sugar was controlled. But they were no more likely to get blood lipid testing or eye examinations, two other tests that are recommended by the American Diabetes Association.

  The study did not look at whether health outcomes improved when people saw their primary care doctor more often than once a year. A wide range of previous studies has shown that regular visits to primary care doctors have helped patients avoid hospitalizations and made it more likely they take their medications appropriately, said Dr. Ann O’Malley, a senior researcher at the Center for Studying Health System Change, a Washington think tank.

  O’Malley agreed with Dartmouth’s conclusion that improving results will require changing the way medical providers are paid so that primary care doctors, specialists and hospitals all have incentives to coordinate care, rather than just do more. ”We can’t expect primary care to save everybody on its own,” she said.

Health bill won’t increase spending much

By Christopher Weaver, KHN, Sept. 9 

  The health overhaul legislation changes made by Congress and regulators since February will have only a ”moderate” effect on the nation’s health tab through 2019, government economists say in a new study.

  In all, the changes will increase annual growth in health spending by about 0.2 percentage points on average, bringing the rate to 6.3 percent, said the economists, who are members of the Office of the Actuary at the Centers for Medicare and Medicaid Services. Their findings were published in the journal Health Affairs.

  The economists’ conclusions conflict with the claims of Republicans who said the Democratic health law would unleash a steep climb in health spending. But, they also draw into question President Barack Obama’s contention that people who like their plans can keep them; though the impact on spending is modest, the analysts foresee an array of changes in insurance industry and employers’ offerings.

  ”The effects on health spending are moderate,” said Andrea Sisko, the lead author of the report, ”but the underlying effects on coverage are more pronounced.” That means health insurers will offer different types of plans or cancel current offerings, some workers will likely shoulder more costs, and millions of otherwise uninsured people will have coverage.

  The health law and other changes would,by 2019, the latest year projected, increase health spending as a share of the economy by only 0.3 percentage points, to 19.6 percent of GDP. Though the increase is modest as a percentage, the overall rise in the nation’s health spending – including both government and private expenses – will rise by $617 billion between now and then, the economists said. In 2019, health spending is expected to total $4.6 trillion.

  Their predictions include the impact of the health law as well as the costs of delaying a scheduled 21 percent cut to physician Medicare pay, the extension of subsidies for people who retain employer coverage after losing their jobs, and a change in how drugs physicians administer are paid for by Medicare. The drug change alone was responsible for more than $140 billion of the increased spending.

  In a conference call with reporters, the economists said their projections focus on the entire health system, rather than just federal spending, which is the Congressional Budget Office’s domain. They also said they were not able to isolate the costs of the overhaul, known as the Affordable Care Act, from other legislative and regulatory changes.

  Richard Foster, Medicare’s top actuary, who was not an author of the report, noted in a press conference . . . , that the projections did not deviate that much from the CBO’s estimates.’  Paul Ginsburg, president of the Center for Studying Health System Change, has cautioned that many of the changes the CBO and Office of the Actuary attempt to predict may not come to pass because there’s a dearth of evidence. When both offices drafted predictions for the 2003 Medicare law, for instance, they were off target by tens of billions of dollars.

  The economists also offered these predictions:

- New health insurance exchanges for individuals and small businesses could see an influx of 16 million people in 2014, and up to 30 million by 2019. Foster said individually-purchased private insurance plans may cease to exist as a result.

- By 2018, after a spike in the growth of health spending resulting from an expansion of insurance coverage, spending should begin slowing. One big reason is that the so-called Cadillac tax on high-cost insurance plans will kick in. The economists expect insurers and employers to shift more costs to policy-holders to avoid the tax.

- Around 100,000 fewer people will have employer-sponsored coverage by 2019 because more people will be shifted to Medicaid or the exchanges than will gain coverage in that market.

- The administrative costs of implementing the overhaul will total up to $37.7 billion, money that will be spent largely on setting up state-run insurance exchanges.

Hospital stay doesn’t mean admission

By Susan jaffe, KHN, Sept. 7

Produced in collaboration with The Washington Post

 After Ann Callan, 85, fell and broke four ribs, she spent six days at Holy Cross Hospital in Silver Spring Md. Doctors and nurses examined her daily and gave her medications and oxygen to help her breathe. But when she was discharged in early January, her family got a surprise. Medicare would not pay for her follow-up nursing home care. because she did not have the prerequisite three days of inpatient care.

  ”Where was she?” asks her husband, Paul Callan, 85, a retired U.S. Army colonel. ”I was with her all the time. I knew she was a patient there.”

  But Holy Cross had admitted her only for observation. Observation services include short-term treatment and tests to help doctors decide if the patient should be admitted for inpatient treatment. Medicare’s guidance says it should take no more than 24 to 48 hours to make this determination.

  Yet some hospitals keep patients under observation for days, and that decision can have severe consequences. Medicare considers observation services outpatient care, which requires beneficiaries to cover a bigger share of drug costs and other expenses than they would when receiving inpatient care. And unless patients spend at least three consecutive days as an inpatient. Medicare will not cover follow-up nursing home expenses after discharge.

  The Callans owe $10,597.60 to Renaissance Gardens, the Silver Spring nursing home where Ann Callan spent three weeks.

  ”I’m going to fight this,” Paul Callan says. ”I don’t care how long it takes, because I don’t think it’s right.”

  The Callans have since retained an attorney to pursue the matter, and hospital officials would not discuss details of the case ”in anticipation of possible legal action,” a spokeswoman said. However, Karen Jerome, a physician who is an adviser on care management at Holy Cross, said in a statement that the hospital has a policy of informing patients when they are in observation care, and that patients receive a thorough review to determine their status.

   While patients generally say in observation status for no longer than 48 hours, she said, it is the patient’s condition and need fo medical care that doctors have to consider most, not the clock. Sometimes the patient does not meet criteria for inpatient care after 48 hours but hasn’t improved enough to go home. When that happens, the hospital will keep the patient until he or she has a ”safe discharge plan.”

Conflicting Mandates

  Claims from hospitals for observation care have grown steadily, and so has the length of that care, says Jonathan Blum, deputy administrator at the Centers for Medicare and Medicaid Services (CMS), the federal agaency that runs Medicare. The most recent data show claims for observation care rose from 828,000 in 2006 to more than 1.1 million in 2009. At the same time, claims for observation care lasting more than 48 hours tripled to 83,183.

  In a report to Congress in March, the Medicare Payment Advisory Commission said the increase may be explained by hospitals’ heightened worries of more-aggressive Medicare audits of admissions and Medicare’s decision in 2008 to expand criteria that allow patients to be placed in observation status. Yet the number of people admitted to inpatienet status remained stable, the report said.

  The trend is emerging as hospitals cope with increasing constraints from Medicare, which is under pressure to control costs while serving more beneficiaries. In addition to more stringent criteria for inpatient admissions, hospitals face more pressure to end over-treatmente, fraud and waste.

  In this environment, doctors have to make difficult judgments about their elderly patients, says Steven Meyerson, medical director for care management at Baptist Hospital of Miami.

  ”Under a set of rather arbitrary definitions, which are very vague and difficult to understand and apply, we have to decide who’s an inpatient and who’s an outpatient when sometimes the distinction can be two or three points in their sodium level or the amount of IV fluids they are receiving,” he told CMS officials at an information-gathering session Aug. 24.

  If the distinction isn’t always clear to doctors, it’s even more elusive for patients.

  Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy in the District, has received dozens of complaints from seniors who assumed they would have the fuller coverage provided to inpatients.  ”People have no way of knowing they have not been admitted to the hospital,” says Edelman. ”they go upstairs to a bed, they get a band on their wrist, nurses and doctors come to see them, they get treatment and tests, they fill out a meal chart – and they assume they have been admitted to the hospital.”

  Setting a patient’s status is complicated. More than 3,700 U.S. hospitals use a tool created by McKesson Health Services to guide the decision. It provides criteria for medical conditions and treatment based on scientific evidence to identify ”over 95 percent of all reasons for admission to any level of care,” Rose Higgins,McKesson’s president for care management, said in a statement. Higgins said that hospitals can tell patients the criteria used to assess their status, but the company’s recent filing with the Securities and Exchange Commission describes the decision-making tool, called InterQual, as a trade secret.

  Many patients are not told by hospital officials that they haven’t been admitted. (Medicare does not require such notification.) And the designation can change during a person’s hospital stay. Sometimes a physician who hasn’t seen the patient will determine that the cause does not merit inpatient status. Medicare requires that patients whose status is downgraded must be informed.

‘No Man’s Land’

  Ed Timmins, 88, has been in a nursing home in Springfield since he was discharged from Inova Fairfax Hospital after falling in a restaurant parking lot in June. The Defense Department retiree was an observation patient during his four days at the hospital, where he was treated for extreme back pain and received an MRI and other treatment. But without the three-day inpatient stay, Medicare will not cover his nursing home bill, which reached $23,864 through the end of August.

  On his first day in the hospital, Timmins, who has Alzheimer’s disease and was taking powerful pain killers, received a notice saying he was being ”placed into an outpatient status for Outpatient Observation or Extended Recovery. You are still considered an ‘outpatient but are being cared for on a nursing  unit for further evaluation of your symptoms by your physicians. Within 24 hours, your physician should make a decision to either . . . Admit you for inpatient treatment or Discharge you for continued outpatient follow-up care.”’

  ”For him to be treated at an Inova hospital for four days and then be considered an outpatient is ludicrous,” says his daughter, Lynn Holloway. She was in his room – on the phone updating her mother – when he received the notice but assumed they would deal with the issue once his condition stabilized.

  Hospital officials say status decisions are often not in their hands. ”Medicare rules require us to make sure that a patient meets what’s called medical necessity to be in an inpatient status,” said Linda Sallee, vice president for case management for the Inova Health System. A hospital spokeswoman said Inova physicians would not discuss details of Timmins’s care.

  Even if patients know they are observation patients, there is little they can do to change their status. Medicare has covered their care on an outpatient basis, so they have not been refused benefits.

  ”There’s no official appeal,” said Edelman. ”Medicare has not denied coverage. you’re in no man’s land.”

Following The Rules

  Hospital officials say they pay a price if they give inpatient status to a Medicare patient who should only be under observation. When that happens the hospital is overcharging Medicare and can be required to refund some of the money the government paid.

  During a three-year pilot project in six states, Medicare auditors, who received commissions based on over charges they uncovered, forced hospitals and other health-care providers to return $1 billion in improper payments. The program is being expanded (to) every state this year.

  Pressure to increase the use of observation status may also come from the new federal health law which includes penalties for hospitals that have unusually high rates of preventable readmissions. Because observation patients have not officially been admitted, they wouldn’t count as readmissions if they need to return.

  The stepped-up audits and the new law’s financial incentives are intended to control skyrocketing Medicare costs and to reward better care. That could be jeopardized by an increase in costly inpatients. easing the standard for inpatient status would also raise the agency’s nursing home spending.

  ”We’ve asked them to change it,” says Sallee. ”But I would be very surprised if they did, because it sould cost a lot of money.”

  Blum says that many factors are involved in the increasing use of observation care. ”It’s not clear to us whether or not this trend is due to financial incentives,” he says. ”There could be a lot of other things going on.”

  For example, he says, doctors may be ”doing the right thing” by keeping vulnerable seniors in the hospital for observation if they lack a support system at home.

  Medicare officials are weighing changes to the admissions policy and sent letters to hospital associations in july soliciting suggestions. Among the options are requiring hospitals to notify patients that their stay is considered observation, setting a strict time limit for observation care and changing how the agency pays hospitals for such care, Blum says.

  For some, changes may not come soon enough.

  ”This system is impracticable and just locks up patients in the hospital,” Meyerson told CMS officiants last month. ”They are not well enough to leave and not sick enough to admit. So what do you do with them?’

   If you have questions about your hospitalization or nursing home coverage, call Medicare at 1-800-633-4227 or email extendedobservation@cms.hhs.gov.   

 

Debunking Medicare Myths

James C. Capretta

Fellow, Ethics and Public Policy Center, Sept 2, KHN

  Here’s a puzzle: Critics say Medicare Advantage plans – the private insurance options offered to beneficiaries – are inefficient and costly. But those same critics oppose vouchers for Medicare – even though that would set up a direct competition between the private plans and the traditional fee-for-service program.

  What are they afraid of?

  After all, if the case critics make is correct and private insurers simply can’t do the hard work of cost control as well as the government, then Medicare’s ”public option” would presumably win the contest.

  But that’s apparently not how these critics see things. they are just as resistant to subjecting Medicare fee-for-service to a level playing field of competition as they are enthusiastic about cutting Medicare Advantage’s administratively determined payments.

  Indeed, when the bipartisan leadership of the Medicare Commission in the late 1990′s recommended a move toward a voucher-like program, would-be defenders of government-administered, fee-for-service medicare viewed it as a mortal threat (”privitazation!”) They took this position  even though the fee-for-service plan would have been preserved as one of the options for beneficiary selection. In the end, the Clinton administration killed the idea to avoid offending the defenders of the fee-for-service status quo.

  The Obama administration’s preferred approach to Medicare advantage payment ”reform” – rejected at the last minute by Congress in favor of more formulaic cuts – reflects the same bias. Private insurers would have submitted bids in competition with each other, with the average bid used to set regional benchmark  rates. The benchmark would then establish a payment ceiling for all private plans competing within the same geographic area. But it wouldn’t have constrained Medicare fee-for-service. In regions where fee-for-service was more expensive than the average private plan, beneficiaries could have enrolled in the more expensive ”public option” at no additional cost above the statutory Part B premium.

  It’s not just speculative musing to consider what would happen if fee-for-service were more expensive than private coverage in certain markets. Because, despite all of the talk about overpaid private plans, it turns out that some Medicare Advantage plans are almost certain to beat fee-for-service in a direct price competition. According to the medicare Payment Advisory Commission (Medpac), the average cost of providing Medicare-covered benefits through private insurance is exactly the same as it is through fee-for-service. That average, however, includes some very loose networks.

  Medpac also found that, on average, more tightly-controlled Medicare Advantage HMOs provide Medicare benefits for just 97 percent of the cost of fee-for-service. These HMOs are by far the most popular form of Medicare Advantage plan with nearly 90 percent of Medicare’s private plan enrollees choosing them.

  And these HMOswin on costs despite the huge advantages fee-for-service enjoys in today’s arrangements. Fee-for-service is the default option for enrollment. If a beneficiary does nothing, that’s where they end up. There’s no advertising budget necessary. In addition, much of the administrative costs of running the fee-for-service program, such as revenue collection by the Internal Revenue Service, is not built into the premium paid by the beneficiaries. Most importantly, fee-for-service is able to dictate the prices it will pay to medical service providers. Private plans have no such option. They must negotiate contracts with their networks and get hospitals and physicians to agree to a fee schedule. Moreover, in many parts of the country, private plans are forced to pay premium rates to compensate hospitals and physicians for the losses they incur on their Medicare fee-for-service business.

  But even with these advantages, fee-for-service is still more expensive than Medicare advantage HMOs, which probably explains why fee-for-service’s advocates are so adamantly opposed to the kind of direct and transparent price competition that a move toward a defined contribution approach in Medicare would bring about.

  Previous estimates by the Congressional Budget Office and the chief actuary of the Medicare program confirm that a move in this direction would lower costs in the Medicare program because in many parts of the country efficient managed care models would be able to offer coverage at much less cost than price-controlled fee-for-service. Beneficiaries who chose to remain in fee-for-service would thus pay more for the privilege of doing so, and the assumption is that many of them would decide to switch  into less expensive coverage rather than face higher premiums in the traditional program.

  Nearly everyone agrees that there is tremendous waste in today’s arrangements. But it is bordering on delusional to believe tjhat the federal government has greater capacity than the private sector to engineer a more productive and efficient health delivery system.

  The federal government has been running Medicare fee-for-service for nearly half a century, and the results speak for themselves. Medicare fee-for-service is the number one reason the nation suffers from dangerously fragmented and uncoordinated care. It pays any licensed provider of medical services a fee for rendering a service to a Medicare patient, no questions asked. Every provider is paid the same, regardless of how well or badly they treat their patients. To cut costs, Congress has always found it easier to impose arbitrary, across-the-board payment reductions than to steer patients away from some hospitals or physicians who provide low value at high cost.

  The recently-enacted health law is no exception. Despite all of the talk of ”delivery system reform,” the cuts in Medicare come from arbitrary payment rate reductions – decreases that will drive Medicare’s reimbursement levels below those of Medicaid by the end of the decade, according to Medicare’s chief actuary.

  What’s needed most today in American health care is innovative change which drives up productivity and value. With the right incentives, that’s what the private sector can deliver, even as it’s been clear for some time that the federal government cannot do likewise. 

Repealing health reform

By Andrew Villegas, KHN staff writer, Sept. 1

  Almost since the moment the health overhaul became law, its Republican opponents have called for its repeal – some GOP lawmakers have even advanced regulation to achieve this end.

  As part of the run-up to the November elections, the Heritage Foundation, a conservative Washington think tank, has established an ”action arm” to push for repeal. Much of the focus involves tapping into what it perceives is significant grassroots backing. The group has enlisted the help of 74 conservative organizations to talk to lawmakers. The effort, which is being led by Michael Needham, also has a form letter available on its website for voters to send to their representatives in Congress. The ultimate goal is to have lawmakers vote up or down on repealing the health reform law. With 170 Republican signatures currently on a discharge petition to bring a repeal to the House floor – 218 is the  necessary number – Heritage Action is now eyeing Democrats who voted against passage of the health law. And, despite the long odds against repealing the law anytime soon, Needham says the prospects of success are good, even if it takes another four years and a new Congress.

  He recently spoke with Kaiser Health News’ Andrew Villegas on the details of Heritage Action’s strategy.

Q: What are the prospects for repealing the health overhaul law?

A: First of all it’s going to be a multi-year effort. Obviously it’s going to be difficult to get Obamacare repealed as long as President Obama would have the ability to veto any repeal legislation. It’s important to remember that in 1988 the Senate overwhelmingly passed the Medicare Catastrophic Coverage Act and then repealed it one year later because Americans, especially American seniors, saw the costs that program had and saw that the benefits were underwhelming based on what they were promised. And so in 1989 we had a repeal effort of a major piece of health care legislation that passed with I believe 77 senators voting in favor of it, so there is a precedent for repealing these types of bills.

Q: Do you think that the path forward gets muddy if Republicans don’t take a lot of seats in November?

A: No. Look, I think that at the end of the day, the American people are speaking with a loud voice. Fifty-eight percent of Americans consistently in poll after poll are saying that they support repeal of Obamacare, and so I think on some level the will of the American people is going to be heard . . . Our discharge petition has (170) Republicans that have signed it No democrats have signed it yet. So clearly, the Republican Party is more in tune with the American people right now on this issue than the Democratic Party, which seems to be avoiding the conversation. But it needs to be a bipartisan effort. . . . I don’t think anybody predicts that the Republicans are going to be able to get cloture on a repeal in the Senate next year without Democrats.

Q: How do you expect the repeal process to unfold? What are some of the steps involved?

A: I think there are a number of Democrats who are strongly against Obamacare. When you look at Mike McIntyre down in North Carolina, when you look at a guy like bobby Bright (of Alabama) or Walt Minnick (of Idaho), Heath Shuler (of North Carolina). There are a number of Democrats who understand that the costs of Obamacare – what it does in terms of debt that we’re going to pass on to our children and our grandchildren, what it does in terms of getting in the way of the doctor-patient relationship – is the wrong path for the American people. And many of them voted against Obamacare and some of them have even said since then that they favor starting over with a clean slate. So (what has happened) is for some of these Democrats . . . to take that next step.

Q: A lot of people are viewing repeal talk as largely symbolic with an eye toward the future. Do you think it’s a symbolic gesture?

A: No, I think this is a 100 percent authentic effort to repeal Obamacare because we’re seeing the impact . . . Grand slams happen in the course of a baseball season, and this is something that I think is going to happen.

Q: What do you think are good Republican ideas to replace Democrats’ health reforms?

A: The American health care system is set by a peculiarity in the tax code . . . where there’s different tax treatments for employer-based health insurance purchases than there is for [plans bought] on the open market or the individual market. I think . . . having tax reforms that treat all health care purchases equally so people aren’t penalized for leaving their job or losing their job or from being independent contractors . . . is absolutely critical to creating a true market where the forces bring down costs and improve the quality of every other [insurance] product. I think being able to buy health insurance across state lines [and] freeing state governments to experiment with Medicaid within certain bounds such as they were allowed to experiment with welfare reform in 1996 – these are all sorts of ideas that various Republicans have talked about . . . but more importantly, that conservative free-market health care economists have been promoting – are the right direction for our country.

Q: In your opinion, are any parts of the health law salvageable?

A: I think at the end of the day it’s pretty clear . . . The costs are going to go up. It’s going to put huge costs on small businesses. The overwhelming majority of the stuff in the bill is going to be harmful to the system and the best way [forward] is to repeal the whole thing and then we can sit down and move on. But I don’t see any value in taking the current bill that was rammed through Congress and splicing and dicing that one because the American people want it repealed and that’s what should happen before we talk about where to go from there.

 

 

For cost control, vouchers and Medicare don’t mix

By Austin Frakt, assistant professor, health policy and management,

 Boston University School of Public Health 

KHN, Aug. 19

  With the ambition of reducing the federal debt, Congressman Paul Ryan has offered a proposal to convert Medicare to a voucher-based program. Under the plan, in time all Medicare beneficiaries would receive program benefits from private plans subsidized by government payments (vouchers). In principle, such a system could reduce federal Medicare costs if the subsidy grows more slowly than medical inflation, shifting more of the costs (of) care to  individuals. The history of Medicare and its politics suggest it is unlikely to work out that way.

  About Ryan’s plan, economist Paul Krugman wrote in The New York Times, ”(W)e already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs than our current system.” Krugman is correct. When it comes to Medicare, vouchers and cost control, it seems you can’t get all three.

  Though rarely described this way, the private Medicare Advantage plans are a (voluntary) voucher system. When covering a beneficiary, an Advantage plan receives a fixed monthly payment from Medicare  that depends on the beneficiary’s county of residence and health status. That fixed monthly payment is tantamount to a voucher. With it, beneficiaries can select from any Advantage plan operating in their county. They can also stick with traditional fee-for-service Medicare – and about three in four beneficiaries to so.

  But today, the market-based arm of the program costs more, not less, per beneficiary. Those fixed monthly payments to Advantage plans, are on average, 13 percent above fee-for-service Medicare costs. It didn’t start out that way. Originally, private Medicare plans were paid 95 percent of per beneficiary fee-for-service costs. The logic was that private plans ought to be able to provide Medicare services more efficiently than traditional Medicare through a combination of controlling utilization and driving hard bargains with providers. So. Medicare used to take five percent off the top.

  Then Congress began to ratchet up payments, first with the 1997 Balanced Budget act and more recently with the 2003 Medicare Modernization Act. (This year’s health reform law aims to reduce Advantage payments, though still not below 100 percent of fee-for-service costs on average.) Ironically, traditional Medicare payment regulatory reforms – like the prospective payment of hospitals and home health agencies – have been more successful (even) if not anywhere near successful enough) in modifying the rate of growth to the program’s costs.

  What’s going on? Why is the market-based Advantage voucher system not helping to control Medicare costs? The answer is that health care cost control is tough, technically and politically. Provider groups typically resist it. When it pertains to Medicare, beneficiaries resist it too. By adding another private sector layer to the program – health insuers – the Advantage program invites a third source of political pressure. Rent-seeking by providers and insurers, as well as the power of the beneficiary constituency, align in their encouragement of higher Advantage payments. Congress, apparently, is willing to yield to that encouragement.

  So, it’s really no surprise that Advantage plans have not, to date, been part of a Medicare cost control solution. Congress has not consistently been willing to say no to the combination of powerful interests that advocate for higher payments to private plans. Given the track record, it is also not unreasonable to conclude the mandatory voucher program Ryan advocates wouldn’t save money either. As Krugman suggests, it could even be worse because in time 100 (percent) of beneficiaries would be enrolled in vouchers, not the 24 percent that are enrolled today.

  The politics of Medicare are such that Ryan’s idea, paying for care entirely through private plans, costs more. That’s not due to a market failure, but a political one. Congress likes to spend money, insurers, providers and beneficiaries like to receive it. Congress spends even more when it can satisfy those interests under the guise of a seeminly pro-market, pro-competitive program.

 When it comes to cost control and considering the political calculus of Congress, vouchers and Medicare don’t add up.

 Austin Frakt is a health economist and an assistant professor of health policy and management at Boston University’s School of Public Health. He blogs at The Incidental Economist. 

KHN, AU

 

 

Preventive care coverage expanded

By Michelle Andrews, KHN, Aug. 10

  Preventive health care is important at any age, but never more so than as we get older. Many of the major cancers that can be screened for – such as breast and colorectal cancer – are typically diagnosed at about age 70. After age 55, people have a 90 percent chance of developing high blood pressure, putting them at higher risk for heart disease and stroke.

  ”The payoff in terms of prevention in geriatrics is more upfront and more immediate,” says geriatrician Peter Hollmann, chairman of the public policy committee for the American Geriatrics Society.

  Starting in January, the new health-care law will make it easier and cheaper for seniors to get preventive care. Medicare beneficiaries will be able to receive for free all preventive services and screenings that receive an A or B recommendation for seniors from the U.S. Preventive Services Task Force. That includes mammograms and colorectal cancer screening, bone mass measurement and nutritional counseling for people at risk for diet-related chronic diseases such as diabetes.

  Medicare beneficiaries will also get a free annual wellness visit under the new law. This visit will cover a number of services, including a health risk assessment and a review of the person’s functional and cognitive abilities.

  This goal is to identify and to address declines in physical or mental capacity early on, say experts – before someone takes a fall, for example, or starts to forget to pay his bills.

  Currently, seniors in traditional Medicare pay 20 percent of the cost for most covered preventive services. The new requirements for free preventive coverage don’t apply to enrollees in Medicare Advantage plans, although many of those plans already offer free preventive services.

  Cosst can be a big stumbling block to getting preventive care.

  A co-payment of just $12 for mammograms in Medicare’s managed care plans resulted in screening rates that were eight to 11 percentage points lower than those for women in plans that didn’t require a co-payment, according to a 2008 study published in the ”New England Journal of Medicine.” Another study found that an increase of $10 in a co-payment for physician office visits led to a 20 percent decline in appointments among elderly patients.

  ” A lot of these screenings aren’t something somebody wakes up and says, ‘Wow, I’m going to have a flexible sigmoidoscopy today,” says Cheryl Mattheis, senior vice president for health strategy at AARP.

  To encourage seniors to get that test, one of a number of approved screenings for colorectal cancer, and other important preventive services, ”we have to educate people about the value and then eliminate the cost and make it convenient,” she says.

  The new  law envisioning the  free annual wellness visit as an opportunity for seniors to develop a ” personalized prevention plan” with their physician and plot out appropriate services and screenings for the next five to 10 years.

  There hasn’t been much research on people in their 90s or older, so it’s hard to calculate the risk/benefit ratio of preventive tests and screenings in this group, say experts.

  ”It gets a little murky when people get older,” says Hollomann. Among other things, ” you have to consider their practical life expectancy.”

Many people who work with seniors hope the annual wellness visit will provide an opening to also discuss preventive activities not covered by Medicare.

  ”We can use it as an opportunity to educate people about community activities like healthy eating or fall prevention programs,” says Nancy Whitelaw, a senior vice president at the National Council on Aging.

  Some insurance plans offer their own programs that encourage ”healthy aging.” Eight years ago, Tom Cajeski joined the Kaiser Permanente Senior Summit program at a clinic near his home in Kailua, on the island of Oahu in Hawaii. Among other things, the program aims to stay in touch with seniors who are relatively healthy and don’t visit clinics often to make sure they’re getting the preventive care they need, says Sandi Brekke, who runs the program.

  Every month members attend lectures or demonstrations on health topics from foot care to acupuncture. Twice a year they get physical evaluations to test their strength, flexibility and balance, among other things.

  Cajski, 73, says he thinks the program helps him take better care of his health.

  ”I’m surrounded by people who give me health hints and keep me thinking about something that would otherwise recede,”he says.

  Advocates for seniors say the new law’s provisions make it clear that prevention is important at any age. And about time, too.

  ”It’s awfully nice to see Medicare catch up to where the est of the world has been for some time,” says Hollemann.

Health reform repealers are wrong

By Johathan Cohn, senior editor, ”The New Republic

KHN and ”The New Republic,” Aug. 2

  The effort to repeal health care reform, all in one fell swoop, seems to be stalling. Instead, the opponents of reform are trying to dismantle it piece by piece. The latest effort came last week, when a group of Republicans in the Senate proposed abolishing the Independent Payment Advisory Board. And therein lies a lesson about the future of American health - care and the two different shapes it could take

  The IPAB will consist of 15 members, appointed by the White House and confirmed by the Senate, who will serve staggered six-year terms. Starting in 2015, if Medicare spending exceeds targets set in the reform law, the IPAB will recommend changing the way Medicare pays for services, in order to reduce spending. The president and Congress will have the power to reject those recommendations, but only if they come up with equivalent reductions of their own.

  Architects of the IPAB, and health reform more generally, hope that it can help achieve two goals. First, they hope it will allow the government to reduce spending on Medicare, which – in the long run – is going to gobble up more and more of the federal budget, requiring infusions of more and more taxpayer dollars. Second, they hope that changes in Medicare ripple through the rest of the health care system, so that as the government spends less on medical treatment, the rest of the country does, too.

  Wait, don’t these Republican critics want to stop Medicare from growing so fast? And don’t they also want to reduce overall spending on health care? Why, yes they do. But they think IPAB is the wrong way to do it, because it means government – i.e. – ”unchecked bureaucrats” – are the ones who would be deciding how to cut spending.

  When you put it that way, it definitely sounds unappealing. Who likes ”unelected bureaucrats” ? But take a step back and consider what these critics of IPAB, and health reform more generally, are really proposing.

  Spending on health care has been rising for the last few decades, thanks to market inefficiencies, an aging population and the development of expensive new tests and treatments for disease. Today, we spend around 18 percent of gross domestic product on health care. If nothing changes, tomorrow we could find ourselves spending 20, 26 or 30 percent. Every dollar we spend on health care is a dollar we have to take from some other place. As Medicare gets more expensive, we have to give up more tax dollars to pay for it. As private insurance gets pricier, employers and employees have to divert more wages to cover the premium.

  All of this creates pressure to reduce health care spending. The question is how to do it. On these infrequent occasions when the opponents of health care reform are being honest, they say their strategy is to let the market reduce spending on its own. Turn Medicare into a voucher program and then expose all Americans, old and young, to significantly larger out-of-pocket expenses. Advocates of this strategy claim that individual consumers will seek out the best deals and that the resulting competition will make the entire health care system provide more care for less money.

  But that outcome seems unlikely. Highly unlikely. For one thing, multiple studies show that, dollar for dollar, government run Medicare is more efficient than private insurance, thanks to greater market power, economies of scale, and the ability to piggy-back on existing government programs. (Medicare handles a lot of its revenue collection through the IRS, which would exist and be collecting money even without Medicare.) Shifting over to a voucher system would, if anything, reduce the dollars going into patient care.

  Most important, a great deal of evidence suggests that, as cost-sharing goes up, many people do not economize in ways that leave them better off. In a famous set set of experiments from the 1970s, conducted by the Rand Institute, low-income people who faced higher cost-sharing ended up in worse cardiovascular health – because they cut back on the medication they needed to keep blood pressure under control. More recent studies of cost-sharing among seniors have confirmed that result.

  Market focused cost control also shifts the burden of health expenses within the population, in ways that actually make the vulnerable even more vulnerable. The idea of insurance is to spread risk – that is, to insulate sick people from crippling medical expenses by having healthy people share some of that burden. but the more cost-sharing falls on individuals, the less insulation sick people get. Sick people end up in more trouble financially; to the extent they really do end up spending less. It’s often because they’re going without care they actually need. That’s not to say there’s no place for market forces in controlling health care costs. Far from it. Particularly if there’s more information about prices and quality, many people can – and should – make intelligent decisions about which insurance plans to buy, which doctors and hospitals to trust, and even which treatments to choose. But given the enormous potential for higher cost sharing to impose real harm. It’s important to make this transition carefully and alongside other reforms that temper market power.

  You want to make sure everybody has insurance, guarantees free access to preventative care and put a cap on overall out-of-pocket spending – so that everybody gets the basic care they need and nobody faces medical bills that are truly crippling. You also want to take advantage of existing efficiencies in Medicare, but then use the program and its huge bargaining power to introduce system-wide financing changes – like paying more to providers that other better qualify or moving away from fee-for-service payment – that the private sector hasn’t, and can’t do, on its own. In other words, you want an approach that strikes a balance between government and the market.

  There’s room to argue about whether the new health care reform gets the balance right (I’d have preferred a balance tilted a lot more to the government side.) But it is still a balance – and the IPAB, which will help introduce those changes to Medicare, is a key reason why. When critics say they want to repeal it, or any other part of health care reform, just make sure you consider what their alternative is – and whether it’d really be better.

Health law support steady

By Lexie Verdon, KHS, July 28

  The percentage of people who view the new health bill unfavorably dropped six points to 35 percent in the past month, but that has not translated into a significant increase of supporters, according to the July tracking poll from the Kaiser Family Foundation. Overall support remained stable since the June survey, with about half the public expressing a favorable view of the overhaul, the poll found.

  Seniors, a key target of both political parties this election season, tend to view the new health law more negatively than adults overall; however, they also are unaware of many of the Medicare provisions in the overhaul and have been left with erroneous perceptions by the bitter legislative debate, according to the survey, which was released today.

  About 38 percent say they support the law, while 48 percent of seniors view it unfavorably – a drop of 10 points since April. Twenty percent of seniors said they would be better off with the changes and 37 percent said it will make no difference in their lives.

  Half of the seniors said they understood accurately that the overhaul would eventually close the gap in their out-of-pocket expenses for Medicare drugs, called the doughnut hole, and that Medicare premiums will increase for high-income seniors. but only a third knew that under the new provisions, they will no longer be responsible for co-payments and deductibles for many preventive care services.

  Still, half of the seniors erroneously said that the law will cut benefits for those in traditional Medicare and more than a third said that a federal government panel will ”make decisions about end-of-life care for people on Medicare.”

  The arguments about ”death panels” surfaced about a year ago when opponents of reform complained about a provision in the bill that would allow Medicare to pay doctors to talk with patients about end-of-life planning. That uproar nearly derailed the bill, and the provision was removed.

  How ”would seniors’ views about the law change if they did not have these misperceptions and were better informed?” asked Drew Altman, president and CEO of the Kaiser Family Foundation in a commentary released with the poll today. ”We can’t say for sure. What we can say is that as we move from a combative legislative debate to what is likely to be an equally heated election season, seniors’ misperceptions and lack of knowledge about some key elements of the law remain profound.”

  But Altman also points out that seniors are not likely to vote solely on the issue of health care. The June Kaiser tracking poll found that about 13 percent of seniors said they would vote based on a candidate’s record on the health bill. a ”A district would have to have a very close race, lots of seniors who vote, few other competing issues, and a candidate who succeeds in making his or her opponent’s vote on health reform a hot issue for seniors’ votes on health reform to play a significant role in a race,” he write. (note: KHN is an editorially-independent program of the foundation.)

  Among the overall public, about a third of the respondents said that their family would be better off under the overhaul, another third said it would make no difference to their situation and 29 percent said they would be worse off. Twenty-seven percent of those surveyed said the law should be repealed.

  Since June, there have been slight declines in the percentage of people who said they were ”disappointed,” ”angry” or ”anxious” about the new law.

  The decrease in the number of people viewing the law unfavorably was coupled with an increase of four points in the respondents who said they don’t know their opinion or didn’t want to respond.

  The telephone survey of 1,504 adults was conducted July 8-13 and included responses from 406 people over the age of 65. The margin of error for the full poll is +/- 3 percentage points and 6 percentage points for responses by seniors.

 

New provisions in health law to help seniors

By Michelle Andrews, KHN, July 27

  Among the most important questions involving the health care overhaul are how seniors will be affected. Here are two of the biggest pocketbook issues.

  When am I going to be able to start collecting benefits under the law’s new long-term care program?

  Not anytime soon. Even if you were to start contributing to the Community Living Assistance Services and Supports (CLASS) program as soon as it’s up and running – probably in 2012 – you wouldn’t be able to begin collecting benefits until 2017 at the earliest.

  This voluntary insurance program is intended to help offset some of the costs of long-term care and help people who have functional or cognitive disabilities stay in their communities rather than be institutionalized. It will pay out a cash benefit that will average at least $50 per day. The precise amount of the benefit will vary, depending on someone’s degree of disability.

  Unlike private long-term care insurance, which may permit benefits to be used for home health care but cover few other home-related services, CLASS benefits will be able to be used in a variety of ways that would help people stay in their homes. Interior doors could be widened to accommodate a wheelchair, for example. The benefits could also be used to pick up part of the costs for nursing home care, if necessary.

  People will be automatically enrolled in the CLASS program if their employers participate, although individuals can opt out. Premiums will be deducted from paychecks. There will be an alternative enrollment process for the self-employed and for those whose employers don’t participate.

  But in order to receive benefits, you must pay monthly premiums for at least five years. And the program is open only to people who have been employed for at least three of the five years that they’ve been paying premiums.

  So if you don’t work, whether because you’re retired or are unable to work for some reason, the CLASS program is not going to help you.

  Also, you can’t enroll until the secretary of health and human services spells out details about the benefit; that’s expected by October 2012.

When will the Medicare prescription drug coverage gap close?

  The    coverage gap, or ”doughnut hole,” in which Medicare beneficiaries are responsible for paying 100 percent of their drug costs, won’t close completely until 2020. But the gap starts closing this year, with $250 rebate checks sent to seniors whose drug spending lands them in the doughnut hole. An estimated four million beneficiaries will receive checks this year, according to the Department of Health and Human Services.

  Some 380,000 checks have been mailed out already, according to HHS. Additional checks will be mailed monthly to beneficiaries after they enter the coverage gap.

  Here’s how the gap works in a standard Medicare Part D drug plan in 2010: After a $310 deductible, seniors pay 25 percent of the first $2,830 in total drug costs. Then they enter the doughnut hole and must pay the next $3,610 completely on their own. After that the plan kicks in again, and the enrollee pays five percent of the costs. Closing the gap doesn’t mean that seniors get off the hook entirely: It means that the percentage of the costs that they’re responsible for will gradually decrease from the current 100 percent to 25 percent in 2020. That’s the same proportion of their drug costs that they pay before they reach the doughnut hole.

  The gap will start to close next year, when seniors will get a 50 percent discount on brand-name drugs while they’re in the doughnut hole, and a seven percent discount on generic drugs. By 2016, seniors who reach the doughnut hole will pay 45 percent of brand-name drug costs and 58 percent of generic drug costs. And son on, until in 2020 they’ll be responsible for 25 percent of drug spending overall until their drug costs are so high that they have to pay only five percent of the total.

When Bad news about health reform isn’t bad

By Jonathan Cohn, senior editor of The New Republic

(This column is a collaboration between KHN and ”The New Republic”)

  (Recent) newspapers included a pair of headlines about health care reform. And they were probably not the kind that reform advocates like to see.

  One was in the ” Boston Globe:” ” Firms Cancel Health Coverage.” According to the article, a number of small businesses had recently decided to stop offering insurance to employees. In 2008, Massachusetts put in place a new health insurance scheme similar to the Patient Protection and Affordable Care Act, the federal law President Barack Obama and congressional Democrats passed earlier this year. If businesses in Massachusetts were now dropping coverage three years into that state’s reform experiment, people might conclude the same will happen across the country. And they probably wouldn’t like that very much.

  The other headlline was in Sunday’s ”New York times:” ”Insurers Push Plans Liimiting Patient Choice of Doctors.” As the story explained, insurers in three cities (Chicago, New York and San Diego) were testing new plans that offered beneficiaries significantly reduced networks of doctors and hospitals, in exchange for lower premiums. The largest audience, again, was small businesses, but the insurers thought the new plans might appeal to some larger businesses as well.

  This isn’t the first time insurers have offered plans with fewer treatment options. It happened most famously in the 1990s when insurers first introduced the concept of ”managed care” on a wide scale. Consumers didn’t like it then, and they might not like it now. But last time, most people blamed the insurance industry. This time, they might blame the government – in no small part because reform critics will use the occasion to say, ”I told you so.”

  Taking the blame for anything and everything that goes wrong in health care has always been the biggest political danger to reform, at least in the short term. The Obama administration and the Democrats now ”own”’ health care just as surely as they own General Motors. But before Sean Hannity or ”The Wall Street Journal”  editorial page gets their hands on these stories. let’s be clear about something: These headlines don’t highlight reform’s problems. They actually highlight its virtues.

  Insofar as the articles report broader trends -and they may not – they actually chronicle the same basic process at work. Health care is getting more expensive; the economy is still sputtering. Employers who provide and help pay for employee coverage can react to this in one of two ways. They can stop offering insurance altogether, which is what the Globe reports some small Massachusetts firms are doing. Or they can simply offer less generous policies which is what the Times suggests will happen in those three cities.

  But employers were doing these things already, long before Obama and his allies came along. Firms have been walking away from coverage ever since the early 1970s, when rising health care costs first hit American business hard. The  question is whether reform makes employers more likely to drop coverage. The answer seems to be no, at last for now. Reform includes a requirement that employers provide insurance or pay a penalty. Although the Globe story suggests a few firms are dropping coverage, the official data shows that, overall, the number of employers offering coverage actually increased after Massachusetts implemented its new scheme.

  That doesn’t mean every company that offers insurance will keep doing it forever. Over time, some businesses will inevitably decide to drop coverage, jsut as they do now. But before reform, employees in such companies were frequently in big trouble, since they no longer had access to decent policies they can afford. In Massachusetts and soon, the rest of the country, people without employer coverage will be able to get comprehensive policies through insurance exchanges – complete with subsidies to help pay for them.

  But what about the people who watch as employers whittle down coverage, restricting which doctors and hospitals they can see? Again, this happened before and was bound to happen again – only now, thanks to health reform, the law will limit how plans can do it. They can’t impose annual or lifetime dollar caps on benefits. And while they can limit beneficiaries to certain doctors and hospitals, they have to offer beneficiaries the right to appeal treatment denials – and the right to get treatment out of network. if it’s not available in network.

  These guarantees aren’t as strong as they could or should be. Future legislators, hopefully, will improve upon them. But they provide real security, the kind that didn’t exist before – and the kind that most Americans should appreciate, even if the critics of reform don’t.

Doc’s orders help patients get end-of-life treatment

By Jessica Marcy KHN Staff Writer, July 2

   Nursing home patients are more likely to receive the treatment they want and less likely to have unwanted hospitalizations and medical interventions under a program using medical forms signed by a physician that detail the patients’ decisions about end-of-life care, according to a new study.

  Researchers examined the impact of a program in which patients fill out the medical forms that record whether they want to receive CPR, hospitalization and treatments like antibiotics, feeding tubes and other medical interventions. Doctors review and sign the form, and it is added to the patient’s medical file. The program – Physicians Orders for Life-Sustaining Treatment (POLST) – started because of concerns that traditional patient-generated orders and advance directives were often too vague or did not offer enough details to be helpful in a clinical setting.

  ”It is really unusual to find something that has an effect on the kind of treatments people receive and ensure that they are consistent with what they want. It seems like it should be easy to do, and it’s actually really, really hard,” said Susan Hickman of Indiana University, who is the lead author of the study.

  The study found that people with POLST forms who said they wished to receive care primarily for pain relief were 50 percent less likely to receive unwanted treatments than those with only a ”Do Not Resuscitate” order. POLST participants who requested fewer medical interventions still received pain management treatments at similar levels to other patients, while those who asked for full treatment on their POLST forms were just as likely to receive it as other patients. The program also allows patients who do not want extraordinary resuscitation measures to detail other treatments that they do want.

  Co-author Susan Tolle, of the Oregon Health & Science University, said that the default practice is to do everything possible despite the fact that only about 12 percent of nursing home patients want intensive care treatments. The majority of patients prefer limited treatment, and the program allows them to receive the exact level of care they desire, she said. ”There are many health care professionals who welcome this, particularly emergency medical personnel,” Tolle said.

  The study examined the medical records of 1,711 nursing facility patients in the POLST program in West Virginia, Wisconsin and Oregon, where it launched in 1990. Since then, POLST and similar programs have expanded to 32 states.

  This study is published in this month’s issue of the Journal of Geriatrics Society.

  Hickman attributes the program’s success to its systemic nature and the fact that the forms are written in clear, clinical language. ”It isn’t just a piece of paper. It’s really a program that involves coordination between hospitals, nursing facilities, hospice programs and emergency medical services. It’s a program in which everyone is on board and understands what the goals are, what to do when they see a form, how to move it through the system so that it doesn’t get lost but stays with a patient as it’s intended,” Hickman said. 

 

Prostate cancer drug getting eye

Kaiser Health News, July 1

  Medicare officials are considering whether covering a drug used to treat prostate cancer is worth the cost, The Wall Street Journal reports.

  The announcement that the Centers for Medicare and Medicaid Services would do this analysis ”was the latest hurdle in Dendreon’s push to get its Provenge treatment used. If the Centers for Medicare and Medicaid Services covers Progenge, that would increase the number of patients eligible and likely force private insureres to do the same. A denial by CMS could severely stifle the product’s growth,” CMS said it will complete its assessment in a year. ” Provenge, seen as the first in a new class of cancer-fighting drugs, is designed to use a patient’s own cells to stimulate the body’s immune system to fight the cancer. However, because of its complexity, a normal three-infusion course of treatment is expected to cost $93,000, making it difficult to afford without insurance support” (Stahl, 6/30).  

 

Info about new government insurance website

By Phil Gatewitz, KHN Staff Writer, July 1

  Consumers shopping for health insurance coverage get a boost today with the launch of a new federal website, www.healthcare.gov.

  The health law that Congress passed in March called for the creation of the site, which advocates say will make it easier for some to shop for a plan. Consumers will be able to see all options available where they live, compare costs and determine if they qualify for a government program.

  Federal health officials say the website will work as a bridge to help consumers until 2014 when much of the new law takes effect, including provisions that bar insurers from discriminating against people with pre-existing conditions and establishing new health insurance exchanges, the marketplaces that make it easier for consumers and small business to buy insurance.

  Here’s a short Q and a on the new website.

What’s on the Site?

  Currently, the site provides a basic list of all private health plans that are accepting new customers, by state and ZIP code. It includes information on government programs such as Medicaid and Medicare and high risk pools, that provide coverage to people with pre-existing conditions.

  It also includes coverage options to small businesses, such as tax credit programs contained in the health law.

  You can compare quality of care at hospitals, learn about the health overhaul law and get health prevention tips.

  In October, a more comprehensive version of the website will be launched that will have extensive benefit and pricing date, including premiums, deductibles and coverage limitations.

  Eventually, the site will also include performance data on the plans, such as what percentage of claims the plans reject, how much the plans’ premium revenue is spent on health care and the number of times patients appeal coverage decisions.

How is this federal site different than existing online insurance brokers, such as eHealthinsurance?

  The federal website lists all available private health plans and government health insurance programs. EHealthinsurance lists only selected plans and does not list government plans.

Can I sign up for a plan directly from the federal website?

  No, there is no enrollment feature for private health insurance on the site. Rather, the site provides the health plans’ web links and phone numbers so that consumers can contact a plan directly to apply.

So how does the website work?

  The site takes you through a checklist: state, age range, whether you are disabled, healthy or have a medical condition. The web site asks if you are losing coverage from work or if you have any coverage. then, you’re given the choice to learn more about private health plans, along with other options such as Medicare, Medicaid, COBRA coverage and the high risk insurance pools being set up by states and the federal government this month for people who have not been able to get insurance because of pre-existing medical conditions. You enter your ZIP code to get a list of plans in your area.

What does the site tell me about the private health plans?

  It has plans’ contact information, including website links and customer service telephone contacts. In addition, the website links to a summary of the plan’s benefits and to the provider network so you can check to see if your doctors are there. You can also find out about the drug coverage offered by the plans.

What changes in 2014, when more of the health law kicks in?

  Most of the functions of the new federal website will be taken over by state-based insurance exchanges, which will have their own websites to help consumers shop for coverage. 

Want to know what a hospital charges? Good luck

By KHN Staff  Writer Christopher Weaver, June 29

  When Bill Rose broke his leg in a motorcycle accident, he knew he’d end up paying for the surgery himself – he was temporarily uninsured. So he asked the hospital for an estimate and negotiated a 30 percent discount, bringing the price down to $8,260 in exchange for paying up front.

  But a month after the operation, the hospital told Rose, an insurance salesman from Defiance,Ohio, that the price had soared. He owed $10,000 more. One reason for the bigger bill was his surgeon’s decision to use a $7,500 bone graft product that is only used sometimes in such procedures and was clearly not anticipated in the hospital’s estimate, according to documents provided by Rose.

  Rose’s story shows the difficulties faced by consumers – especially the uninsured – when they try to shop for the best price or negotiate. More than 30 states, including Ohio, require hospitals to disclose at least some of their charges, according to the National Conference of State Legislatures. Congress included such a provision in the new health overhaul law and similar proposals are pending in the House. But many experts say these efforts don’t help much.

  Paul Ginsburg, president of the Center for Studying Health System Changes, a research organization in Washington, says published hospital charges are ”useless for consumers.” One reason, as Rose discovered, is that hospital prices are moving targets, varying with patients’ needs and doctors’ treatment strategies.

  ”Every doctor does it differently,” says Dr. Steve Neeleman, a surgeon at Intermountain Healthcare in Utah. Doctors who are usually not hospital employees, may not be thinking about costs when they choose treatments, he says. complications may also lead to bigger bills, though Rose’s surgeon noted there were none in his case.

Estimates Are Unreliable

  Patients can’t depend on estimates because they’re often based on a hospital’s average charges for treatments. for instance, Tampa General Hospital charged as little as $48,631 and as much as $89,969 for gall bladder removals between July 2008 and June 2009, according to a Florida state website created under a 2004 price transparency law.

  When bills come in above the estimate, patients have little recourse. Rose’s attorney pointed out in a letter to the Ohio attorney general that state law protects car owners from mechanics’ charges that exceed estimates by 10 percent but does nothing for patients. Rose, 63, who has recovered, says the hospital could have consulted his surgeon about the treatment plan and calculated a more accurate estimate.

  Last October his lawyer negotiated a final $1,250 payment. In all, Rose paid $9,510 or the $27,133 charges calculated by the hospital. The hospital did not respond to questions about Rose’s bill.

  The American Hospital Association says it supports plans to expand existing state efforts to make hospital charge information available to patients. But a spokesman recently told Congress that ”making meaningful ‘up front’ pricing” available is difficult in part because patients’ needs vary.

  Uninsured patients and those with high-deductible health plans – a small, but growing portion of the market – are the most sensitive to price because they pay more out-of-pocket. ”If they don’t have to pay for it, they just don’t care,” said Aetna executive Kathleen Campbell, noting that the Hartford-based insurer’s high-deductible policyholders were three times more likely to use its online price information than those with less at stake.

  Beginning in 2014, the new health law is expected to vastly increase the number of Americans with insurance. The law could make people even less concerned about shopping for better health care deals, says Michael Leavitt, secretary of Health and Human Services during the George W. Bush administration.

  But that hasn’t stopped members of Congress from pushing to disclose information about their charges. A provision of the overhaul law will require hospitals to publish ”standard charges” for all goods and services, but regulators have yet to define such charges.

  Meanwhile, the House commerce committee’ s health panel held hearings last month on three proposals, all of which would require hospitals to publish charges. The bills have stalled, despite bipartisan support.

  But hospital charges don’t give consumers what they want: a firm price. ”Charge masters,” as these lists are known, might include 65,000 items, and a single procedure may include any mix of them. Rose’s bill, from University of Toledo Medical Center, listed 101 items ranging from a $3 towel to $5,000 worth of recovery room time.

  California requires publication of charge masters, but Jessica Rothaar of the advocacy group Health Access said, ”no human being can decipher” them. UCLA Medical center, for example, includes on its state-required charge master list ”GRMS EXT PIECE HOWMED STRYKER.” It’s $10,200, with no explanation. (It’s a prosthetic bone).

  Insurers don’t have to deal with charge masters. They negotiate prices individually with hospitals and often pay based on a patient’s diagnosis or the type of procedure performed – the ways that Medicare, the federal program that insures the elderly and many disabled persons, pays hospitals.

Advocates Urge Single Price

  Medicare would have paid the Toledo Hospital $9,818.24 for surgeries like Rose’s – had he been an impatient – regardless of which products or services his surgeon used. Private insurers often pay based on Medicare’s rate, plus or minus a percentage. State laws typically do not require hospitals to disclose the often confidential prices they negotiate with insurers.

  There are limited exceptions. In New Hampshire, the state publishes the negotiated prices for 41 procedures, based on information provided by insurers. Aetna also provides policyholders prices for a handful of procedures on its websites.

  Price information could be made useful to consumers by requiring hospitals to publish prices for set diagnoses or procedures, rather than the charge lists of individual items, experts say. That way, there would be a single price for a gall bladder removal or hip replacement.

  ”If the goal is for Americans to understand it,” and be able to compare prices, ” then one number is the only way to go,” said Gerard Anderson, a health policy professor at Johns Hopkins University.

  Rep. Steve Kagen, D-Wis., a physician who is sponsoring the Transparency in All Health Care Pricing Act, observed at a congressional hearing last month that Subway restaurants charge flat rates for sandwiches no matter which toppings customers choose. ”If the owners of Subway can figure out how to make money by lumping their prices,” he said, ”so can our nation’s hospitals.”

 

Medicare ‘doc fix’: Make political lemonade

Kaiser Health News, June 28

By Austin Frakt, Assistant Professor

Boston University School of Public Health

  The mechanism that governs the growth rate of Medicare spending on physician services isn’t working. The Sustainable Growth Rate put in place in 1997 is supposed to keep total Medicare physician costs from growing faster than the overall economy. When costs do grow too quickly – and they always do – the law demands that prices be cut commensurately.

  But it doesn’t work. The SGR target is too low. Medical inflation is perennially above the growth rate of the economy. So Congress always overrides those mandated cuts, and the gap between spending dictated by the SGR and actual spending grows. Most recently it stood at 21 percent.

  This is no way to run a health care system. The SGR may make 10-year budget projections look good, but that’s only because it’s based on an unrealistic assumption that the mandated low growth rate can be sustained. By now we know that it can’t.

  The solution is Cot to let the 21 percent cut go into effect. That’s too deep a cut and would devastate physician practices and severely restrict beneficiary access to care. Nor is the solution to keep patching the problem with interim over-rides. That’s what Congress did last week. It’s a stop-gap and doesn’t address deeper problems. Instead, a systemic ”doc fix” is required.

  The first step toward a solution is a fuller understanding of the problem. Costs are the product of payments and volume. Growth in Medicare physician payments are constrained by the relatively small updates Congress allows in its over-rides of SGR dictated cuts. Last week congress voted to replace the 21 percent payment cut with a 22 percent increase, for example.

  With such small increases, payment levels are below those in effect early in the decade, adjusted for medical inflation. (This is, by the way, a cost control virtue of the SGR. There’s nothing like the threat of a double-digit percentage payment cut to make a one or two percent increase look large.) But the volume of health care services remains unconstrained. as it grows, so do costs.

  Controlling volume is a challenge, one Congress has never met. It’s too easily defeated by charges of government rationing. Of course, markets ration, too, based on prices. In a market, higher prices lead to lower volume. But Medicare is not a market. Congress – not beneficiaries – pays most of the bill. Congress can’t dictate prices and turn a blind eye toward volume and expect costs to fall.

  The SGR problem is now so large it offers an opportunity for political leverage on the issue of volume. The American Medical Association and other physician groups may want it fixed badly enough that they’ll accept some payment system changes in return. And, in the current anti-deficit climate the cost of a full fix – estimated at $245 billion over 10 years – must be partially offset with some kind of savings. As an illustration of the political power of a full SGR fix, the AMA supported health reform on the promise of one.

  What should Congress seek in exchange for scrapping the SGR methodology? At the top of my list would be to base some of physician payment on quality improvement. Aligning payment incentives with quality and not quantity will strike at the hart of the cost growth problem. Also high on the list should be reducing payments to specialists and increasing those for primary care physicians.

  Specialists are responsible for hundreds of billions of dollars of unnecessary care annually and primary care doctors are predicted to be in short supply as more Americans obtain coverage under the new health reform law. Finally, payments should be adjusted to account for geographic variations in costs that are reasonable and related to appropriate care.

  The SGR system was flawed from the start and should have been fixed years ago. But now we have an opportunity to make necessary systemic changes. This lemon really can, and must, be turned into lemonade.

  Acknowledgment: Aaron Carroll (physician, Indiana University professor and blogger) provided valuable feedback on an earlier draft.

  Austin Frakt is a health economist and an assistant professor of health policy and management at Boston University’s School of Public Health. he blogs at ”The Incidental Economist.”

  

System needs to treat ‘whole person’

Kaiser Health News, June 25

 By Jessica Marcy, KHN Staff Writer

   Professor Kate Long understands the burden of chronic disease. While growing up, she learned to handle Gaucher disease – a genetic condition that can produce bone pain, fatigue, seizures and enlarged spleen and liver. Later, as a registered nurse, she worked with patients who struggled to manage conditions such as heart disease, arthritis and diabetes. She says that both her experience as a patient and a health care professional influence the way she approaches her work as director of the Patient Education Research Center at Stanford University.

  As people live longer, chronic diseases have skyrocketed, accounting for nearly 75 percent of the nation’s annual $2 trillion health expenditures, according to the Kaiser Family Foundation. (KHN is a program of the foundation.) But the health system remains largely designed to treat people with acute problems and often provides fragmented care. The National Council on Aging (NCOA) found that 80 percent of adults age 65 or older have at least one chronic disease and 50 percent have more than one. One-third of them feel confused about how to manage their disease after seeing a doctor.

  In 1992, Long helped to develop the Chronic Disease Self-Management Program, a workshop program designed to complement patients’ treatments. The classes help them cope with frustration, fatigue, pain and isolation while also teaching them effective ways to communicate, exercise and deal with medication regimes.

  KHN reporter Jessica Marcy recently spoke with Long and here are edited excerpts of the conversation.

 Q. How do you think chronic illness affects people?

  A.  I think it impacts every aspect of  their lives. They have three major tasks. They have to deal with the medical management of their disease – whether it’s taking pills, doing exercise, diet or whatever. They have to deal with the fact that the things they want to do and need to do in life may also change. That can go all the way from no longer being able to work to no longer being able to do a loved hobby or having to change things in a major way. And (they have to cope with the) emotional impact, whether this is fear or anxiety or depression.

  Q. Could the health care system do a better job addressing chronic disease?

  A. The system would probably need to be totally reorganized if it was really going to do that. Right now, it addresses diseases or even parts of diseases or small sub-parts of the body. It does not address the whole, complete person with  multiple chronic diseases. so, right now, what happens, if you’re lucky, you go to a primary care doc who kind of does that day-to-day stuff and then you see four or five specialists, each of which do their little specialty part – none of whom really talk to each other except maybe to look at your laboratory tests on an electronic medical record if you’re really lucky.

  It is totally uncoordinated. It’s chaotic. It serves pieces of people.

  Q. How does your program empower individuals to take control of their own health?

  A. We take the term self-management very seriously. A good manager is one that makes day-to-day decisions about one’s health but at the same time uses consultants – health professionals, family and friends, other community resources. The way a person can take control or manage a chronic illness is to first understand that most people live 99.9 percent of their lives outside of the health care system. So, they are responsible for managing the disease during that time, for making decisions (about exercise, eating and activity).

  We don’t tell people what to do. We give them a tool kit and we give them a little practice How they use these tools and which ones they use are up to them.

  Q. Have you faced any problems in implementing the program?

  A. Individuals have a hard time understanding what a chronic disease is. I’ve been told many times, ”I don’t have a chronic illness, I have diabetes,” or ”I don’t have a chronic illness, i have arthritis.”

  (In addition,) there has been a problem with linking the community agencies offering the program and the providers who could be very,very useful in referring (patients). The linkages with the established health care system could probably be stronger than they are.

  Q. What have been the outcomes and what are some of the benefits?

  A. What we know about the small-group program is that it consistently improves health status. People have fewer symptoms, less pain, less depression, less shortness of breath. They feel more empowered, they have better self-efficacy or better confidence in their abilities to take care of their chronic illnesses and in some cases, lower their health care utilization.

  Q. How do you think the program fits into efforts to improve the national health care system?

  A. It’s a small piece, but it’s a ver important one. We have to prepare our population to live with chronic illness. And the program can prepare very lrge numbers of people to live on a day-to-day basis more comfortably and more productively. At the same time, as people do this, they can also lower health care costs by utilizing, especially inappropriate services, less.

About those presidential promises

Kaiser Health News, June 24

By James C. Capretta, Fellow, Ethics and Public Policy Center

   Over the past three years, President Barack Obama made many promises to the American people about his health care plan. Among other things, he said it would reduce the federal budget deficit in coming years, promote better quality care and improve access to physicians.

  But two promises stood out in the sales pitch because they were aimed at assuaging the deepest fears of a broad cross-section of the electorate: those who already have good health insurance today.

  First, during the presidential campaign, Obama promised on numerous occasions that families with existing coverage would see their annual premiums fall, on average, by $2,500 per household. Jason Furman, an adviser to candidate Obama and now an economic aide in the White House, even said that the Obama campaign team believed the level of premium savings could be fully achieved, or nearly so, by the end of an Obama first term.

  Second, throughout the campaign and many times since taking office, the president has promised to let Americans stay with the health insurance plans they are enrolled in today if they want to. In other words, the changes he favors in health care arrangements would not force anyone out of something they find entirely satisfactory.

  These promises were not throwaway lines. They were often repeated because they were instrumental in making the case for the legislation.

  The truth is that the vast majority of working-age Americans and their families find the coverage they have today to be more than acceptable. Yes, they see problems in health care that need fixing, which is why they are inclined to favor some kind of reform. But that doesn’t mean they don’t like their own plans, because most often they do. And why shouldn’t they? In the main, job-based insurance is fairly generous, with low cost-sharing and expansive coverage. Moreover, it usually provides access to the best doctors and hospitals in town. Firms often have little choice but to offer such coverage in order to attract the kind of workers they need to compete.

  Consequently, there was very little Obama could do to make health care better for these people, and much he could do to make matters worse. Which is why he promised them that his overhaul would essentially leave them alone – and cut their costs. What’s not to like about that?

  The problem, of course, is that the reality of the new law differs markedly from what was promised - something that is becoming increasingly clear by the day.

  A recent story in The New York Timesreported that employee benefit professionals expect the health law’s new insurance requirements will add 2-3 percent to job-based premium costs next year. One way or another, firms will pass on these added costs to their workers, in higher premiums, higher cost-sharing requirements or reduced cash wages. With the cost of family coverage at about $14,000 per year, that means the new law will cost households $400 or more in 2011. And that doesn’t yet account for the new taxes on the health sector that will get passed on to consumers, or the large premium increases expected to be imposed on younger and healthier people from the more sweeping insurance changes coming in 2014.

  The adminisstration and its allies argue that the other provisions of the bill will somehow bring about offsetting cost reductions, too. But how?

  The two main cost-cutting ideas were so violently opposed by congressional Democrats that they don’t kick in for many years. The tax on ”high-cost” plans was delayed until 2018, and the Independent Payment Advisory Board won’t be issuing binding recommendations until 2015.

  In the meantime, the only plausible cost-cutting ideas are the ”delivery system changes” promoted through Medicare. The law’s proponents are especially keen on the potential of Accountable Care Organizations.

  Under the new law, ACCOsare a concept to be tested, starting in Medicare. The hope is that they will induce physicians and hospitals to practice less expensive managed care through payment incentives. But it’s far from certain that the provider community will embrace them, given the inevitable red tape that comes with government-initiated ”reforms.” Moreover, Medicare’s enrollees may rebel when they find out that the test allows the assignment of Medicare patients to ACO networks without their consent or even their knowledge. Banking on big savings from something with so many question marks and implausible assumptions is wishful thinking in the extreme. At best, it will be many years before ACOs make a difference, and there’s a good chance they never will at all.

  In a nod toward the other key presidential promise – that you can keep what you have today – the new law includes a provision that allows ”grandfathered” plans to remain in place even as new sweeping insurance regulations impose requirements, and costs, on other insurance products. But the Department of Health and Human Services has wide discretion to define what constitutes a qualified grandfathered plan under the law. And last week, HHS Secretary Kathleen Sebelius used that discretion to essentially make it impossible for most job-based plans to qualify for this designation. Small changes in benefits and cost-sharing – the kinds of changes most employers are forced to make every year to address changing circumstances – will disqualify those plans from the grandfather designation. That means virtually all job-based health insurance will be forced to comply with the federal government’s new regulatory requirements in just two or three years – something the administration has all but admitted was their intention all along.

  The president and his team understood early on that they could not pass a sweeping health care bill without promising those with good insurance that, at a minimum, their coverage wouldn’t be harmed and their costs could not go up. Despite the relentless sales pitch, there was always a lot of skepticism among voters that such a government-heavy plan would leave them alone and be cost-free. Now, of course, their skepticism is being validated. Yes, the bill has passed. But a price will be paid for muscling it through to passage based on promises that are being broken just a few months after enactment.

 

Savings possible on eye care

Kaiser Health News, June 17

    The Wall Street Journal  reports that Medicare could save $500 million a year by switching from one type of eye medicine for another, both made by Genentech, ”according to a draft study by federal officials and a University of Miami eye doctor. The study shows that the cheaper drug, Avastin, is already used in about 65 percent of Medicare patients with wet age-related macular degeneration and accounts for nearly 60 percent of their eye injections, compared with about 40 percent for a more expensive drug called Lucentis. However,Medicare paid $537 million for Lucentis in 2008 and only $20 million for Avastin, according to the unpublished study, which was reiewed by The Wall Street Journal.” Wet macular degeneration is the ”leading cause of irreversible blindness among older people” (Mundy, 6/17).

Medical devices not tracked

Kaiser Health News, June 21

The New York Timesreports on a dispute between a surgeon and the medical device company he once worked for and promoted. ”For years, Dr. Richard A. Berger designed surgical tools and artificial joints for Zimmer Holdings, trained hundreds of doctors to use the products and talked it up wherever he went. In return, Zimmer, an orthopedic implant maker, helped enrich Dr. Berger, portraying him as a master surgeon and paying him more than $48 million over a decade.” But then, ”Dr. Berger started complaining to Zimmer a while back that one of its artificial models was failing prematurely, and he went public recently with a study that he says proves it.” The company told Berger that the problem was his technique, not the product, and did not renew his contract last year.

  ”Amid the booming use of artificial joints in the United States, the break-up between Dr. Berger and Zimmer highlights what experts say is a troubling situation for patients and doctors when disputes arise about orthopedic implant safety, there are no independent referees or sources of information because no one tracks the performance of the devices . . . While producers of implanted heart devices have a voluntary system in which outside panels investigate problems, American makers of orthopedic devices do not. Many of the artificial joints that surgeons like Dr. Berger use, including the Zimmer knee at issue, are  cleared under law by the Food and Drug Administration for sale without testing in patients” (Meier, 6/18)

Lawmakers want crackdown on drug

 agreements that keep generics out

KHN, June 18

    Democrats are looking at proposals to crack down on licensing agreements between drug companies that keep generic drugs out of the market, Politico reports. In the agreements, pharmaceutical companies pay generic manufacturers to ”delay introduction of generic drugs, which are often cheaper than brand-name drugs. The industry lobby squashed that attempt. But both administration and House Democratic officials told Politicothat it’s being actively discussed now in a new effort to come up with $10 billion in spending cuts and savings to offset emergency assistance to local school boards this summer.” The Federal Trade Commission says such ”pay-for-delay” agreements ”amount to collusion,” but drug companies say the agreements are a way to avoid long legal battles over exclusivity drug manufacturing.

”And in congress, Sen. Herb Kohl (D-Wis.) won Senate Judiciary Committee approval last year of legislation to crack down on the practice – saving $1.8 billion for the government over the next 10 years, according to the Congressional Budget Office” (Rogers, 6/17.

 

 

End-of-life decisions important

KHN, June 16

  Actor Gary Coleman’s death is highlighting the importance of who makes your end-of-life decisions and is drawing attention to the fact that having a ”living will” does not always guarantee that your wishes will be carried out, CNN reports.

  Coleman died from a brain hemorrhage last month after his former wife, whom he had designated to make medical decisions for him, decided to take him off life support a day after he fell into a coma. But, “Coleman’s living will said he wanted to be kept alive unless he was in an irreversible coma for at least 15 days, according to a court document . . . Although it may seem strange that a former spouse could decide whether a person lives or dies, experts say it’s not unheard of since it’s up to the health care proxy to determine what the patient would have wanted.” A spouse, health care agent, proxy, surrogate or power of attorney has the authority to talk to the doctor on behalf of an incapacitated patient. ”The living will, also called an ‘advance directive,’ is primarily a guideline, experts say. Different states have different regulations governing how much weight the living will carries and how much authority the health care agent has. Caringinfo.org, run  by the National Hospice and Palliative Care Organization, has state-specific forms” (Landau, 6/16).  

Health law repeal vote fails

Kaiser Health News, June 16

  A vote pushed by House Republicans to repeal the mandate on citizens to carry health insurance failed Tuesday, despite some Democrats joining Republicans to rescind what is known as the requirement known as the individual mandate. Politico reports, ”Rep. Dave Camp of Michigan, the top Republican in the Ways and Means Committee, called for the repeal under a ‘motion to recommit’ – a parliamentary tool often used by the minority party to change bills on the House floor. Nevermind that the bill Camp is using for this maneuveris a small business tax bill – Republicans wanted to get Democrats on the record once again saying they back a law that requires uninsured Americans to purchase health insurance.” The vote was 187-230 to repeal the mandate, with 21 Democrats joining all but one Republican in voting for the repeal. Republicans, however, were successful in making laawmakers vote on the measure and ” have been unified in their opposition to the individual mandate, repeatedly claiming that the government does not have the authority to force Americans to buy health insurance” (Sherman, 6/16).

emocr 

Grandfathered plans get look

Kaiser Health News, June 14

  The Wall Street Journal reports that draft regulations ”being developed by the Obama administration say more than half of employer health care plans may lose their grandfathered status and be required to comply with the health overhaul bill approved March 23. The guidelines are likely to touch off fresh disputes between President Obama and opponents of the health care bill. Mr. Obama promised as part of his health overhaul that Americans who liked their insurance coverage could keep it. The regulations govern so-called grandfathered status, which allowed employers to keep offering a plan that if it doesn’t meet all the bill’s requirements . . .  New plans would have to comply with all the bill’s requirements, grandfathered plans could avoid elements such as limits on cost sharing” (Johnson, 6/12).

  The new regulations would ”limit the changes that employers can make if they want to be exempt from certain provisions of the health care law passed by Congress in March.” The New York Times adds, “Many employers want the exemption because it allows them to keep their existing health plans intact with a minimum of changes. More than 170 million Americans have employer-sponsored insurance.” Plans will lose their grandfathered status if they increase employer’s employee’s costs ”by more than the rate of medical inflation plus 15 percentage points” or cut all benefits for a specific condition. The grandfather status means that plans do not have to fulfill requirements such as meeting “essential health benefits” to be mandated by the government. However, even grandfathered plans would have to meet other requirements, such as a prohibition against canceling policies when a person gets sick (Pear, 6/13).

Medicare Advantage: You get what you pay for

By Austin Frakt Kaiser Health News, June 14

  The Obama administration seems worried. In an election year, any change to Medicare that adversely affects beneficiaries is a political liability for incumbents. and big changes to Medicare are coming, beginning with Medicare Advantage, the program that provides private insurance alternatives to traditional fee-for-service Medicare, the program’s public option.

  Last Monday, private insurers that offer Advantage plans submitted their 2011 bids, estimates of the cost of providing a fixed set of basic Medicare benefits next year. It is through this annual bidding process that the generosity of coverage and level of cost-sharing for each plan is established. With 2011 government payments to plans fixed at 2010 levels by the new health overhaul law, it is likely that beneficiaries will pay more to get less from Advantage plans next year. The bids will reveal how much.

  According to the Wall Street Journal, in advance of the bid deadline, Department of Health and Human Services Secretary Kathleen Sebellius sent a letter to insurance companies warning them not to dramatically increase premiums or cost-sharing of Advantage plans.  If they do, the run the risk that Sebellius will reject their proposals.

  Despite the secretary’s threat, it’s inevitable that Advantage plans will adjust their premiumsand cost sharing upward in the long run, if not in the short run. Over the next few years, the new health law gradually reduces Advantage payments from today’s generous levels that are about 15 percent above fee-for-service costs. The lower levels will depend on local costs and plan quality.

  That’s good news for taxpayers, even if it isn’t welcome news to Medicare benefiiaries. According to the Congressional Budget Office, the reduction in plan payments is expected to save more than $100 billion in the next decade. The lower spending on Advantage plans inevitably will lead to reductions in plan availability. Some beneficiaries will have access to fewer plans, some to none at all, a fact illustrated by a Health Care Financing Review paper I co-authored.

  Our earlier paper in the International Journal of Health Care finance and Economicsindicates that even where plans continue to be offered, their benefits will be less generous as government payments decrease. Though beneficiaries will object to the loss of benefits, they actually don’t value those benefits anywhere near their full cost to taxpayers. In a study published last year, also in (the same journal) we found that for the benefits provided by each additional dollar paid to Advantage HMOs since 2003, beneficiaries would have paid just $0.14 out of their own pocked. In monetized terms, a dollar saved makes a Medicare beneficiary worse off, but by far less than one dollar.

  This relatively poor return of value on taxpayer dollars is why I support reductions in Advantage payments. The administration and congressional Democrats have chosen the right path for Advantage payment policy. Having done so, they are now faced with a political problem. How can they avoid the potential ire of disgruntled Medicare beneficiaries? It will be hard, if not impossible.

  Sebelius’ letter is a good try. It’s an attempt to bully plans into self-subsidizing their products or finding creative ways to hide the reduction in generosity this year. If she succeeds, then she’ll have achieved a short-term political victory But she’s facing an uphill battle.

  In the long run, there’sno getting around the fact that Advantage plans will shrink in generosity and availability. Anything else would defy a fundamentallaw of economics that also happens to be a fundamental law of politics: You get what you pay for.

   Austin Frakt is assisstant professor of health policy and management, Boston University School of Public Health.

Heart problem underscores need to test competing treatments

By Julie Appleby, KHN staff writer, June 9 

  Judy Currier remembers waking up the morning after doctors spent hours cauterizing tissue inside her heart. They were trying to correct a rapid, irregular heartbeat that had left her exhausted, frequently out of breath and at a higher risk of stroke.

  “I was amazed at how quiet my heart was,“ says Currier, a 68-year-old resident of Springfield, Va. But the benefits of the treatment, called catheter ablation, didn’t last. Soon her heartbeat became erratic again, forcing her to ask: What should I do?

  That’s the dilemma facing more than 2.2 million Americans who have atrial fibrillation, the most common heart arrhythmia and one of the most vexing to control. While treatments ranging from medication to surgery are proliferating – and often are marketed aggressively by hospitals – no one can say with certainty which will work best for any individual patient. And each treatment has side effects, some of them serious.

  “We don’t have great evidence to help patients and doctors make a fundamental choice among the treatment options, which differ dramatically,“ says Steven Pearson, president of the Institute for Clinical and Economic Review, which evaluates medical treatments and is affiliated with Harvard Medical School.

  That makes A-fib, as it’s commonly called, a top candidate for comparative effectiveness research, say Pearson and other experts. Congress set aside $1.1 billion last year for this type of research, which involves head-to-head testing of drugs and treatments to determine which work best, and for which types of patients. Advocates say such research will improve health care and help get costs under control.

More Study Needed

  More information about A-fib therapies, for instance, would allo w doctors to customize treatment for specific patients, says Harold Sox, a prominent internist who headed an Institute of Medicine committee advising Congress on how to spend the comparative effectiveness research funds.

  The committee issued a report recommending that atrial fibrillation  should be a top candidate for such funding when it is given out by the government in the coming months.

  A-fib occurs when erratic electrical signals cause the heart to go haywire. Age is a major risk factor; others include high blood pressure, heart failure, valve problems and open heart surgery.

  But sometimes there is no evident cause. The heart quivers, or fibrillates, rapidly for a few minutes, days or even weeks. During A-fib, the heart doesn’t pump as effectively, which allows some blood to pool in the heart, potentially forming stroke-causing clots. In some patients, the condition comes and goes; in others, it’s constant.

  A-fib is different from heart attack. Some people never even know they’re experiencing the condition. It is not in and of itself life-threatening, although prolonged A-fib increases the risk of stroke, and the symptoms, from palpitations to shortness of breath, can be frightening.

Treatments Vary

  There are  several main ways of treating the condition.

  Prescription drugs. Most causes of A-fib are initially treated with medications, to control either the heart’s rate or rhythm. Douglas Packer, a professor of medicine at the Mayo Clinic and the lead researcher for a recently launched multinational study of a-fib treatments, (http://www.newswise.com/articles/mayo-clinic-receives-48-million-in-grants-to-study-catheter-ablation-for-atrial-fibrillation) says that the drugs work in 30-60 percent of  patients, with success rates falling after the first year. But some of the drugs have serious, even life-threatening side effects.

  Catheter ablation. In this proceduer, specialists thread guide wires through blood vessels into the heart. Then they insert devices that use intense cold or heat generated by radio waves to cauterize, or ablate, tissue thought to be responsible for the electrical impulses causing the erratic heartbeat. Catheter ablation corrects A-fib in 60-80 percent of patients in the short run,“ Packer says.

  The technique is most successful among patients whose rapid heartbeat comes and goes, a condition known as paroxysmal A-fib, says Sung Lee, director of  cardiac pacing and electrophysiologyat Washington Adventist Hospital in Takoma Park. He said that about 30-60 percent of all patients will need a second procedure. Catheter ablation is considered less risky than surgery. It can be costly, though. Mellanie True Hills, an A-fib patient who runs the Web site StopAfib.org, says insurers typically pay $25,000 to $50,000 for the procedure.

  Surgery. Some surgeries involve opening the chest and often stopping the heart. One of these is the Cox maze procedure, introduced in 1987.

  Surgeons make a series of cuts and stitches in a maze-like pattern on the outside of the heart to block areas thought to be causing the malfunctioning electricalheart signals. Another type of surgery, minimally invasive, requires three or four small incisions and the use of special laparoscopic tools.

  About 60-90 percent of patients get relief from a-fib after an open-chest procedure. Packer says the percentage is somewhat smaller for those undergoing the minimally invasive technique. True Hills says costs costs can range from $40,000 to $70,000 for minimally invasive surgery, up to $100,000 for the open-chest kind.

  Cardioversion. This is a technique that uses drugs or an electric shock with a defibrillator to jolt the heart back into normal rhythm. Most patients return to a normal rhythm but many slip back into A-fib, sometimes weeks, months or years later. Cost is about $5,000 to $7,000.

  “The bottom line,“ Packer says, is that “it can be confusing for specific patients to know what should be done,“  . . .

This story was produced in collaboration with The Washington Post.

 

States to curb retiree benefits

Kaiser Health News, June 4

  States are seeking savings in public employee retiree benefits to close sprawling budget gaps. Bloomberg Businessweek reports. “New Jersey and 20 other states are urging early retirements, cutting benefits and demanding employees contribute more in the face of what the Pew Center on the States says is a $1 trillion gap between available assets and what’s owed workers.“ States had only $2.35 trillion to cover $3.35 trillion in liabilities for pensions and other retiree benefits in 2008, Pew said. In New Jersey, where the state has set aside only $89 billion for $135 billion in liabilities, Gov. Chris Christie “proposed that employees still working after Aug. 1 contribute to health care and get lower benefits,“ a plan that would encourage current employees to retire before then.

  According to Bloomberg Businessweek, investment losses are another contributing factor. “U.S. public pension funds posted a median loss of 25 percent in 2008,“ according to Wilshire Associates. As the value of assets declined, benefit payments to retirees grew 8 percent, to $175 billion in 2008 from $162 billion a year earlier, according to the Census Bureau“ (McNichol, 6/4).

Research Roundup

Kaiser Health News, May 28

  Commonwealth Fund: The Impact of Health Reform On Health Spending – this issue brief “projects the effect of national reform on total national health expenditures and the insurance premiums that American families would likely pay. We estimate that, on net, the combination of provisions in the new law will reduce health care spending by $550 billion over 2010-2019 and lower premiums by nearly $2,000 per family. Moreover, the annual growth rate in national health expenditures could be slowed from 6.3 percent to 5.7 percent“ (Cutler, Davis and Stremikis, 5/21). . . .

  Archives of Internal Medicine: Impact of the ALLHAT/JNC7 Dissemination Project On Thiazide-Type Diuretic Use – The authors analyzed two national databases – “a physician survey of medications reported for hypertension and a pharmacy dispensing database on antihypertensive medications“ to examine if it’s possible to change “national prescription prescribing practices.“ Trained “academic detaliers“ provided face-to-face education about the findings of the 2002 Antihypertensiveand Lipid-Lowering Treatment to Prevent Heart Attack Trial (ALLHAT) and subsequent 2003 report by the joing committee on Prevention, Detection, Evaluation and Treatment of High Blood Pressure (JNC7).

  While “nationally, thiazide-type diuretic use did not increase between 2004  and 2008,“ the authors conclude “that there was a statistically significant increase in thiazide-type diuretic prescribing that was geographically associated with clinic investigator-centered academic detailing aimed at increasing use of thiazide-type diuretics,“ which can help prevent high blood pressure (stafford et al, 5/24).

New England Journal of Medicine: The Public’sResponse To the 2009 H1n1 Influenza Pandemic – The authors write, “Given the crucial role that the public plays in containing or spreading illness and in seeking related medical care, we have examined the public’s response to the 2009 h1n1 pandemicand relevant public health recommendations through a comprehensive review of available data from (20) national public opinion polls conducted by telephone between April 2008 and January 2010.“

  “Our review of these data suggests that in the event of a future influenza pandemic, a substantial proportion of the public may not take a newlly-developed vaccine because they may believe that the illness does not pose a serious health threat, because they (especially parents) may be concerned about the safety of the available vaccine, or both. More work may need to be done to understand the basis of these beliefs and to address them in the case of a serious influenza outbreak. Polls during the 2009 h1n1 pandemic also suggest that public health communication efforts related to either personal influenza-prevention behaviors were effective in reashing a large swath of the public“ (SteelFisher, Blendon, Bekheit and Lubell, 5/19).

Doughnut Hole checks in mail

Kaiser Health News, May 28

  The Los Angeles Times: “Senior citizens who hit the so-called doughnut hole in Medicare’s drug benefit will begin getting $250 rebate checks in two weeks, the Obama administration announced Thursday (May 27) – providing one of the first benefits of the recently-enacted health care law. The rebates, designed in part to bolster support for the controversial law, are the first steps in a decade-long phase-out of the unpopular gap in Medicare Part D drug coverage. Seniors now enrolled in a Medicare Part D plan pay 25 percent of the cost of their prescription drugs until the total bill reaches $2,830. At that point, enrollees must pay the full cost of their prescriptions until their total out-of-pocket spending reaches $4,550. Catastrophic coverage then kicks in and enrollees pay 5 percent of drug costs for the rest of the year. Department of Health and Human Services officials said Thursday that the first 480,000 seniors who hit that coverage gap, or `doughnut hole,` will be sent checks on June 10, five days before the deadline“ (Levey, 5/27).

  NPR’s SHOTS blog: “Checks will then go out every 30 days or so after that. By year’s end, an estimated four million beneficiaries will get them. The rebates are a one-time benefit. Starting next year, beneficiaries will get a 50  percent discount on brand-name medications once they reach the coverage gap. Within a decade the gap will be closed altogether.  . . . At a news conference on implemental efforts on the new health law, however, (HHS Secretary Kathleen) Sebelius warned that seniors not only need to do nothing in order to receive the rebate checks – they SHOULD do nothing.” (Rowner, 5/27).

  The Associated Press: “Sebelius warned that scam artists are already taking advantage of (the) rebate program to circulate bogus `application forms’ that solicit personal information such as Medicare numbers. `If anybody shows up asking for information . . . report it immediately.’ Sebelius said, `Nothing is required in order to get the check.’ . . . The medicare coverage gap came about because of funding constraints, when in 2003 a Republican-led Congress created the prescription benefit under President George W. Bush’s administration“ (Alonso-Zaldivar, 5/27).

  The Hill: “The announcement marks the latest example of ongoing efforts to persuade the public, and particularly seniors, of the new health care law’s benefits. Seniors disproportionately dislike the new law, and they’re also the group that’s most likely to vote in this year’s midterm elections. Two months after health reform was signed into law, Sebelius said, “It’s clear we’re headed in the right direction“ (Pecquet, 5/27).

  CQ HealthBeat: “Sebelius’ comments came as administration officials continue to stress the portions of the law that are going into effect right away, or even earlier than planned“ (Herman, 5/27).

 

Decline of employer-sponsored health coverage under reform

Kaiser Health News, May 27

By Austin Frakt, assistant professor, Boston University

  One of the latest criticisms of the new health overhaul law is that it will encourage employers to stop offering health insurance. In fact, it will.

  We should welcome this, provided the decline in employer coverage is gradual and good alternatives exist. There are several advantages to the way in which the new law promotes severing the connection between employment and health insurance. One of them is that it will make more visible the biggest looming health care problem: costs.

  The erosion of employer-sponsored health insurance is not new. employers have been dropping coverage for years. According to the 2009 Kaiser/RET Employer Health Benefits Survey, over the last decade employer offers of health insurance have declined by 10 percent. That’s been a problem because affordable coverage has not been readily available for many consumers outside of employer groups. For far too many, the only viable alternative to employer-sponsored insurance has been no insurance.

  That will change in 2014 when coverage becomes available on exchanges, along with federal subsidies – depending on income – to buy it. That same year, Medicaid will expand to cover all individuals with incomes below 133 percent of the federal poverty level. As these non-employer options become available, the incentive and need for employer-sponsored insurance will decline.

  A few years later, in 2018, another incentive for employer-sponsored health insurance – its preferential tax treatment – will begin to erode. A 40 percent excise tax (the “Cadillac tax“) will be levied on a gradually increasing portion of employer-based premiums. Right  now, in contrast to insurance bought by individuals, premiums on employer-provided coverage are not taxed. That tax subsidy causes employer plans to be about 40 percent cheaper than they otherwise would be and encourages 26 percent more health spending than would otherwise occur. The exscise tax will gradually recapture the foregone tax revenue, reduce the healthcare costs encouraged by the tax subsidy and drive down the incentive for employees to seek employer-sponsored coverage and for employers to offer it.

  So, the deck is stacked against employer-sponsored coverage. The only things in the new health care law that encourages it are small-business subsidies for offering coverage and large-employer penalties for failing to do so. The former are scheduled to sunset after 2016 and the latter are small relative to a typical insurance premium. In the long run, they’re no match for the forces against employer-sponsored coverage.

  But we need not fear the loss of employer-sponsored insurance if good, reasonably-priced options exist in the individual market. It’s essential that exchanges with fair subsidies to purchase coverage function properly.

  Breaking the connection between insurance and employment solves otherlabor market problems, too. it would reduce “job lock“ (keeping a job for the insurance only) and enhance employment mobility. It would increase the insurance options available to most workers, an effect estimated in a recent national Bureau of Economic Research working paper to be valued at more than $2,000 for a family of four. And, it would permit the allocation of dollars spent by employers on health care premiums to wages, giving workers greater control over how the money is spend.

  Meanwhile, as our health care system undergoes this change, health care costs will continue to rise faster than GDP, a clearly unsustainable rate. This isn’t a result of the new health care law (health care costs would soar nearly as rapidly without it), and it isn’t likely to be fully resolved by it (despite some provisions that can help).

  A growing portion of largely obscure employer-based insurance tax subsidies will be replaced with explicit income-based subsidies. Higher-income individuals who switch from employer-sponsored to individually-purchased coverage will directly pay the full cost of premiums. For such individuals, the hidden contribution their employers had made toward premiums as well as their own implicit payments via payroll deduction will be fully revealed. No longer will health insurance premiums be out of sight, out of mind. Cost increases will be easy to observe and harder to accept.

  As the full impact of those cost increases becomes apparent, there may be a temptation to interpret them as a consequence of the erosion of employer-sponsored coverage. That would be a mistake. Some will likely confuse the distributional consequences of the new law with the absolute changes in underlying costs. That would also be incorrect. There may be calls for rollbacks of the high-premium excise tax, reductions in low-income subsidies, or higher employer penalties. Providers and the insurance industry may encourage such measures as means of putting off painful changes to their business models. That would be a shame.

  The mechanisms that will contribute toward reduction of employer offers will make costs more visible and play a role in the redistribution of their burden, but they will not be responsible for cost increases. Weakening those mechanisms may temporarily push cost increases back below the radar, but it will do nothing to reduce them.

  The ultimate consequence of the decline of employer-sponsored insurance depends on how we respond. Good, bad or ugly? It’s up to us.

Austin Frakt is a health economist and an assistant professor of health policy and management at Boston University’s School of Public Health. He blogs at The Incidental Economist. 

   

Gov. loans could raise costs

Kaiser Health News, May 28

  Eager to expand or modernize, about 5,000 doctors, dentists and other health care providers have obtained more than $2.5 billion in government-backed loans under the economic stimulus law, according to federal records. But those loans, some experts say, could produce an unwanted side effect: higher health costs.

  Dr. Ronald Cooper, a radiologist, borrowed $1.5 million to buy and expand services at an MRI facility in Vero Beach, Fla. Orthopedic Specialists of the Four States in Galena, Kan., used  a $3.4 million loan to double its office and surgery space. West Lake Dermatology in Austin, Texas, received a $3.9 million loan to construct a larger facility to offer medicaland cosmetic services such as chemical peels and Botox.

  The economic stimulus law passed last year increased to 90 percent from 75 percent the amount of loans guaranteed by the government and reduced or waived many of the associated costs. The Small Business Administration, which has made $19.6 billion in loans under the law – including 13 percent to health-related businesses – says the loans have helped spur the economy.

  Yet, some health policy experts worry that giving billions of dollars to doctors and other health providers will add to the nation’s already rapidly rising bill for health care. That could drive up insurance premiums as well as costs to taxpayers of the huge Medicare and Medicaid programs for the elderly, poor and disabled.

  These types of loans could absolutely backfire,“ said Elliott Fisher, director for the Center for Health Policy Researchat the DartmouthMedicalSchoolin New Hampshire. Fisher is head of the Dartmouth Atlas of HealthCarewhichhas done studies showing that regions with more hospitals, specialists or diagnostic services tend to have higher per-capita health costs. He argued that “most of these loans will not reduce costs, but in fact they are quite likely to lead to higher costs . . . We know that a lot of health care resources are devoted to unnecessary and wasteful services.“

  But  doctors and other health providers who have received loans say consumers will benefit. “Our patients will be thrilled,“ said Dr. Mark Rattinger, a West Palm Beach, Fla. internist who used a $935,000 loan guaranteed through the SBA to move into larger, more modern office space that will allow his group practice, which has six doctors, to add two more.

  “Small businesses across the country have been able to secure critical financing as a result of the Recovery Act loan provisions,“ SBA administrator Karen Mills said in a statement. The law’s provisions providing more generous loan terms expire in May.

  The SBA-guaranteed loans have been overshadowed by other parts of the $787 billion stimulus law that provided $86 billion to state Medicaid programs, $19 billion to doctors to install electronic health records and $10 billion to the National Institutes of Health.

  Like other types of businesses that have received loans, health practitioners have wide latitude in how they spend the money. Many have used it to modernize or expand, according to interviews with loan recipients.

  Health care providers did not have to prove a need for new or expanded services to get the loans. That could be a mistake, said John Steen, a Meadville, Pa., health consultant and past president of the American Health Planning Association, which is made up of government health planners and consultants and is based in Falls Church, Va. He said the loans suggest the administration was more intent on creating jobs to counter the recession’s impact than on controlling health costs.

  Some providers took out the loans to help them deal with cutbacks in government reimbursements.

  Dr. Patrick Lester, an Oklahoma radiologist who owns a small chain of diagnostic imaging centers, secured a $2 million SBA loan. He said he hopes the money will help keep afloat his Broken Arrow facility that is struggling because of Medicare payment costs. “The government giveth and the government taketh away,“ said Lester, owner of Servant Medical Imaging which operates facilities in Oklahoma, Colorado and Texas.

Home caregivers face Hurdles

By Paula Span

In Collaboration With The Washington Post

They met on a blind date in 1949 and married two years later. They lived in the same Cape Cod-style house in Silver Spring for nearly 50 years. So when Leonard Crieriewasdiagnosed with Alzheimer’s disease in 2005, there was no question that his wife, Betty, would take care of him at home for as long as she could.

  Betty led him into the shower, helped him dress each morning and took him everywhere with her because, once he started wandering, as some dementia patients do, she dared not leave him alone. She learned how to change the colostomy bag he wore since he’d survived rectal cancer years earlier. She slept, fitfully, with a monitor by her bed so that she could respond if he needed her at night.

  “It was difficult, but I was able to take care of him,“ says Betty, now 80. “Because it happens slowly, you don’t realize how bad it’s getting.“

  She agreed to have Leonard attend an adult day program at nearby Holy Cross Hospital - he enjoyed socializing there – so that she could get a few hours’ break several times a week; she found a Holy Cross caregivers’ support group very useful. But she refused the pleas from her three adult children to hire an aide to help at home. “I always felt like I had it under control,“ she explains, though her children thought the $18-an-hour cost also troubled a frugal woman who shops at dollar stores.

  As the months passed, “we could see the stress level affecting her,“ recalls her daughter Linda Fenlon. “The frustrating part was, we wanted her to have some independence, some quality of life. But she saw it as her duty in life to take care of him.“

  For four years Betty Crierie rarely asked for or accepted her family’s help until a Wednesday last June. As she left her support group meeting, she remembers, “I got this funny feeling in my chest.“ It worsened on the 10-minute drive home. She called her daughter and said, “I’m calling 911. I think I’m having a heart attack.“

`In Sickness And In Health`  

  Caring for a sick or disabled elderly relative exacts a toll – physical, emotional, financial – on any family member, but being a spousal care giver brings particular challenges.

  “Spouses are older and dealing with their own age-related health limitations,“ says Steven H. Zarit, a Pennsylvania State University gerontologist. The tasks they shoulder have grown more demanding.“ Family care givers now administer arsenals of medications and undertake procedures, from wound care to dialysis, that were once the province of medical professionals.

  Moreover, today’s longer life spans, in which once-fatal conditions such as heart disease have become manageable chronic illnesses, mean that the “sickness“ part of “in sickness and in health“ can last for many years. Spouses determined to single-handedly honor their vows, says Suzanne Mintz of the National Family Caregivers Association, “are using their old rules to fight a new problem.“

In an oft-cited study published in the Journal of the American Medical Associationin 1999, University of Pittsburgh researchers followed nearly 400 elderly spousal care givers for four years and reported that those experiencing mental or emotional strain had 63 percent higher mortality rates than non-care givers. (Care givers not experiencing emotional or mental strain did not have elevated mortality rates.)

  And a study published this year by a team from the University of Florida and the University of Alabama at Birmingham found that high care giving strain among spouses increased the risk of strokes by 23 percent; the association was particularly strong among husbands caring for wives.

  “Spouses are likely to take on more than they can reasonably do,“ Sarit says.

  Betty Crierie was the classic example: Caring for her increasingly disabled husband, trying to shelter their adult children from the burden, unwilling to bring in a costly home-care aide when she felt she was doing fine on her own – until she had her heart attack. “We didn’t realize how much she was doing until we took turns taking care of Dad ourselves,“ Linda Fenlon says. “It was so labor intensive. We very quickly realized she couldn’t continue.“

   While their mother recovered, the children moved their father into a nursing home, a wrenching act for all concerned. Betty visited Leonard there two or three times a week, continuing to do his laundry at home, until he died five months later at age 83.

Depression-Era Values

  Why is it so difficult for older care giving spouses to seek help? Zarit’sresearchhasshown that compared with adult children taking care of an ailing parent, spouses don’t turn to adult day programs until later in the course of illness, and they’re apt to withdraw the participant after a short time.

  Sister Kathy Weber, who leads the Holy Cross support group that Betty Crierie attended, sees a Depression-era-bred reluctance to spend money on care, even when couples can afford it. “They’re supposed to get along somehow and squirrel it away for their kids – who want them to use it now, for their care, which would make the children’s lives easier, too,“ Weber says.

  Spouses don’t want to lose control of their homes or their relationships. Sometimes they hope to protect their partners’ dignity, not wanting children to see how diminished they’ve become. “There’s a lot of pride there, “Weber says.

  What might help, care giver advocates say, is for health providers to regard older couples as a unit, recognizing that a care giver’s compromised healthcouldprematurelyinstitutionalize an ailing spouse. Some geriatric practices already do so. “On the intake forms in doctors’ offices, there should be questions to identify whether someone is a family care giver,“ suggests Mintz. “That would alert the physician and the staff to the situation and raise questions about that person’s own health. Is she taking care of herself?“

  Meanwhile, President Barack Obama’s proposed 2011 budget would add $102 million for family care giving programs, “A step in the right direction,“ Mintz says. The money would boost existing programs that serve family care givers, including training and counseling; referrals, respite care, transportation, adult day programs and home care. AARP analysts estimate the increased funding could help an additional 200,000 families. Family care givers can use the help: Medicare pays for doctors and hospitals but provides only very limited post-hospitalization home care, and Medicaid (which covers only the poor) allots most of its dollars to nursing homes. The financial burden of caring for a spouse at home falls mostly to families themselves

But even with better support, watching a partner decline is difficult. “They are about to lose their lives as they’ve known them,“ Weber explains.

  That’s what happened to Sheila Fridovich, whose husband, Bernard, developed Pick’s disease, a form of dementia, in his late 60s. Sheila kept him at home in Annapollis, eventually hiring a daytime aide, for nearly six years.

  “I couldn’t eat. I couldn’t breathe; I didn’t have a moment’s peace,“ she acknowledges. Yet she refused to see a therapist or join a support group. “I needed to iron it out in my own head,“ she says.

  “We grew up in a generation where getting help from a therapist is not stigmatized,“ theorizes her daughter Lauri Fridovich Lee, who joined a support group online. “For the older generation, it is.“

  Eventually, consulting with a Veterans Affairs physician about ddrug coverage, Sheila discovered that Bernard, a Navy veteran, was elligible for admission to a specialized dementia unit of the VA, Community Living and Rehabilitation Center in Baltimore. She moved Bernard there in 2006. At 79, he’s still a resident and gets excellent care, she says. But after a stroke, he cannot speak, and she’s not sure, on her Sunday visits, if he knows who she is.

  It’s a traumatic experience for a husband and wife, far more than for their kids,“ Frodovich says now. She’s only 71, still working part-time as an educational consultant, but “the way I live is not the way I lived before. I’m married but I’m not. I have a husband but I don’t. I’m in no man’s land. ”

 

Perspectives on health law

Kaiser Health News, May 13

  The New England Journal of Medicine dedicates a significant amount of its current issue to research and perspectives on the new health reform law, the Patient Protection and Affordable Care Act, which is abbreviated as ACA. (5/12)

Christopher C. Jennings and Katherine J. Hayes, Jennings Policy Analysis: “Although the political far right may characterize the (ACA) as a one-size-fits-all government takeover of our health care system – and the far left may wish it were – the insurance reforms in fact embrace a hybrid federal-state approach. The new statute envisions and permits varied approaches to applying federal rules and regulations.  . . .  Done right, the implementation of the ACA can achieve the advantages of a minimum national standard for coverage and greater equity among Americans without sacrificing the states’ traditional roles, responsibilities and flexibility. Done wrong, implementation will create excess layers of bureaucracy, and delay will ensure that this historic health care reform legislation falls far short of its goals.“

Jon Kingsdale, executive director of the Massachusetts Health Insurance Connector Authority: “The focus on healthinsuranceexchangesinthe (ACA) is one sign of just how politically mainstream the new law is. Not only are exchanges market-based, but also the ACA decentralizes them, delegating primary responsibility to the states.  . . . But I’m a realist. I know that controversies will arise over their proper function and mission.  . . . After all,  an accessible, customer-friendly, easy-to-use market is still only as good as the products it offers. Whether an insurance exchange looks more like a Wal-Mart than a flea market will depend on whether doctors organize themselves into efficient, patient-responsive systems of care. In the United States, reforming the organization and delivery of medical care has always been the biggest challenge in the struggle to produce better care at sustainable cost.“

Jonathan Gruber, M.I.T.: (T)he real question concerns how far the ACA will go in slowing cost growth.  . . . There is no shortage of good ideas for ways of doing so, ranging from reducing consumer demand for health care services to reducing payments to health care providers, to reorganizing the payment for and delivery of care, to promoting  cost-effectiveness standards in care delivery, to reducing pressure from the threat of medical malpractice claims. There is, however, a shortage of evidence regarding which approaches will actually work – and therefore no consensus on which path is best to follow.

  “Given this uncertainty, it is best to cautiously pursue many different approaches toward cost control and study them to see which ones work best. That is exactly the approach taken in the ACA . . . analysis by both the Congressional Budget Office and the CMS actuary show that the ACA will substantially reduce the federal deficit, only slightly increase national medical spending (despite an enormous expansion in insurance coverage), begin to reduce the growth rate of medical spending and introduce various new initiatives that may lead to more fundamental reductions in the long-term rate of health care cost growth.“ 

Doctor pay fix deadline

Kaiser Health News, May 6

  “For the third time this year, Congress has just days to avert a scheduled 21 percent cut in pay to doctors who treat seniors and others on the Medicare program.“

  Most people agree a cut of this size “would be devastating for Medicare and the patients it serves,“ but figuring out “how to solve the problem in anything but a stopgap way“ continues to be perplexing.

  In 1997, “Congress passed a balanced budget law that put the current formula in place determining how doctors will be paid. The idea was that if doctors as a group cost Medicare too much, their pay would be docked to make up the difference in future years. But James Rohack, president of the American Medical Association,“ says that the sustained growth rate “penalizes (doctors) for doing the quality care you want.“ Congress` most recent delay of the rate cut is set to expire May 31. (Rovner, 5/6)

 

Transparency proposals pondered

Kaiser Health News, May 6

  House lawmakers are considering several  bills to make health care pricing more transparent.

  Modern Health Care reports the Energy and Commerce’s health subcommittee “plans to take up a trio of bills aimed at increasing transparency and clarity in health-care policy, tackling an issue that has bedeviled the industry for decades and handcuffed efforts to turn every day people into better purchasers of care.“

  Rep. Steve Kagan, D-Wis., a physician, introduced legislation requiring “hospitals, doctors, nurses, pharmacies and a range of manufacturers and vendors to openly discuss prices. Failure to do so would result in a financial penalty to be determined by HHS. Failure to do so would result in a financial penalty to be determined by HHS.“ Two competing bills sponsored by Texas Republicans would take similar approaches. (DoBias, 5/5)

 

Medicare spending growth is capped

By James C. Capretta

  White House Budget Director Peter Orszag has speculated that creation of the new Independent Payment Advisory Board  just might be viewed decades from now as the most important and far-reaching change enacted in the entire health reform legislation – despite the lack of significant public attention to it before passage. he might be right.

  After all, the IPAB – a 15-member independent panel, to be appointed by the President and confirmed by the Senate- is now charged with enforcing an upper limit on annual Medicare spending growth. That’s right. Medicare spending is now officially capped. Even most people who follow health policy closely don’t seem to know this. Perhaps it’s just too hard to believe that a Democratic Congress, prodded by a Democratic president, actually voted to cap spending for a cherished entitlement.

  But make no mistake, beginning in 2015, Medicare spending is now supposed to be limited, on a per capita basis, to a fixed growth rate, initially set at a mix of general inflation in the economy and inflation in the health sector. Starting in 2018, the upper limit is set permanently at per capita gross domestic product growth plus one percentage point.

  One might be tempted to think this is an area of the legislation which should have gotten some bipartisan support. After all, in the past, it’s the Republicans who have pushed for these kinds of caps on entitlement costs, with Democrats fighting them every step of the way. Conservatives know that if they are to have any hope of fighting off a major tax increase to close the nation’s budget gap, Medicare spending growth has to be slowed, and soon.

  But the IPAB provision is actually an indicator of why there is a great divide in American health  policy. To hit its budgetary targets, the IPAB is strictly limited in what it can recommend and implement. It can’t change cost-sharing for covered Medicare services. Indeed, it can’t change the nature of the Medicare entitlement at all or any aspect of the beneficiary’s relationship to the program. The only thing it can do is cut Medicare payment rates for those providing services to the beneficiaries.

  This wasn’t an accident. It reflects the cost-control vision of those who wrote the bill. They believe the way to cut health care costs is with stronger federal payment controls. They envision the IPAB coming up with new payment models which will push hospitals and physicians to emulate today’s most efficient delivery models. Call it “government-driven managed care.“

  But the efficient, private sector delivery models in operation today have been built on a principle of exclusivity. They don’t take just any licensed provider into the fold. They operatehighlyselective, if not totally closed, networks. That’s the way they get control over the delivery system. Low quality performers are dropped or avoided altogether, and tight processes are established to streamline care and  unnecessary steps.

  The federal government has never shown any capacity to exclude otherwise-qualified suppliers of services from Medicare. Indeed, the whole point of the fee-for-service modcl which Congress has so jealously protected over the years is that beneficiaries get to see any licensed provider of their choosing, to whom Medicare pays a fixed reimbursement rate, no questions asked.

  In the past, to hit budget targets, Congress has always preferred to impose across-the-board payment  ratereductionsto provisions which would punish or reward providers based on some measure of quality or efficient performance. Tellingly, that was also true in the bill Congress just passed. The big savings comes from arbitrary cuts in payment updates for institutional providers of care. The much-touted “delivery system reforms“ will produce almost no savings, according to boththe Congressional Budget Office and the chief actuary of the Medicare program. When push comes to shove, the IPAB will almost certainly  fall into the same trap. To cut spending fast and withcertainty, the preferred solution will always be deeper payment rate reductions rather than reforms which may or may not lead to more efficient organizational arrangements.

  Even as he has been praising the IPAB’s potential, Orszag has also gone out of his way to attack Wisconsin Congressman Paul Ryan’s proposal to convert the Medicare entitlement into a fixed, defined contribution toward the purchase of insurance. It’s an entirely different way of limiting Medicare’s cost growth. Beneficiaries would have strong incentives to get the most value possible from their fixed entitlement. Rep. Ryan’s critics say the plan would leave seniors holding the bag, contending that the entitlement would gradually cover a smaller and smaller share of costs. But that’s only true if the reform didn’t also lead to a more efficient health sector.

  Most sectors of the American economy are experiencing profound transformations as the workforce becomes ever more productive. What’s driving the change is a competitive global marketplace.

  The question for health policy is this What will bring about a smaller transformation in American medicine.

  Certainly, more of the same payment rate reductions will not do it. Medicare’s chief actuary has already said that the payment cuts in the health reform law are unsustainable because they don’t change the cost structure for those providing care. In a very real sense, seniors will be the ones holding the bag from these cuts when they can’t access care due to a lack of willing suppliers.

  Rep. Ryan’s plan would bring the power of a consumer-driven marketplace to the health sector, with the government providing oversight and consumer protection. There’s plenty of evidence indicating that such a decentralized approach would work far better than central planning at weeding out unnecessary costs while still improving the quality of patient care.

James C. Capretta is a Fellow at the Ethics and Public Policy Center. He served as an associatedirector of the White House Office of Management and Budget from 2001 to 2004. 

By Mary Agnes Carey, KHN Staff Writer, May 4

  Health and Human Services Secretary Kathleen Sebelius said May 18 that “within a couple months we will have a very robust call center operation“ to answer consumers’ questions about the new health overhaul law.

  Sebelius, speaking after she addressed a conference on primary care sponsored by the journal Health Affairs, said she “can’t give . . . an exact timeline.“ HHS did not provide additional details.

  The government, Congress and consumer groups have received a torrent of calls and mail from people seeking information about how the law would affect them. HHS has hosted several web chats in which Sebellius and experts have explained provisions of the law.

  In addition, a website lists commonly-asked questions and answers about the health care law.

  This is one of KHN’s “Short Takes“ – brief items in the news. 

States struggle to move people out of nursing homes

From KHN

  PEACHTREE CITY, Ga - Richard Hasselbach and Deborah Kadlec met in a nursing home and dreamed of a fie together outside its walls.

  Their health conditions made living on their own a challenge: Hasselbach, 63, is disabled from a stroke ad lost a leg to a blocked artery. Kadlec, 52, has multiple sclerosis. They both use wheelchairs and needhelp with chores such as bathing, cooking and remembering  to take ther medicines. Most of their relatives live in other states.

  Despite those obstacles, Hasselbach and Kadlec got their own apartment andapersonalcare aide last summer through the help of a federally-funded program run by the state. The program known as Money Follows the Person, is th nation’s most ambitious effort to move people out of nursing homes an other long-term-care facilities. It aims to help people live on their own and  save tens of millions of dollars for Medcaid, the state-federal health insurance program for the poor and disabled that pays for two-thirds of nursing home bills in the U.S. Nationally, nursing home care averages about $75,190 per patient each year. Care in the home, thorough such services as meals-on-wheels and daily visits by a healthaide, averages $18,000 a year, according to the AARP Public Policy Institute.

  The program gives nursing home residents personaland financial help to live on their own or in small group settings, as well as payments for costs such as apartment security deposits, household furniture and alterations to make homes or cars accessible to the handicapped.

  Georgia is one of 29 states and the District of Columbia participating in Money Follows the Person. Its experience shows both early successes and an illustration of the program’s slow start nationwide. Georgia had hoped to move 1,312 people from nursing homes and other long-term-care facilities by 2011. but through the end of last year, it has moved out only 221.

Progress On Goals Wide-Ranging 

  Congress established Money Follows the Person in 2005, and states set a combined goal of moving out more than 37,000 residents from nursing homes and other facilities by 2013. Most stats, including Georgi, started their programs in 2008. Two years later, just 5,774 residents have moved nationally, according to state data collocated by Kaiser Health News.

 The new healthoverhaulsigned into law last month extends the program to 2016, adds $900 million to what was a five-year, $1.3 billion initiative and loosens eligibility rules.

  The impact could be very significant,“ said Debra Lipson, a senior researcher at Mathematica Policy Research, a Princeton, N.J.-based think tank that s evaluating the program for the federal government. Most states are moving slowly for various reasons: problems finding affordable housing, resistance from nursing homes, stringent federal rules that limit who is eligible and what types of community settings they can move into, according to a recent study by Mathematica.

  Alice Hogan, who heads the Money Follows the Person program in Georgia said she considers the program a success. “Like most states, we wished  things wear going along faster, but implementation has been more difficult than expected,“ she said. “But personally I am not disappointed because I am very happy with those tat we gt out because each of them is a real person who is now in he community.

 

Private long-term care insurance and the CLASS Act

By Howard Gleckman, senior research associate, Urban Institute

From KHN, April 22

 

  The Community Living Assistance Service and Supports (CLASS) Act – the new national long-term care insurance program included n the just-passed health bill – begins to change the way we pay for personal assistance for the frail elderly and adults with disabilities.

  CLASS taksasteptowardsmoving long-term care financing from the welfare-like Medicaid program to an insurance-based system.  But CLASS alone won’t get the nation there. Private insurance, currently  a niche product that covers only about seven million American, will have to play an important role as well.

  A key question remains: Will private coverage fill the gaps left by CLASS? Top industryexecutivesaredeeply divided over how to respond to the new law. Some are anxious to design products that wold supplement CLASS insurance, much like the Medigap insurance currently enhances basic  Medicare. But others see little benefit in selling such products, and suggest they may try to competewithCLASS. This could doom the new government program. Anditcouldleavethe industry stuck with the same limited market it has today.

  While many details of CLASS insurance won’t be worked out for at least twoyears, daily benefits will be relatively modest – probably about $50 or $75. That’s very valuable for the many elderly and disabed who live at home. But for thoe worried about having to move to a nusing home, which costs an average of more than $200 a day, CLASS insurance will fall far short of their needs.

  That’s where private insurance fits in. today, Buyers of commercial policies typically purchase a daily benefit of more than $100. That suggests many consumers may want to top off the government’smodest daily benefit withprivate coverage. This, in fact, is what has happened in France. There, government benefits are very modest for middle and upper-income individuals. So about 26 percent of those 60 andolderhavepurchased extra private coverage – for more thn the seven percent who currently own long-term care insurance in the U.S.

  But CLASS coveragemay not be easy for private companies to complement. For instance, while the daily benefit is modest, CLASS coverage is available for life. Private companies effectively dropped lifetime benefits years ago and are unlikely to return to them.

  Private companies also worry about how people would qualify for benefits. Under CLASS, it takes only the approval of a patient’sown doctor, who is likely to approve most claims. Andprivate companies fear it will be impossible to deny payments for somebody who is already receiving CLASS benefits. As a result, they may be reluctant to sell policies to complement government policies.

 But the biggest  industry worry is price. It will be a few years before anyone knows how much CLASS premiums will be, but they may very likely exceed an average of $100 a month (younger people will pay lower premiums and older people will pay more). A new study by the SCAN Foundation and the consulting firm Avalere Health figures that a CLASS-like policy will cost the average buyer about $115 monthly. (SCAN funding supports some KHN coverage of aging.)

  Insurers worry that once consumers buy the government plan, they’ll have little money left to pay for a supplemental private policy. That was a big reason why much of the industry opposed CLASS in the first place.

  Now, some compnies think those potentally high CLASS premiums may give them an opening to ompetewith governmntinsurance. Here’s why: Privatecarrierscankeeptheirpremiumsrelativelylowby refusing to sell to people with pre-existing healthissues. But CLASS will be available to everyone who holds at least a part-time job andthuswillcover many high-risk buyers. That threatens to drive up CLASS premiums which, in turn, may push more buyers to cheaper private insurance. By cherry-pickngthehealthiest buyers, private companies could kill CLASS.

 Why shouldn’t they? Because CLASS offers one huge potential benefit to private companies. it opens the door to a large government-funded marketing campaign that promotes the need for long-term care insurance. The industry has never been able to make that case on its own but, with federal promotional dollars, long-term care insurance could become a more widespread product, and that would be good for everyone.

  So maybe there is a deal to be struck. As long as private companies agree to sell CLASS supplemental policies, government agrees to promote the need for long-term care insurance, whethergovernment or private. Now that wouldbea public/privatepartnership worth watching.

 
lassoffers one  u

Class Act to provide flexible cash

By Harris Meyer, KHN, April 15

  Millie  Todaof Toledo, Ohio, takes care of her hubandRichard, 83, who is severely disabled from Parkinson’s disease. She’ is grateful that with thhelp of governmnt-paid homoe healthaides and adult day care, he’s able to cntinuelivingat home rather than move to a nursing home.

  Even with that aid, Toda, 75, says extra money would be a big help. She could use the cash to help replace the broken lift on the front porch so she wouldn’t have to pull and push him up and down the front steps of their trailer home to get to his wheelchir.

  A provision in the health care overhaul law sigedbyPresidentBarackObama last month could bring some help in the future to people like the Todas. Thel aw establishes a voluntary, long-term care program that will provide cash to enrollees who suffer at last two limitarions in daily activities, such as eating, bathing and dressing. The help could begn five years after people enroll in the program.

  Supporters say the program, known as the Community Living Assistance Servces and Supports (CLASS) Act, will give families greater means to care for disabled relatives. There are about 10 million Americans who need long-term care servces, including 4 million under age 65.

  “This will empower conumers by puting money in hteir hands. Then entrepreneurial organizations will come to them and ask, `What can we do to help you?“ said Larry Minnix, president of the American Association of Homes and Services for the Aging, which lobbied for the CLASS Act.

  But some business and insurance groups argue that the CLASS program won’t be financially sustainable. The key is getting enough Americans to sgn up for CLASS, advocatesr respond.

  James Gelfand, seni0r manager of healthpolicyatthe U.S. Chamber of commerce, which opposed the CLASS Act, doubts that participation will be adequate. Only about 5 percent of eligible employees choose to participatein employers’ privatelong-term care insurance benefit programs andabout7 million Americans own private long-term care policies.

  The CLASS program will be run by te U.S. Department of Health and Human Services (HHS). After contributing for five years, participants wo are disabled and meet criteria set by HHS will be eligible for  cash benefit of at least 450 a day. There will be no screening for pre-existing conditions and no lifetime benefit limit.

  The CLASS cash benefit will be flexible. It can be used to pay for a home health aide, transportation, assistive technology such as wheelchairs, lifts, text telephones and sensors withalarm,s adult day care, respitecaretogive the family care giver a break, household modifications to accommodate the disabled person – or even to pay a family member to provide the care. Alternatively, it can be used to help pay for assisted  living or a nursing home.

  Such care, of course, can be extremely expensive. Nursing home c;osts average more than $70,000 a year and home health expenses average just under $30 an hour. But Nancy King, chef operating officer of Senior Independence, a nonprofit service agency in Columbus, Ohio, said that even $50 a day – $18,250 a year – will help people trying to pay for a home health aide, adult day care or assisted living.

  HHS has to write the rules for the program including setting the premium and benefit levels and the disability triggers for receiving benefits. That process will determine when the program can begin.

  Under the law, premiums will vary based on initial enrollment age, with younger people paying less, students andpeoplebelowthepovertylevel will pay only $5 a month. While HHS has authority to adjust premiums to keep the program financially viable, it”s expected that participants will pay the same premium amount as long as they remain continuously enrolled.

  In an evaluation of the proposal last fall, the nonpartisan Congressional Budget Office estimated that monthly premiums would average $125 at the start. It also projected that benefits would average $75 a day, with annual inflation adjustments.. In its analysis, the CBO estimated the program would reduce net federal spending for the first 20 years – particularly because no claims would be paid in the first five years – then boost net outlays by tens of billions in subsequent decades.

  Under the terms of the healt law, the CLASS program hs to pay for itself through premiums and cannot be subsidized by the government. Keeping the program solvent, CBO said,  hinges on enrollment of healthy individuals. If fewer Americans were to sign up, and many of them were in poor health, the program would face financial trouble, te CBO concluded.

  In an effort to attract healthy Americans, the CLASS Act hopes to interest employers and their workers by streamlining the sign-up and premium payments. Employers can offer workers the opportunity to pay ther premiums through a payroll deduction. If an employer does that, all employees must be automatically enrolled in the program, except those who notify their employer that they want to opt out. The CBO said that this automatic enrollment feature could  boost participation among healthier people

  The law also allows workers to pay premiums on their own if their employer doesn’t participate or they are self-employed.

  Many hope the CLASS Act will further increase public awareness of long-term care needs and boost sales of private policies to cover more expensive care like nursing homes.  In a written statement, John Hancock Financial, a major seller of long-term care insurance, said the CLASS Act “sends a powerful message about the importance of long-term care preparedness“ that should motivate Americans. “It will not replace the need for private long-term care insurance for many Americans.“

CLASS Act to provide long-term care in home

KHN, April 15

  Kaiser Health News: The Community Living Assistance Services an Supports (CLASS) Act, a provision of the health reform law, “establishes a voluntary, long-term ca

KHN, April 15re program that will provide cash to enrollees who suffer at least two limitations in daily activities, such as eating, bathing and dressing.  . . . there are about 10 million Americans who need long-term care services, including 4 million under age 65.“

  “Under the terms of the health law, the CLASS program has to pay for itself trough premiums and cannot be subsidized by the government. Keeping the program solvent, CBO said, hinges on enrollment of healthy individuals“ (Meyer, 4/15).

  Stateline.org: “It is well-known that nearly all seniors and adults with disabilities want to remain in their homes as long as possible, and it’s vastly cheaper for states to provide the help – meals, bathing and dressing, and other home services – that allows them to do so rather than resort to institutionalization.“

  But “here’s the problem: Medicaid – which pays nearly 50 percent o all nursing home bills n the country and 40 percent of all long-term care – is biased in favor of institutional care. When seniors qualify financially and are deemed to need care, Medicaid funding for a nursing home bed is guaranteed. but for those who want to remain at home, funding is only a possibility and a national shortage of home health providers often means long delays.“ The new law gives states incentive to reduce the cost of long-term care (Vestal, 4/15).

Trouble ahead for Medicare and Social Security

KHN, April 8

  “Federal Reserve Chairman Ben S. Bernanke warned recently that Americans may have to accept higher taxes or changes in cherished entitlmnts such as Medicare and Social Security if the nation is to avoid staggering budget deficits that threaten to choke off economic growth.“ The Washington Postreports, “These choices are difficult, and it always seems easier to put them off - until the day they cannot be put off anymore,` Bernanke said. . .“ Bernanke’s remarks highlighted the difficultes posed by funding these entitlmentprogramsover the long term. With the population aging andmedical costs rising faster than inflation, Medicare is set to become a major drain on the federal budget in the coming decades, though the recently-passed health-care bill has delayed the datewhen the program will begin to require big infusions of cash“ (Irwin nd Montgomery, 4/8).

Back surgeries skyrocket

KHN, April 7

  NPR: “Too many complex back surgeries are being done and people are suffering as a result, according to a study in the current issue of TheJournl of the American Medical Association. This general tendency noted in the study – that many patients and doctors think more medical care is always better – has implications for the new healthoverhaullaw. “Back pain associated with aging can be treated in one of numerous ways: rest and physical therapy, surgery to remove the bony growths that can push on nerves, fusing two vertebrae together or fusing many vertebrae together.“ But several studies have not shown an advantage for surgery so this study examined Medicare billing records to see whether the number of back surgeries had been reduced as a result.

  “They foundthenumber of surgeries has gone down very slightly. But when they looked specifically at complex surgeries, they founda big difference. `The most complex type of back surgery has increased dramatically between 2002 and2007, with a 15-fold increase` says co-auth0r Richard Deyo.  . . . Deyo andhiscolleagues also checked the rateof complications. This more complex form of surgery is associated with a higher risk of life-threatening complications,` he says“ (Silberner, 4/6).

  HealthDay News/MOdern Medicine: “After adjustment for age, conmorbidity andprevious spinal surgery, the odds ratio of life-threatening complications was 2.95 for complex fusion compared with decompression. Also, for complex fusion versus decompression only, 30-day mortality was 0.6 versus 0.3 percent, the mean hospital charge was $80,888 versus $23,724, and the 30-day rehospitalizationrate was 10 versus 7.8 percent“ (4/8).

  MedPage Today: “Complex fusion accounted for less than 1 percent of operations for spinal elements in 2002, but 14.6 percent of those performed in 2007.“ Researchers were unclear about the reason for a spike in complex surgeries. “Several forces might be contributing, (Dayo) said, including effective marketing by device manufacturers touting the efficacy of complex operations using new surgical implants“ (Neale, 4/6). 

 

 

Why support individual mandate?

By Jonathan Cohn, Senior Editor of The New Republic

KHN, April 8

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

Imagine for a moment that you work in a hospital emrgency room. And just outside the door, a man has collapsed from a heart atack. Inside the facility, literally feet away frm where he lies, are the equipment and knowledge to save his life. But this man doesn’t have health insurance.

  Wouldyou treat him anyway? Or let him die?

  If you think the way the vast majority of Americans do, you’d choose to save the man. Whatever your political attitudes, the thought of withholding life-saving treatment from somebody because of ability to pay seems too cruel.

  Andthat’s fine. I’d make tesame decision! But if you believe that, then you should also support what remains one of the most controversial elements of healthcarereform, even after its enactment. That element is the individual mandate.

  An individual mandate is a requirement that everybody carry  health insurance. Such requirements are a feature of every universal health care system in the wrld. And, under the recently-passed Patient Protecton and Affordable Care Act, they’d be a feature of America’s healthcaresystem as well. Starting in 2014, Americans who don’t obtain coverage either through a government program, through an employer-sponsored privte policy or through a plan purchased directly through the new insurance exchanges would be subject to financial penalties.

  Back in 2007, and early 2008, during the campaign for the Democratic presidential nomination, the mandatebecame a focus of dispute between the two front-runners, Hillary Clinton and Barack Obama, Clinton supported the mandate while Obama opposed it. But after becoming president and consulting with his advisers over how best to design  a plan, Obama changed his mind and indicated he would support the idea.

  Obama wouldenduparguing for the mandatelargely on the same grounds that Clinton had. It is necessary, he said, in order for the rest of the insurance system to work. A major goal of healthreformis to make sure everybody, even people with pre-existing medical conditions, can get coverage. To accomplish that, you have to require that insurers offer policies to everybody, without discriminating against them based on health status. But imposing such a requirement would allow people to game the system: They could wait until they get sick and than buy coverage. The only way to avoid this problem is to make everybody carry insurance even when they are healthy.

  It’s a technical argument more than  moral one. And it happens to be correct. For proof, one need look only at states that have imposed community rating (the requirement that insurers charge the same rates to people in different health conditions) and/or guaranteed issue (the requirement that insurers give policies even to people with medical problems without a mandate.) The requirements have made coverage more available to people in poor health, but only by raising premiums substantially, as insurers anticipate healthy people will opt out of coverage until they need it.

  Still, there are otherreasons to support a mandate.One is explicitly about redistribution – from the medically lucky to he medically unlucky. At any one time, only a very small percentage of the population will have major health problems. The rough rule of thumb is that 20 percent of the people are responsible for about 80 percent of the cost in the system. But fortune (and misfortune) plays a huge role in determining who ends up sspartof that 20 percent – all it takes is contracting  a serious disease, having a debilitating accident or developing an acute condition.  Rather than force this unlucky 20 percent to bear the burden of their medical expenses alone, you can ask everybody else . . . the people lucky enough to be in good health . . . to help shoulder that burden.

  When you phrase it that way, the argument for a mandate sounds awfully liberal. But there is a third argument for the mandate – related, but from a different philosophical point of view. That’s where the dying man outside the emergency room comes in.

  The fact is that, even before the Affordable Care Act passed, the U.S. guaranteed health care in life-threatening situations. Under the Emergency Medical Treatment and Active Labor Act, which the Democratic Congress passed and President Ronald Reagan signed in 1986, providers of medical care must give stabilizing care to people who need it, regardless of ability to pay.

  The law is hardly a substitute for universal coverage. It doesn’t require that providers offer preventive or follow-up treatment and it allows them to collect huge bills afterwards. But in practice, many doctors and hospitals will endupproviding quite a lot of charity care. And while they can pay for at least some of that out of their own revenues, they inevitably pass a portion of those bills on to everybody else, in the form of higher insurance premiums and higher taxes.

  But some uninsured people who end up getting charity care could afford to pay for insurance premiums – or at least, pay some portion of them. It might not be enough to offset the entire cost, but it’d be enough that they were making a reasonable contribution to the cost of their own care. And there’s no reason they shouldn’t.  As one mandates upporterexplaineda few years ago, “for people who can afford to buy insurance, it’s time for them to step up to the plate and buy that insurance.“

  Does that soundlike a conservative argument? That’s becauseitis. The quoteis fromaFox News interview withformer Massachusetts Governor Mitt Romney, in 2006, not long after he signed into law that state’s universal coverage scheme. Romney, of course, is a Republican. The Massachusetts systemclosely resembles the one the U.S. will get  under the Affordable Care Act, completewithanindividual mandate.

  Today, Romney denounces the Affordable Care Act as an unconscionable government takeover of health care.  And he is just one of many conservatives who supported the individual manatee before it became part of “Obamacare.“ But don’t be fooled. If Romney and fellow Republicans weren’ so determined to tarnish the Affordable Care Act politically, they’d acknowledge what they said before: The individual manatee makes perfect sense.

Advance directives lead to less medical care

KHN, April 2

  New Englnd Journal of Medicine:  More than one in four elderly Americans lacked the ability to make a decision about their medical care at th end of life.

  Drawing from the Health and Retirement Study data and interviews following the patient’sdeathwith a family member or someoneknowledgeableaboutthe case, the authors found, “Incapacitated subjects who had prepared a living will (regardless of preferences) were less likely to receive all treatment possible . . . and more likely to receive limited treatment than subjects wthouta living will.  . . .  Livingwillswere associated with increased odds of receiving comfort care.“ In comparison, “Subjects who had appointed a durable power of attorney for health care were less likely to die in a hospital . . . or receive all care possible . . . than those who had not appointed a durable power of attorney.“

 Medicare Advantage competitive pricing

By Austin Frakt, Associate Professor of HealthPolicy andManagement, Boston University School of Public Health

KHN, April 12

  Few Americans should be satisfied withthe way the government pays private helthinsurance plans that participate in the Medicare Advantage program. Taxpayers pay 14 percent more to insure a benficiary through the Advantge program than through traditional fee-for-service Medcare, the program’s“public option.“ The new health reform law – the AffodableCare Act – will reduce, but not eliminate, the additional payments to Advantage plans. Medicare benficiaries are concerned about the reduction in Advantge plan availaability and generosity that will result from those payment cuts.

  There sould be a better way to pay Advantage plans, one less likely to be a taxpayer rip-off or to contibute to swings in plan availaability and generosity. In fact there is, and Medicare’s prescription drug program uses it successfully: coompetitive pricing (also called competitive bidding).  Under a competitive pricing system, plans bid their price to provide a standard set of services. The amount the government pays a plan reflects bids offered by all competing plans (e.G. payments are set to the average bid).

  The critical component missing from the Advantage program is payments related to bids. Instead, payments are based on a formula established by Congress. The differences between this “administrative pricing“ system and compettiv pricing are related to taxpayer andbeneficiary dissatisfaction with the Advntage program.

  The effort to bring price competition to the Advantage program is a long story of health plan opposition and political failure. Nevertheless, if it were allowed to function, a competitive payment system has the potential to take politics out of pricing and result in lower volatility in payments,  Advantage plan participation and benefits.

  Congressional meddling has become almost synonymous with Advantage administrative pricing. Payment rates are political tools used as means of compromise or to extract concessions. They’re also a source of revenue. Payments go up when it benefits certain members of Congress. Payments go down when money is tight and other expenses take a priority. The system may benefit politicians but it disadvantages the rest of us (insurance companies excepted).

  Under a competitive bidding structure, changes in payments, plan participation andgenerosity of benefits would be related to changes in cost. Though costs increase with bid-based payments, the large and disruptive changes imposed by the congressional tinkering of administrative prices would be things of the past. The economic efficiency would benefit taxpayers, and the consistency would be a welcome relief to beneficaries.

  Politicians have tinkered with Advantage payments by increasing them for plans in historically underservedruralareas. The disproportionate power of senators from rural regions helped promote and maintin administrative pricing and the higher rates it can deliver to the areas they represent.

  Thus, it was a great surprise when the Senate’s healthreformbill included a provision for Advantage plan competitive pricing. “ Those of us who study Medicare andare close observers of the political processwere stunned. Not only had 60 senators, including many from states withlarge rural regions, agreed  to real price  competition, but they did so despite decades-long industry resistance to anything of the sort. The Senate bill then passed the House and was signed by President Obama. For a brief and glorious week a more sensible Advantage program payment system was the law of the land.

  Then the budget reconciliation amendment was passed and signed andwith it administrative pricing returned. Why in the final hours of negotiationover healthreform had the Democrats axed competitive pricing? Wasn’t the disproportionate repersentation of rural senators the big hurdle, one that it had already overcome?  Sadly, in this case, the Senate’s judgment was not decisive.

  There are three potential reasons why lawmakers purged competitive pricing at the last minute. First, the key difficulty in the final days nd hours was not in satisfying rural senators but in satisfying reluctant representatives. Andthe House had already passed an update to the administrative pricing. Advantage program payment scheme as part of its health reform bill.

  Second, perhaps a few House holdouts wanted assurance that insurers  and beneficiaries in their districts would be taken care of. When the problem is one of convincing fence-sitting politicians, one enterethe conversations with money in hand, not a vague promise of an efficient market..

  Finally, complying with the Congressional Budget office’s criteria, in order to receive a favorable score, was paramount. Price competition is complex for CBO to score and more difficult to tweak to wring out the last few billion dollars to make the numbers. Administrative pricing, on the other hand,  is relatively easy to score and to adjust to hit a budget target. Adjusting the administrative pricing ystem may have been a key element of conversations between the the Democrats and CBO in the frantic final ours of negotiation.

  Until the inside story of health reform politics is written we may not  know the truth about how Advantage program competitive pricing passed the Senate or why it was overturned. But one thing is clear: the politics of Medicare is a cruel sport in which the failure of good ideas is common. The upshot of the rough and tumble, however, is that taxpayers and beneficiaries receive the hardest blows.

 

Aetna suspended

  “The Wall Street Journal:“  Medicare officials have suspended the Aetna insurance company from enrolling new members for “its Medicare Advantage andMedicare prescription-drug plans because the insurer didn’t comply with rules about changing drug plan designs, the government said.“ The sanctions come after the government says the Connecticut-based insurance company did not “meet requirements to make sure seniors could continue on their medications during changes to the Aetna plans in 2009 and those offered this year.“ The action will not affect current Aetna customers and is “unlikely to have a big financial effect on Aetna, analysts said.  . . . The sanctions could present a problem if Aetnahasn’t resolved the government’s concerns by the fall, when open enrollment begins anew. The company is working with beneficiaries and the government to resolve the problem quickly, said Fred Laberge, a spokesmn for the Hartford, Conn. insurer“ (Johnson and Wisenberg Brin, 4/10). 

 

 

Long-term care and health law

By Peggy Girshman, KHN Staff Writer, April 13

  One of the lesser-known provisions in the new health law may have one of the biggest and longest-lived impacts.

  As baby boomers edge into their 60s, many wonder how they will get care if they’re unable to care for themselves.

   Jim Firman says the answer lies in the Community Living Assistance Service and Supports (CLASS) Act – a section of the new health law that would establish a federal insurance program for long-term care. Firman has been president and CEO of the National Council on Aging since 1995. He says that the CLASS Act was “literally one of Ted Kennedy’s dying wishes, “ and that now “is the right time to establish the benefit championed by the late Massachusetts senator.

  He spoke with KHN’s Peggy Girshman recently at the annul Agng in America meeting. Here are edited excerpts of that interview.

  Q. How do you characterize what’s going to happen in the next 10 to 20 years with long-term care in this country?

  A: Right now, millions of older adults who have worked hard all their lives are forced to spend down their lilfe savings and go into an expensive nursing home, just because they can’t afford care at home. The health reform plan makes it easier for individuals on Medicaid to get care in their own homes. It also means tht spouses of people receiving home care on Medicaid will no longer have to be forced down into poverty before they get help.

  Equally important and even less known is the fact that this new health care plan creates a major national insurance program to help people pay for long-term care at home. People who are working will voluntarily opt to pay in, it will be a payroll deduction if they choose to do this, and after paying in for five years, they will be eligible to earn an average of $75 per day in cash on a monthly benefit basis to help them pay for home and community-based care

  Q. Seventy-five dollars a day doesn’t pay for tht much now, let alone 20 years from now. How do you answer critics that say this (is) a drop in the bucke in providing long-term care insurance for people?

  A; I think they are wrong. Think about it from the business point of view. In my neighborhood – I  live in Arlington, Va. – within six blocks of me, I know two elderly people who are frail and need help, and I know two people who are in their late 50s and have had strokes and are both paralyzed. If they were able to pool their money, which would come to about $112,000 a year between them, I could put together an incredible package of services and care and support to keep those people in their homes.

  It’s not enough to keep people in nursing homes, where you’re paying for room and board and a whole bunch of things other than care and depreciation and in for-profit homes you’re also paying for profit. But, don’t underestimate the power of $75 a day. That could help most people, particularly if it’s complementing efforts made by family members and other kinds of things.

  Q. How would you describe what the need is going to be in the next 10, 20, 30 years for long-term care – whether it’s community-based or nursing home-based?

 A:  It’s anybody’s guess . . .  The big wild card in ths is Alzheimer’s and dementia. If we are able to in he next five or 10 years to develop a vaccine or a cure, it could dramatically change the cost of long-term care in this country. You can look at rosy scenarios andsay, the percentage of older people in long-term care will decrease because we’ll come up with cures or prevention for Alzheimer’s, or you can say we don’t, in which case more people will live longer and get Alzheimer’s.

 Q:  tIseemslike in some cites, counties, suburbs, that there are overlapping services for seniors. What is the best practice for trying to navigate that?

  A: The best practice is always to take a person-centered approach. To look at people holistically, and say what are all their needs, not just health needs or not even just their needs for . . . long-term care services. But what are their economic financial needs, and then to do case work, however that’s done, where you bring otgether all the resources in a community to help a person. At the end of the day, it’s somebody looking at that person and saying, “I’m going to help you get everything that’s out there.“

  Q. Who decides who that somebody is, and who pays that somebody, or coordinates that somebody?

  A: Well,   right now nobody pays for it unless you’re impoverished and on Medicaid, and then they have somebody call the case manger who tries to do that. But the answer (for most people) is that no one (entty) decides, and that’s okay. We have to empower people. Just because people are disabled doesn’t mean they’re not smart and they don’t know what to do. Even if they have dementa, they have family members.

  I think this s an empowerment issue. It’s about giving people the information, helping them understand their rights, making it easy through the Internet and new technology for people to talk about this. (Once people start receiving benefits from the CLASS Act), a whole bunch of people will now have $27,500 a year to pay for what they want and need, there wll be an instant uprising of innovation andcreativity in the private sector. Both for-profit and nonprofit will be all over it. They’ll be in there offering people comprehensive solutions to do exactly what they need. I think this problem will solve itself through American ingenuity and innovation.

   

 

No health insurance could cost you

Kaiser Health News, April 15

  “The Internal Revenue Service won’t audit you to make sure you have purchased health insurance under provision sof the new health care law – but it may withhold your tas refundif you can’t demonstrate that you are insured, an IFS official said Thursday,  “The Wall Street Journal“ reports. “There are tools we can use. We obviously  will be notifying folks for whom there is no record of health insurance that we have these questions,“ Steven T. Miller, IRS deputy commissioner for services andenforcementsaid during a Senate Finance Committee hearing. “The Journal, reported,.“We have a refund offset mechanism in order to enforce that provision.“ Under the new health law, penalties for failure to buy health insurance would begin in 2014.

  Senate Finance Committee Republicans “questioned whetherthe IRS will even have the ability to make sure the insurance mandate is enforced.“ But, as the new law is written, insurance providers will be required to provide documentation to both the taxpayer and the IRS to show that an individual has coverage. “The IRS will use document matching to identify people without coverage and will notify those taxpayers that they may owe penalties.“ The law does not permit the IRS to issue liens or levies for penalty collection, but Miller said it also does not stop the IRS from cutting a tax refund to obtain penalties. (Vaughan, 4/15)

True or false about health care law

By KHN Staff, March 31

  The sweeping health care overhaul signed into law by President Barack Obama is more than 2,000 pages long and has been dissected by analysts, politicians and pundits. It’s no wonder that some consumers are confused – and perhaps frightened – about how the law might affect them. Some concerns were raised during the congressional debate or have been swirling around the Internet.

  KHN staff writers checked out some of the claims.

  Comparative effectiveness research will lead to the rationing of care for the elderly.

 Not true.

  The law creates a nonprofit Patient-Centered Outcomes Research Institute chargedwith examining the “relative health outcomes, clinical effectiveness andappropriateness“  of different medical treatments by evaluating existing studies andconducting  its own. The institute would be governed by a 10-member board that includes patients, doctors, hospitals, drug makers, device manufacturers, insurers, payers, government officials and health experts.

  This law states that the institutedoesnothave the power to mandate or even endorse coverage rules or reimbursement for any particular treatment. Medicare may take the institute’s research into account when deciding what procedures it will cover, so long as the new research is not the sole justification and the agency allows for public input.

  This is a shift from Congress’ position when it created the Medicare Part D drug benefit in 2003;; back then it banned any use of comparative effectiveness research in determining what would be covered.

  Many experts believe that as health costs continue to mushroom, Medicare andprivate payerswill incorporate the institute’s work into their coverage decisions. Others say history suggests that’s unlikely. “The graveardsofWashington, D.C. are littered with government agencies that tried to do comparative effectiveness research,“ said Michael Cannon, director of healthpolicystudies at the Cato Institute, a libertarian think tank in Washington.

-Jordan Rau

  Cuts in the Medicare Advantage plans under the health care overhaul  “will cause massive disruption for  more than 10 million seniors“ and many of them will lose coverage.

  Partially true.

  That wass the warning in a statement from America’s Health Insurance Plans, a lobbying group, days before the healthoverhaul cleared Congress, echoing a Republican criticisn.

  The new healthlawwillcut$130 billion in spending on the Advantage program by 2010, which currently pays private plans to administer Medicare benefits and pays them about 14 percent more than the per-patient cost of the tradtionalMedicareprogram. Plans use that subsidy to lure members with lower premium costs or extra benefits not normallly paid for by Medicare, such as vision care or better prescription drug coverage. Some Democrats and analyssts have argued the higher rates are wasteful.

  Even experts who support the change concede that the impact of the cuts could be evident. Robert Berenson, a scholar at the Urban Institute and former Medicare official, said some Avantage plan members will notice skimpier benefits, “but the Republicans have really exaggerated that this will wipe out the Advantage plans.“

  Marsha Gold, a healthpollicyanalystfor the private researach group Mathematica, said, “Over time, there will be less rich benefits or higher premiums, but it’s going to be gradual,“ noting that the largest cuts do not begin until 2015.

  The three-quarters of beneficiaries who receive traditional Medicare benefits would not be affected by the change. However,for those in Advantage plans, they may have fewer to choose from  “You are going to start seeing companies dropping out,“ said Robert Moffit, a policy analyst at the Heritage Foundation

-Christopher Weaver

  The IRS will be hiring thousands of new agents to check that people have health insurance, and people who don’t will be sent to jail.

  Mostly not true

  This claim arises from a provision of the health care law that would require Americans to purchase health insurance or else face fines. The IRS will be tasked with enforcing this provision.

  The Congressional Budget Office said the number of new employees the IRS will need has not been determined, though it did estimate the agency’s cost could reach approximately $10 billion over the next 10 years.

  House Ways andMeansCommitteeRepublicans used the CBO estimate in a report on the bill’s effect on the IRS. In that report, Rep. Dave Camp,R -Mich, said, “The IRS could have to hire more than 18,000 additional agents, auitors and other workers just to embrace all the new taxes and penalties.“ Camp called such an increase in personnel, “a dangerous expansion of the IRS poweer.“ The IRS currently has about 93,000 employees.

  The CBO report, however, identifies the $10 billion as needed for “administrativ costs,“ and does not state that all of the funds will be used for new employees.

  IRS Commissioner Douglas Shulman told a March 25 Ways and MeanaCommittee hearing that his agency will report back to Congress on the number of additional staff members or funds it will need “to serve the American people.“ He noted that under the new law, the IRS will not audit taxpayers to verify whethertheyhaveinsurance. That responsibility, he said, lies with the Department of Health andHumanServices, which will work “with the insurance companies to determine“ if consumers have “acceptable coverage.“ He also said that no taxpayers would be required to pay any liens, levies or go to jail for not telling the IRS about their insurance situation

-Maggie  Mertens

  When health care reform kicks in, consumers will have longer waits to see a primary care doctor.

  Partially true.

  With estimates that 32 million more people will have health insurance by 2010, concerns that there wll be longer waiting time to see doctors are not entirely unfounded. Even before healthreformlegislationpassed, the U.S. faced a shortage of family doctors that was expected to grow to around 40,000 by 2020, according to the American Academy of Family Physicians. Lori Heim, president of the AAFP, says that number is likely to increase significantly.

  The new legsislationcontainsseveral incentievesaimedat  curbing the shortage by encouraging medical students to go into primary care rather than choosing other specialties, such as cardiology or orthopedics, which are generally more lucrative. In addition, the legislation temporarily raises Medicaid reimbursement rates for primary care doctors and offers special loan repayment programs to students who choose primary care. Heimsaidtheseincentives should help but won’t eliminate the impact of the new patient load. “All of them fall short for what it’s going to take to truly build a primary care workforce that’s going to take care of everyone,“ she said.

  Patients most lilkely to be affected by the shortage are those seeking a primary care physican for the first time, said Stuart Altman, a professor of national health policy at
Brandeis University’s Heller School. Those who already have an established doctor – and some uninsured patients do have relationships already with  physicians – are not likely to see much of a change unless they have to shop for a new one.

  Altman points to the recent experiences of Massachusetts, which approved universal healthcarein 2006. The state was already facing a primary care shortage when the law was implemented. By 2009, a survdy by the Massachussetts MedcalAssociationfound that more than half of internists and40 percent of family doctors were not accepting new patients, the lowest acceptance rates since the srvey was started eight years ago.

  Fitzhugh Mullan, a professor of health policy and pediatrics at The Geogre Washington University, agreed that in the short term, the influx of newly-insured patients will put presssure on the health care system. But he said that in the long term, “It will cause us to increase and rebalance our workforce“ to make it more efficient. He says the rebalancing will include an increase in the number of physician assistants and nurse practitioners, who can be trained more quickly than doctors, to fill the primary care gap nd reduce wait times.

-Jenny Gold

  The new healh care bil will end TRICARE and force military families to buy different insurance

  Not true.

  The future of TRICARE, the health care systm for about 9.6 billion active duty militry and retirees, their families andsurvivors, was a hotly-debated issue before the March 21 House vote on health overhaul legislation. Conservatives, Republican members of Congress and at least one prominent veterans group said the bills did not gurantee that TRICARE’s benefits would be considered “qualifying coverage“ and thus meet the requirements for a health plan under the bill. They argued that millitary beneficiaries might have to leave the plan or pay penalites if TRICARE was not deemed to meet the new law’s standards.

  Thomas J. Tradewell Sr., the national commander of the Veterans of Foreign Wars of the U.S., accused President Barack Obama and congressional Democrats of “betarying  America’s veterans.“

  But the White House, Pentgon, Department of Veterans Affaris, congressional Democratic leaders and othermilitary associations say TRICARE mets all the law’s requirements, and military personnel and ther families can continue to get full benefits under this familiar military health plan. Even some opponents of the health reform bill agreed that TRICARE would not be jeopardized.

  Some of the confusion appears to stem from the different approaches taken to TRICARE in the competting Senate and House passed reform bills. The Senate measure, which passed on Christmas Eve andwassentback to the House for a final vote, did not mention TRICARE by name, though the original House bill did.

  Five House committee carimen issued a letter saying that TRICARE coverage “would satisfy the requirements“ of the bill. Kathleen Sebellis, secretry of Health and Human Services, also sent a letter to Sen. Max Baucus, D-Mont., reassuring him that TRICARE coverage meets “the minimum essential coverage definition.“

  The united defense brought a letter of apology from Tradewell. “I apologize for uing too harsh a word . . . “he said. “ But I did noto apologize fo rour strong advocacy on the issue.“

-Lexie Verdon

  Federal govenment employees will be forced to switch their health insurance coverage and particpate in the exchanges.

  Mostly not true.

 Presidenti Barack Obama has repeatedly stated that people who like their health insurance can keep it. Howeer, that doesn’t apply to a small goroup of federal employees.

  Currently, government employees andqualified retirees can get healthinsurance through the Federal Employees HealthBenefitsProgram (FHEBP) , a “marketplce“ withmorethan 250 plans, withat least 10 national fee-for-service plans. Government employees, including members of Congress, te president, vice president, cabinet members andWhiteHousestaff. all participatein FEHBP. That won’t change – except for member of Congress and their personal staffs. In 2014, they will instead have to enroll in the new insurance exchanges.

  Soeme Republicans, led by Sens. Charles Grassley of Iowa and Tom Coburn of Oklahoma, argued that all members of Congress and staff should be subject to th same coverage that they set up for other Americana;

  The provision has provoked confusion, sparked emotions and even caused the White House to announce that the president will voluntarily participate in the exchange, although he would not be required to do so by the new law. Walton Francis, a health accountant and main author of “CHECKBOOK’s Guide to Health Plans for Federal Employees,“ said the requirement will be controversial and may come up again for consideration. “My guess is the FEHBP exclusion for these members and their staff will probably not survive,“ he said.

-Jessica Marcy 

  Illegal immigrants will get free health care.

  Mostly not true.

  Illegal immigrants already are generally barred from receiving Medicaid benefits, and the new healthlawexcludeshem from receiving premium subsidies. They are also explicitly banned from purchasing insurance with their own funds on the exchanges created in the legislation. Anyone trying to purchase health insurance through those marketplaces must provide proof of citizenship or legal resident status.

  But some commentators have argued that undocumented immigrants will get free or subsidized health care when the reforms are in place, that the enforcement provisions are weak, and undocumented immigrantsmight find ways to circumvent the law. Dan Vale of the Federation for American Immigration Reform said that while .the bill prohibits undocumented immigrants from buying insurance from the new exchanges, it uses a “loosey-goosey verification policy“ that “ doesn’t require a photo ID “

  However, Sonai Ambegaokar of the National ImmigrationLaw Center said the process outlined in the Senate bill is likely to be similar to what officials currently use in the Medicaid program. According to Amebegaokar, “There is a history of verification processes for public programs, we’ve had this for many years in Medicaid, andwe have strict citizenship requirements. And we have yet to see a flood of mmigrants in Medicaid.“

  The Pew Hispanic Center estimates that about 12 million undocumented immigrants ;live in the United States, and more than half of them don’t have insurance. Nonetheless, the vast majority – nearly 80 percent – of the uninsured are U.S. citizens, according to the Kaiser Family Foundation. (KHN is a program of the foundation)

  Advocates for immigrants argue ethat many undocumented residents will simply remain uncovered. The Congressional Budget Office estimates that of the 23 milion people who will continue to be uninsured in 2019, 8 million will be undocumented immitrants. Withougthealth insurance, many of them will continue to receive care in free or subsidized community clinics. In addition, the new law doesn’t charge for the requirement that hospitals offer emergency services to all patients, including illegal immigrants.

-Kate Steadman

E

Kaiser Health News Daily Report, March 21

  There’s  no need to fear that patients” health information will end up in the hands of CIA officers, FBI agents or other federal agencies that deal in security and law enforcement. David Blumenthal, the national coordinator for health  information technology, said last week, according to “Modern Healthcare. ”’He “denied  allegations that a framework for selecting data transmission standards for the proposed National Health Information Network would configure the system to afford federal control over patient data and funnel that information to federal agencies, including the CIA, justice department and Homeland Security Agency.“

  The allegations, said to be circulating in the “blogosphere,“ apparently stemmed from news that Blumenthal’s office is testing the National Information Exchange Model, a system that helps government agencies develop standards for exchanging data. The NIEM was developed by the justice department and Department of Homeland Security and is still used to facilitate intelligence exchange, among other things. But, Blumenthal said, his office would not participte in any exchange project that would allow health information to be consolidated by those agencies. (Conn, 3/20)i

Consumers’ guide to health reform

By Paul Galewitz, KHN Stafff Writer, March 21

  The health overhaul package passed by the House and Senate is the most far-reaching health legislation since the creation of the Medicare and Medicaid programs.

 The following is a look at the impact of the entire packag whoch would extend insurance coverage to 32 million aditional Americns by 2019, but also will have an effect on almost every citizen.

 Here’s where things stand and how you might be affected:

Q: I don’t have halth insurance. Would I have to get it, and what happens if I don’t?

 Under the legislation, most Americanswould have to have isurance by 2014 or pay a penalty. The penalty would sart at $95, or up to 1 percent of income whichever is greater, and rise to $605, or 2.5 percent of incom, by 2016. This is an individual limit; families have a limit of $2,085. Some people would be exempted from the insurance requirement, called an individual mandate, because of financial hardship or religious beliefs, or if they are American Indians, for example.

Q: I want health insurane, but I can’t afford it. What do I do?

  Depending on your income, you might be eligible for Medicaid, the state-federal program for the poor and disabled, which would be expanded sharply beginnig in 2014. Low-income adults, including those without children, would be eligible as long as their incomes don’t exceed 133 percent of the federal poverty level, or $14,404 for individuals and $29,326 for a family of four,according to current povery guidelines.

 Q: Wha if I make too much for Medicaid but stll can’t  afford coverage?

  You might be eligible for government subsidies to help you pay for private nsurance that would be sold in the new state-based insrance marketplaces, called exchanges, slated to begin operation in 2014.

  Premium subsidies would be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,404 to $43,320 for individuals and 29,326 to $88,200 for a family of four.

  The subsidies would be on a sliding scale. For example, a family of four earning 150 percent of the poverty level, or $33,075 a year, would have to pay 4 percent of its income, or $1,323, on premiums. A family with income of 400 percent of the poverty level would have to pay 9.5 percent, or #8,379.  In addition, if your income is below 400 percent ofthe poverty level, your out-of-pocket health expenses would be limied.

  Q: How would the legislation affect the kind of insurance I could buy? Would it make it easier for me to geet coverage, even if I have health pobems?

 If you have a  medical condition, the bill would make it easier for you to get coverage; insurers would be banned from rejectng applicants based on health status once the exchanges are operating in 2014.

  In the meatime, the bill would create a temporary high-risk insurance poolfor people with medical problems who have been rejected by insurers and have been uninsured at least six months. That would occur this year.

  And starting later this year, insurers could no longer exclude coverage for specfic medical problems for children with pe-existing conditions, nor could they any longer set lifetime coverage limits for adults and kids.

  In 2014, annual limits onoverage wold be banned.

  New policies sold on the exchanges would be required to cover a range of benefts, including hospitalizations, doctor visits, prescription drugs, maternity care and certain preventive tests.

Q: How would the legislation affect young adults?

   If  you’re an unmarried adult younger than 26,you could stay on yor parents’ insurance cverage as long a you are not offered health coverage at work.

  In addition, people in their 20 would be given the option of buying  a  “catastrophi“ plan that would have lower premiums. The coverage would largly only kick in after the individual had $6,000 in out-of-pocket expenses.

  Q: I own a small business; Would I have to buy insurane for my workers? What help could I get?

  It depends on the size o your firm. Companies wth fewer than 50 workers wouldn’t face any penaltes if they didn’t offer insurance.

  Companies could get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35 percent of the cost of premiums would be available this year and would reach 50 percent in 2014. The full credits are for the smllst firms with low-wage workers; the subsidies shrink as companies’ workforce and average wages rise.

  Firms with more than 50 employees that do not offer coverage would have to pay a fee of up to $2,000 per full-tme employee if any of their workers got government-subsidiezed insurance coverage in the exchanges. The first 30 workers wold be excluded from the assessment.

Q: I’m over 65. How would the legislation affect seniors/

  The Medcare prescription-drug benefit would be improved substantially. This year, seniors who enter the Part D coverage gap, known as the “doughnut hole,“ would get $250 to help pay for their medication.

  Beyond that, drug company dicounts on brnd-name drugs and federal subsidies and discounts  for all drugs would gradually reduce the gap, eliminating it by 2020. That means that seniors, who now pay 100 percent of their drug costs once they hit the doughnut hole, would pay 25 percent.

  And, as under current law, once seniors spend a certain amount on medcations, they would get “catastrophic“ coverage and pay only 5 percent of the cst of their medications.

  Meawhile, government payments to Medicare Advantge, the private-plan part of Mediare, wuld be cut sharply starting in 2011. If you’re one of the 10 million enrolees, you could lose extra benefits that many of the plans offer, such  as free eyglasses, hearing aid and gym memberships. To cushion the blow to beneficiaries, the cuts to health plans in high-cost areas of the country such as New York City and south Florida – where seniors have  enjoyed the richest benefits – would be phased in over as many as seven years.

  Beginning this year, the bill would make lal Medicre preventve services, such as screnings for colon, prostate and breast cancer free to beneficiaries.

  Q: How much is all his going to cost? Will it increase my taxes?

  Th bill is estimated to cost $940 billion over a decade. But because of higher taxee and fees and billions of dollars in Medicare payment cuts to providers, the bill wold narrow the federal budget deficit by $138 billion over 10 years, according to the Congressional Budget Office.

  If you have a high income, you face higher taxes. Starting in 2013, individuals would pay a higher Medicare payroll tax of 2.35 percent on earnings of more than $200,000 a year and couples earning more than $250,000, up from the current 1.45 percent. In addition, you’d face an additional 3.8 percent tax on unearned income such as divident and interest over the threshold.

  Starting in 2018, the bill would also impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year for indiviuals and $27,500 for families.

  The bill also would raise the threshold for deducting unreimbursed medical expenses from 7.5 percent of adjusted gross income to 1 percent.

  The bill also would limit the amount of money yo can put in a flexible spending account to pay medcal expenses to $2,500 starting in 2013. Those using indoor tanning salons will pay a 10 percent tax starting this year.

  Q: What will happen to my premiums?

  That’s hard to predict. and the subject of much debate. People who are sick might face lower premiums than otherwise because insuers would be permitted to charge sick people more; healthier people might pay more. Older people will be charged more than younger people, but the gap couldn’t be as lare.

  The bigger question is what happens to rising medical costs, which drive up premiums. Even proponents acknowledge that efforts in the legislation to control health costs, such as a new board to oversee Medicare spending, wouldn’t have much of an effect for several years.

  In November a CBO report on the legislation – which at that point had a tougher Cadillc tax – would affect premiums said big employerswould see premiums stay flat or drop 3 percent compred to today’s rates. It also noted that emplouyees with small-group coverage might see their premiums stay the same. And Americans who received subsidies would see ther premiums decline by up to 22 percent, according to the CBO.

Primary care crisis is here

By Andrew Villegard, LHN Staff Writer, March 29

For decades, jut about everybody who has looked at the supply of primary care doctors in this country has warned of trouble ahead.

  But despite the urgenceof report after report, including another recent- one from the Josiah Macy Jr. Foundation, the primary care physician workforce of the future looks like it will lag behind the need.

  Medical students generally prefer the bigger paychecks and greater prestige of specialties.

  “There’s been 50 years of turning away from primary care in this country,” said George Thibault, president of the Macy Foundation, in a recent conference call announcing the foundation’s findings, which say, among other things, that medcal schools should create primary care tracks for educating students.

  Some evergreen recommendations call for paying primary care doctorsmore and recently, using primary care offices as medical homes to coordinate all of a patient’s care to manage costs and care.

  The doctor shortage is looking more problematic as the nation faces an influx of patients after insurance coverage is extended through the new health overhaul law, said Ann O’Malleywith the Center for Studying Health System Change. “Time will tell“ whether that will make a difference, O’Malley said. “I don’t know how bad things have to get before the support required is given to primary care.“

  The notion that decades of blind eyes turned toward the warnings prompted us to dust off a few highlights from days gone by. Here goes:

- The “Journal of the American Medical Association“ called for more primary care all the way back in 1933 when an editorial recorded “the overgrowth of specialism, now so bitterly complained of, and the fadeout of the general practice.“

- Fast forward to a 1981 “ JAMA “ paper in which one researcher said, “There is a shortage of general practitioners, family doctors, generalists, call them what you may. This is true in our urban as well our rural areas. It is true throughout this great country of ours. I do not mean that there is a shortage of physicians, but there is a need for physicians who are interested in the total and continuing care of the patient.“

- Two decades later and the calls to action included a proposal from Republican Sen. Dan Quayle ‘in 1985. for states to meet quotas for primary care residencies.

-  In 1992, just before President Clinton’s attempt at health overhaul, the Council on Graduate Medical Education released a 1994 report that found , “The nation has too few generalists and too many specialists.“ The group again called for more primary care doctos in a 1994 report that called on officials to steer at least 50 percent of graduating doctors to primary care.

- In 2008, The Physician’s Foundation released a report that physicians themselves – 78 percent of those surveyed – said they thought there was an existing shortage or primary care doctors.

Closing Medicare drug gap

By Christopher Weaver, KHN Staff Writer, March 29

Produced in collaboration with the Los Angeles Times

  Now that the health overhaul has passed Congress, Democratic lawmakers are hoping to highlight its most immediate benefits. Chief among them: a plan to help millions of elderly and disabled Medicare beneiciaries pay for their medications by gradually eliminating a drug-coverage gap commonly known as the “doughnut hole.“

  “Who among us will not be more secure knowing that our parents will be protected from the Medicare Part D “doughnut hole“ which has made life-saving medications so unaffordable for those that need them most?“ Rep. Lucille Roybal-Allard, D-Cailf., said after the House vote on the legislation.

  But the doughnut hole is a complicated contraption, and filliing it is far from simple. Here’s a close look at how the dughnut hole works and how it would be closed.

What is the doughnut hole? 

  In 2003, Congress passed legislation creating the Medicare drug benefit, which went into effect in 2006. The benefit is offered by private insurers through free-standing drug plans and Medicare Advantage plans, which also offer medical benefits.

  The Part D plans have some leeway in how they design their coverage. But under the typical benefit for 2010, beneficiaries have to pay a deductible of $310 and monthly premiums averaging $38.9.4. After meeting the deductible, beneficiaries are required to pay 25 percent of their drug costs; , their drug plans, which are subsidized by the government, pick up the rest.

  Once total spending by the patients andtheir drug plans exceeds $2,830, the beneficiaries hit the coverage gap, in which they must pay the full cost of their medications. After they spend another $3,610, they’re eligible for what’s called “catastrophic“ drug coverage, under which they pay only 5 percent of their drug coss.

What will the new legislation do to close the gap?

  Beginning this year, any Medicare beneficiary who crosses into the doughnut hole will receive a $250 check to help pay for their drugs.

  Then, starting in January, patients in the coverage gap will get a 50 percent discount on brand-name drugs. The price reduction will be financed by the drug companies as part of a deal with the White House, under which the industry made tens o billions of dollars in price concessions.

  The federal government will play a big role, too, in closing the doughnut hole. Beginning in 2013, the government will begin providing subsidies for brand-name drugs bought by seniors who hit the coverage gap. The government’s share will start off  small, at 2.5 percent, but will increase to 25 percent by 2020. At that point, the combined industry discounts and government subsidies will add up to 75 percent of brand-name drug costs.

  Generic drugs – which cost far less than brand-name drugs – will be dealth with separately. beginning in 2011, government subsidies will cover 7 percent of generic drug costs. Washington will pick up additional portions each year until 2020 when federal dollars will cover  76 percent of generic drug costs.

  At that point, the doughnut hole will effectively be closed.

  Who will be affected?

  The agency that runs Medicare reported this month that 29 million seniors and disabled people are enrolled in Medicare drug plans, or about two-thirds of the total Medicare population. Of these, roughly 3.4 million people entered the doughnut hole in 2007, the most recent year for which estimates are available. An additional number spent enough to enter the doughnut hole but didn’t have to pay their medications out-of-pocket because they have low incomes and receive separate subsidies.

  This is a very vulnerable population,“ said Hilary Dalin of the National Council on Aging, noting that many in the doughnut hole suffer from multiple chronic conditions and take many medications. Once they enter the coverage  gap, they’e really thinking about cost versus care, which is a terrible proposition for anybody,“ she said.

  A study by the Kaiser Family Foundation found that, of those who entered the coverage gap, 15 percent stopped taking their medications altogether. Among diabetics, 10 percent stopped taking their medicines, a decision that can have severe health consequences. (KHN is an editorially independent part of the foundation.)

  “With the cost of prescription drugs continuing to skyrocket, closing the doughnut hole will help millions of older Americans afford their needed medications and avoid more intensive and costly care later in life,“ Barry Rand, the AARP’s top executive, said in a statement.

Why did Congress create the doughnut hole in the first place?

  The  doughnut hole is all about the money. The Republican-controlled Congress in 2003 pointed up $400 billion for the Part D benefit over 10 years – but that wasn’t enough to constuct a benefit that didn’t have a gaping hole.

  “There is no policy justification for the doughnut hole,“ said Gail Wilensky, a former head of the Medicare agency and an advisor to numerous Republican lawmakers. “The politicians wanted to keep the deductible low enough to touch a lot of people.“

  Indeed, even among opponents to the current legislation, filling the doughnut hole remains uncontroversial. “ Nobody ever liked it,“ said Robert Moffit, a policy analyst at the conservative Heritage Foundation. “It was literally a product of the congressional imagination created in order to meet budgetary requirements.“

How much will it cost to fill the doughnut hole?

  An estimate by the Congressional Budget Office says closing the coverage gap will cost the federal government $42.6 billion by 2019.

  But, the federal subsidies what will help close the doughnut hole will be phased in slowly. The full subsidies will not be in effect until 2020, after the period captured in the cost estimates. And the cost of filling the hole would increase in the following years.

Immediate effects of health reform

By Julie Appleby and Kate Steadman, KHN Staff Writers, March 22

  Obama administration officials and wonks call them “early deliveries.“ They’re the benefits of the health legislation that would kick in this election year.

  The provisions, which could just as easily be called the “Democratic Incumbents’ Protection Plan,“ suddenly are everywhere – touted on liberal blogs, on the Rachel Maddow Show, in talking points by Health and Human Services Secretary Kathleen Sebellius.

  They’re designed to counter Republican denunciations that the legislation is a government takeover of the health care system that will drain the federal treasury.

  But the questionfor Democrats is whether promoting the early changes will be more persuasive with voters than the Republican arguments. The answer may determine whether the Democrats retain their majority in the House.

  James Capretta, a top budget official in the George W. Bush administration, thinks the Democrats will be badly  hurt by the vote. He says he assumes the people who would benefit by the changes before November are in the “single-digit millions,“ not enough to have a big impact. “There aren’t enough people in those categories to say, “Yes the increased taxes are worth it.“

  But Chris Jennings, a consultant who was the Clinton administration’s senior health policy adviser, says the legislation includes “many important, immediately available policies that people will care about.“ He adds, “If we can’t market them, then we  will have deserved to fail.“

  Changes that would occur this year include:

  – Dependent children could remain on their parents’ health insurance plans untl age 26.

  – Some senior citizens would get more help paying for drugs in Medicare.

  – People with health problems that left them uninsurable could qualify for coverage through a federal program.

  These are among the more than a dozen features of the new healthcareoverhaul law that would take effect in 2010 under the measure passed Sunday. (Although the Senate bill approved Sunday by the House would becmoe law with President Barack Obama’s signature, Senateactionis needed to pass a separate measure the House approved that would amend that law.) Other first-year items include a ban on lifetime limits on medial coverage, more oversight of premium increases and tax credits for some small businesses.

  The big changes in the law – the ones that could affect tens of millions of people – don’t kick in until at least 2014. Those include insurance marketplaces called “exchanges,“ rules requiring insurers to accept all applicants, even those with health problems, and an expansion of state Medicaid programs.

  Caprettasaysthatthe legislation has big downsides for Democrats, including sharp cuts to Medicare Advantage, a private plan options for Medicare beneficiaries. The benefits in Medcare Advantage plans likely will be pared because the bill includes payment reductions intended to make the program similar to traditional Medicare. Medicare Advantage, Capretta says, “is going to get hammered, and it’s hard to see how they avoid taking the blame.“

  “The public is unhappy,,“ says Stuart Rothenberg, editor of The Rothenberg Political Report, a nonpartisan newsletter. “The idea that suddenly after the bill passes that Democratic leaders could start talking about it and people would be happy strikes m as Pollyanaish at best.“

  Americans have been sharply divided over the legislation – Democrats hope attitudes toward it will swing in their favor as people focus on the details. While some of the more popular elements of the legislation go into effect quickly, some less popular items – such as the requirement that nearly all Americans carry insurance or face a fine – won’t occur until well after the election.

  Meanwhile, Republicans are keeping up a steady drumbeat of their concerns, saying the legislation will harm more Americans than it helps by raising government spending in a time of record deficits. Many in the GOP want to build support for repealing the law.

  Public opinion of Congress – aimed at both parties – and the legislative process is low. The deal-making to garner votes during the year-long health care debaate, such as special payments to specifc states, coupled withlast-minute maneuvering after Democrats lost their filibuster-proof majority in the Senate, soured voters.

  Some of the items that go into effect in the first year include:

  New help for some uninsured: People with a medical condition that has left them  uninsurablemay be able to enroll in a new federally subsidized insurance program that is to be established within 90 days. The legislation appropriates $5 billion for this, although that may not be enough to cover all who apply; it’s not clear how muchconsumerswould pay as their share of the cost. About 200,000 people are covered in similar state programs currently, at an estimated cost of $1 billion a year, says Karen Pollitz, a research professor at Georgetown University.

  Discounts and free care in Medicare: The approximately 4 million Medicare beneficiaries who hit the so-called “doughnut hole“ in the program’s rdugplan will get a $250 million rebate this year. Next year, the cost of drugs in the coverage gap will go down by 50 percent. Preventive care, such as some types of cancer screening, will be free of copayments or deductibles starting this year.

  Coverage of kids: Parents will be allowed to keep their children in their health insurance plan until age 26, unless the child is eligible for coverage through a job. Insurance plans cannot exclude pre-existing medical conditions from coverage for childen under age 19, although insurers could still reject those children outright for coverage in the individual market unit 2014.

  Tax credits for businesses: Businesses with fewer than 25 employees and average wages of less tha $50,000 could qualify for a tax credit of up to 35 percent of the cost of their premiums.

  Changes to insurance: All existing insurance plans will be barred from imposing lifetime caps on coverage. Restrictions will also be placed on annual limits on coverage. Insurers can no longer cancel insurance retroactively for things other than outright fraud.

  Government oversight: Insurers must report how much they spend on medical care versus administrative costs, a step that later will be followed by tighter government review of premium increases.

 

  Second, many of the interesting pilot studies that are part of the current legislation should be a part of any future legislation. As has become all too clear, we don’t really know how to make the transformation from the delivery system we have now, which rewards institutions and clinicians for doing more and more complex procedures, to one where the incentives reward those who produce high quality, low-cost care. Unlike current pilots anddemonstrations, those that produce desirable outcomes – lower costs at same or improved quality or improved quality at same or lower costs, should be allowed to become part of Medicare without additional authorization fromthe Congress.

  Third, unlike current legislation, medical liability reform needs to be a part of any serious effort that encourages the more conservative practice of medicare and should be regarded as an important enabler of cost containment. An evidence-based strategy of liability reform might help cross the chasm between Republicans and Democrats on this issue. For example, physicians and institutions that agree to follow a set of patient safety measures developed by the Institute of Medicine and standards developed by medical societies or special groups should be provided immunity from liability unless there have been provable charges of criminal negligence.

  Finally, physician payment reform needs to be considered a direct part of health care reform rather than continuing the current myth that somehow it can be considered separately.Yes, it will take real money to fix. The Congressional Budget Office estimates the cost to be approximately $220 billion over 10 years, far more than the current estimated savings from health care reform legislation. Further, it is is impossible to imagine reforming the delivery system without reforming how physicians are reimbursed. Pilot programs that test new reimbursement systems need to start as soon as possible, and Congress should only provide short-term relief from Medicare’s sustainable growth rate pressure until a new system is ready to be legislated. Otherwise, change will never occur.

  These are not small changes. They will clearly require additional funding compared to the status quo. But they represent a far more limited and circumscribed set of changes than what is currently being contemplated, and they contain measures to appeal to both Republicans and Democrats. It seems to be political folly at best to ignore consistent and strong messages from the public about what they do and do not want, or to assume the polls reflect that Americans don”t understand what is being proposed. November will “tell the tale“ if such incremental pieces of reform would have been the better road.

 

 

Long-term care to be scrutinized

  Kaiser HealthNews reports that “The New York Times“ has revealed that an investigation into patient deaths and substandard treatment at long-term care facilities has been opened by the Senate Finance Committee. Some  of these chains treat many thousands of patients every year but  seldom have a full-time physician on staff and rely heavily on temporary nurses (Berenson, 3/8) .

Medicare drug plans raise prices

By Julie Appleby, KHN Staff Writer,

From Kaiser Health News, March 12 

  The 10 insurers with the most Medicare drug plan customers raised premiums an average of 10 percent this year, an analysis released Friday (March 12) by consulting firm Avalere Health shows.

  While the premium increases are far lower than those for many health care policies sold to individuals and small businesses outside Medicare, the rate rise is still many times higher than inflation which is 2.6 percent for the last year.

  Premiums in the top 10 drug plans rose from $34.14 a month in 2009 to $34.30 this year, Avalere  found. Across all plans, rates rose an average of six percent since last year, to $37.25.

  In addition to premiums, many insurers have also raised the amounts that Medicare beneficiaries pay at the pharmacy counter. The average co-payment for a “preferred“ brand name drug rose from $34.83 in 2009 to $36.25 this year, while the average co-payment for other brand name drugs went from $74.31 to $78.95, the Avalerereport found. The open enrollment period for the drug plan this year has ended.

  The Obama Administration has sharply criticized plans by non-Medicare insurers to raise health insurance premiums in the double digits this year, including some individual policies sold in California by Anthem Blue Cross set to go up by 39 percent.

  But the stand-alone Medicare plans are “a different animal“ in contrast to health plans sold to individuals and small businesses, says Walton Francis, author of Consumers’ Checkbook guides to the federal employee health benefits and a book on Medicare. That’s because they cover only one thing, drugs. And, unlike policies sold to individuals in most states, the Medicare drug insurers can’t reject applicants or charge some people more than others.

  Matt Burns, a spokesman for UnitedHealthcare, the largest insurer nationally with 4.5 million enrollees in its drug-only Medicare plans, said increasing drug costs and “the number and types of drugs purchased by members“ helped fuel the increase.

  Timothy Hill, a deputy director in the Medicare program, says about half the average drug premium increase this year results from a change in the way Medicare calculates risk adjustment payments to insurers.

  The Medicare drug program has elements similar to what is being proposed nationally for individuals and small businesses in congressional healthcareoverhaul legislation, including a large marketplace of private insurers overseen by government regulators. Avalere’s CEO, Dan Mendelson, says the exchanges can work to slow premium growth. The data on the Medicare drug plans show, though, “that insurers will ultimately pass along the inconsistencies and failures of our healthsystem“ and premium growth won’t slow “until we solve some of the underlying problems.“

  Since the first full year of the drug program in 2006, premiums across all plans are up an average of 43 percent.

  Medicare’s drug program differs in some key ways from the insurance and regulatory models being proposed in Congress. For one thing, it is voluntary, whereas the overhaul legislation would require most Americans to carry health insurance coverage, which could help temper premium increases if many young and healthy people join the insurance pool.

  Another difference: Medicare officials say they don’t have the power to outright reject premium increases in Medicare Part D, as it is called.

  Under legislation passed by the Senate, the Secretary of Health and Human Services would be able to bar insurers from selling policies on the exchanges if their premiums were deemed excessive. The Obama Administration has also called for a federal rate review authority, which would work with states to oversee premium increases.