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Penn. looks at the hospital superuser challenge

 

In a report whose  substance would probably be  roughly replicated in other states, a Pennsylvania state panel reports that 3 percent of hospitalized patients in Pennsylvania consume a huge proportion of healthcare resources and at a huge total cost: about $1.25 billion a year.

These “superusers” — patients with five or more hospital admissions per year— accounted for 10 percent of all hospital payments in 2016, according to a new report (PDF) by the Pennsylvania Health Care Cost Containment Council (PHC4). They account for 12 percent of hospital admissions and 15 percent of hospital days.

Eighty percent of those payments were for Medicare and/or Medicaid patients.

The three biggest reasons for superusers’ frequent hospital stays were sepsis, heart failure and mental-health disorders. The last, of course, tend to be linked with other ailments. Consider the higher than average incidence of alcoholism, drug addiction and smoking by mentally ill people “medicating” themselves. These pathologies, of course cause many other ailments, especially various cancers and heart and circulatory ailments. And then there are the traffic and other accidents associated with addiction.

Still, there was a ray of good news: The number of superusers dropped  to 21,968 in 2016  from 24,045 in 2012.

Robert Shipp III, vice president for population health strategies for the Hospital and Health System Association of Pennsylvania, told The Philadelphia Inquirer that Keystone State hospitals  have moved to address the superuser problem by, for example advising such patients to visit their primary-care provider, not a hospital, for follow-up care. And increasingly nurses and pharmacists are checking up on patients by phone and visiting them at home.

FierceHealthcare commented:

“Organizations across the country have tried to tackle the problem of high-cost superusers. When the University of Illinois Hospital noticed that its most frequent superusers were chronically homeless patients, it launched an initiative to provide them with furnished apartments and support services. The organization’s $250,000 investment in the program has resulted in a 35% drop in monthly hospital visits and a 40% decrease in the annual cost of their care.”

To read the Pennsylvania panel’s report, please hit this link.

To read The Philadelphia Inquirer’s story, please hit this link.

To read FierceHealthcare’s comment, please hit this link.


Senate panel clears bill to help chronically ill Medicare patients

The Senate Finance Committee has unanimously approved a bill aimed at improving care for Medicare beneficiaries with chronic conditions.

Med Page Today reports that the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 {whew!} would increase access to telehealth for Medicare beneficiaries with chronic illnesses — including those in Medicare Advantage plans — as well as provide more incentives for enrollees to receive care through accountable care organizations (ACOs). It also would extend the Independence at Home demonstration program to keep people in their homes rather than hospitals, allow reimbursement for more non-health and social services, and extend permanently MA Special Needs plans that target chronically ill beneficiaries.”

“One thing we hear a lot from ACOs is they have trouble keeping beneficiaries in-house rather than going to a provider outside the ACO, and that makes it harder to coordinate their care,” a committee aide told the publication. “This bill says that if you go to a primary care doctor in the ACO, we’ll reduce or eliminate your cost-sharing for that primary care service. That will make beneficiaries stick to the ACO, and bring down their costs.”

Sen. Ron Wyden (D.-Ore.), the committee’s ranking member, told MedPage that the measure is “transformative.”

“This is a formal recognition that this package of services — the focus on care at home, the focus on new technology, the expanded role for primary care and prevention, which inevitably leads to more non-physician providers — is the beginning of our push to update the Medicare guarantee. That’s why it’s transformative.”

To read more, please hit this link.


Feds: UnitedHealth overcharged Medicare by $1 billion

By FRED SCHULTE

For Kaiser Health News

The Justice Department on Tuesday accused giant insurer UnitedHealth Group of overcharging the federal government by more than $1 billion through its Medicare Advantage plans.

In a 79-page lawsuit filed in Los Angeles, the Justice Department alleged that the insurer made patients appear sicker than they were in order to collect higher Medicare payments than it deserved. The government said it had “conservatively estimated” that the company “knowingly and improperly avoided repaying Medicare” for more than a billion dollars over the course of the decade-long scheme.

“To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said acting U.S. Attorney Sandra R. Brown for the Central District of California, in a statement announcing the suit. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need — not to line the pockets of participants willing to abuse the system.”

Tuesday’s filing is the second time that the Justice Department has intervened to support a whistleblower suing UnitedHealth under the federal False Claims Act. Earlier this month, the government joined a similar case brought by California whistleblower James Swoben in 2009. Swoben, a medical data consultant, also alleges that UnitedHealth overbilled Medicare.

The case joined on Tuesday was first filed in 2011 by Benjamin Poehling, a former finance director for the UnitedHealth division that oversees Medicare Advantage Plans. Under the False Claims Act, private parties can sue on behalf of the federal government and receive a share of any money recovered.

UnitedHealth is the nation’s biggest Medicare Advantage operator, covering about 3.6 million patients in 2016, when Medicare paid the company $56 billion, according to the complaint.

Medicare Advantage plans are private insurance plans offered as an alternative to traditional fee-for-service option.

Medicare pays the health plans using a complex formula called a risk score, which is supposed to pay higher rates for sicker patients than for people in good health. But waste and overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity concluded that improper payments linked to jacked-up risk scores have cost taxpayers tens of billions of dollars.

Tuesday’s court filing argues that UnitedHealth repeatedly ignored findings from its own auditors that risk scores were often inflated — and warnings by officials from the Centers for Medicare & Medicaid Services (CMS) — that it was responsible for ensuring the billings it submitted were accurate.

UnitedHealth denied wrongdoing and said it would contest the case.

“We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS about our approach under its unclear policies,” UnitedHealth spokesman Matt Burns said in a statement.

Burns went on to say that the Justice Department “fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously.”

A spokesman for CMS, which has recently faced congressional criticism for lax oversight of the program, declined comment.

Central to the government’s case is UnitedHealth’s aggressive effort, starting in 2005, to review millions of patient records to look for missed revenue. These reviews often uncovered payment errors, sometimes too much and sometimes too little. The Justice Department contends that UnitedHealth typically notified Medicare only when it was owed money.

UnitedHealth “turned a blind eye to the negative results of those reviews showing hundreds of thousands of unsupported diagnoses that it had previously submitted to Medicare, according to the suit.

Justice lawyers also argue that UnitedHealth executives knew as far back as 2007 that they could not produce medical records to validate about 1 in 3 medical conditions Medicare paid UnitedHealth’s California plans to cover. In 2009, federal auditors found about half the diagnoses were invalid at one of its plans.

The lawsuit cites more than a dozen examples of undocumented medical conditions, from chronic hepatitis to spinal cord injuries. At one medical group, auditors reviewed records of 126 patients diagnosed with spinal injuries. Only two were verified, according to the complaint.

The Justice Department contends that invalid diagnoses can cause huge losses to Medicare. For instance, UnitedHealth allegedly failed to notify the government of at least 100,000 diagnoses it knew were unsupported based on reviews in 2011 and 2012. Those cases alone generated $190 million in overpayments, according to the suit.

While Medicare Advantage has grown in popularity and now treats nearly 1 in 3 elderly and disabled Medicare patients, its inner workings have remained largely opaque.

CMS officials for years have refused to make public financial audits of Medicare Advantage insurers, even as they have released similar reviews of payments made to doctors, hospitals and other medical suppliers participating in traditional Medicare.

But Medicare Advantage audits obtained by the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit show that payment errors — typically overpayments — are common.

All but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid — often by thousands of dollars per patient. Overall, just 60 percent of the medical conditions health plans were paid to cover could be verified. The 2007 audits are the only ones that have been made public.

CMS officials are conducting more of these audits, called Risk Adjustment Data Validation, or RADV. But results are years overdue.

 


Medicare didn’t follow up on many hospital infection cases

Pathogenic_Infection

By CHRISTINA JEWETT

For Kaiser Health News

 

Almost 100 hospitals reported suspicious data on dangerous infections to Medicare officials, but the agency did not follow up or examine any of the cases in depth, according to a report by the Health and Human Services inspector general’s office.

Most hospitals report how many infections strike patients during treatment, meaning the infections are likely contracted inside the facility. Each year, Medicare is supposed to review up to 200 cases in which hospitals report suspicious infection-tracking results.

The IG said Medicare should have done an in-depth review of 96 hospitals that submitted “aberrant data patterns” in 2013 and 2014. Such patterns could include a rapid change in results, improbably low infection rates or assertions that infections nearly always struck before patients arrived at the hospital.

The IG’s study  was designed to address concerns over whether hospitals are “gaming” a system in which it falls to the hospitals to report patient-infection rates and, in turn, the facilities can see a bonus or a penalty worth millions of dollars. The bonuses and penalties are part of Medicare’s Inpatient Quality Reporting program, which is meant to reward hospitals for low infection rates and give consumers access to the information at the agency’s Hospital Compare website.

The report zeroes in on a persistent concern about deadly infections that patients develop as a result of being in the hospital. A recent British Medical Journal report identified medical errors as the third-leading cause of death in  U.S. hospitals. infections particularly threaten senior citizens with weakened immune systems.

Rigorous review of hospital-reported data is important to protect patients, said Lisa McGiffert, director of the Consumers Union’s Safe Patient Project.

“There’s a certain amount of blind faith that the hospitals are going to tell the truth,” McGiffert said. “It’s a bit much to expect that if they have a bad record they’re going to ’fess up to it.”

Yet there are no uniform standards for reviewing the data that hospitals report, said Dr. Peter Pronovost, senior vice president for patient safety and quality at Johns Hopkins Medicine.

“There are greater requirements for what a company says about a washing machine’s performance than there is for a hospital on quality of care, and this needs to change,” Pronovost said. “We require auditing of financial data, but we don’t require auditing of [health care] quality data, and what that implies is that dollars are more important than deaths.”

In 2015, Medicare and the Centers for Disease Control and Prevention issued a joint statement cautioning against efforts to manipulate the infection data. The report said CDC officials heard “anecdotal” reports of hospitals declining to test apparently infected patients — so there would be no infection to report. They also warned against overtesting, which helps hospitals assert that patients came into the hospital with a preexisting infection, thus avoiding a penalty.

In double-checking hospital-reported data from 2013 and 2014, Medicare reviewed the results from 400 randomly selected hospitals, about 10 percent of the nation’s more than 4,000 hospitals. Officials also examined the data from 49 “targeted” hospitals that had previously underreported infections or had a low score on a prior year’s review.

All told, only six hospitals failed the review, which included a look at patients’ medical records and tissue sample analyses. Those hospitals were subject to a 0.6 percent reduction in their Medicare payments. Medicare did not specify which six hospitals failed the data review, but it did identify dozens of hospitals that received a pay reduction based on their reports on the quality of care.

The new IG report recommended that Medicare “make better use of analytics to ensure the integrity of hospital-reported quality data.” A response letter from Centers for Medicare & Medicaid Services Administrator Seema Verma says Medicare concurs with the finding and will “continue to evaluate the use of better analytics … as feasible, based on [Medicare’s] operational capabilities.”

Questions about truth in reporting hospital infections have percolated for years, as reports have trickled out from states that double-check data.

In Colorado, one-third of the central-line infections that state reviewers found in 2012 were not reported to the state by hospitals, as required. Central lines are inserted into a patient’s vein to deliver nutrients, fluids or medicine. Two years later, though, reviewers found that only 2 percent of central-line infections were not reported.

In Connecticut, a 2010 analysis of three months of cases found that hospitals reported about half — 23 out of 48 — of the central-line infections that made patients sick. Reviewers took a second look in 2012 and found improved reporting — about a quarter of the cases were unreported, according to the state public health department.

New York state officials have a rigorous data-checking system that they described in a report on 2015 infection rates. In 2014, they targeted hospitals that were reporting low rates of infections and urged self-audits that found underreporting rates of nearly 11 percent.

Not all states double-check the data, though, which Pronovost said underscores the problem with data tracking the quality of health care. He said common oversight standards, like the accounting standards that apply to publicly traded corporations, would make sense in health care, given that patients make life-or-death decisions based on quality ratings assigned to hospitals.

“You’d think, given the stakes, you’d have more confidence that the data is reliable,” he said.


Looking at the link of payer type and low-value care

Researchers from The Dartmouth Institute for Health Policy and Clinical Practice examined the connection between payer type and low-value care to determine what effect that insurance design (commercial insurance vs. Medicare) may have on medical overuse and waste.

Among their findings:

  • “The tendency to deliver or avoid low-value care appears largely independent of payer type (Medicare or commercial) and patient population attributes. (Researchers note that the finding suggests that either the difference in anticipated reimbursement is unimportant to providers or that they are ‘unwilling or unable to discriminate by payer type at the point of care.’)
  • “Regions with a high specialist to primary care ratio have more overuse.
  • “Some Hospital Referral Regions may deliver more overuse either as a direct result of higher physician group competition or as an indirect result (more competition results in more fragmentation and redundancy).
  • “The use of the seven low-value services remained relatively consistent over time. However, Vitamin D screening increased substantially during the study period (perhaps as a result of increased public awareness and the promotion of Vitamin D deficiency as a medical concern). In contrast, the use of cervical cancer screening in the over 65 population decreased substantially.
  • “The rate of prescription of opioids for migraine patients is similar in both commercially insured and Medicare populations, but is much more commonly provided than the other Choosing Wisely services examined in the study. (The study’s authors note that study data may not reflect the slight decline in prescription opioid use in response to growing concerns over opioid abuse.)
  • “Finally, the study found that the use of low-value services in both payer types was greater among {groups with} higher proportions of black patients. The researchers note that their finding suggests a concerning ‘potential for double jeopardy in health services receipt among black Americans.’”

To read more, please hit this link.

 


Whither the hospital merger wave?

Herewith a review of the continuing wave of hospital mergers, which, of course, raises serious concerns about competition, or the lack thereof, and  thus huge systems’ pricing power.

Consider that just last week,  Tenet Healthcare announced the sale of three acute- care hospitals to HCA Holdings and Community Health Systems completed the sale of nine hospitals.

And as Healthcare Dive notes: “While some industry experts have posited actionable items to enhance competition, a flurry of regulatory actions and regional influences could increase consolidation even more, leading to even less competition.”

“Rising expenses and declining admissions alongside flattening reimbursements – as well as alternative care settings competing for the one-and-done low acuity patient visits – make for an unfortunate financial reality for some hospitals. Some have found it best to put up a ‘For Sale’ sign.”

“Healthcare and hospital prices will ascend to the level a market can take on. If a provider has a large monopoly in a market/region, prices can actually rise to offset rising expenses and declining patient volume since they have greater power at the negotiating table over insurers.”

Meanwhile, the publication said,  Martin Gaynor, Farzad Mostashari and Paul B. Ginsburg  recently advanced, in a Brookings Institution report, some suggestions on how to encourage competition in the industry, including, in Healthcare Dive’s shorthand:

  • “Increasing scrutiny on mergers.
  • “Stop paying more for the same outpatient services.
  • “Encouraging provider competition.
  • “Improving transparency.
  • “Ending anti-competitive practices, such as anti-tiering and anti-steering.
  • “Allowing lower-risk Medicare ACO contract options for independent provider groups.”

To read the Healthcare Dive report, please hit this link.

To read the Brookings report, please hit this link.

 


Deconstructing the House GOP’s health-insurance bill

 

PHIL GALEWITZ

For Kaiser Health News

The AARP called the health-insurance bill that House Republicans narrowly approved May 4 “deeply flawed” because it would weaken Medicare and lead to higher insurance premiums for older Americans.

The American Medical Association said it would undo health insurance coverage gains and hurt public health efforts to fight disease. The American Hospital Association said the bill would destroy Medicaid, the state-federal health insurance program for the poor that expanded mightily under the Affordable Care Act and buoyed hospitals’ bottom lines.

Normally, that would spell failure.

But in today’s Washington, despite vocal opposition from nearly every major constituency affected by the bill, the vote produced the opposite result. The chorus of nays was not enough to stop the Republican-controlled House from approving the American Health Care Act, which repeals many critical parts of Affordable Care Act — the 2010 law known as Obamacare that has dropped uninsured rates in the United States to historic lows but, despite its lofty name, did little to rein in rising health costs. The AHCA will now move to the Senate, where GOP senators are expected to demand many changes.

Republicans have promised to repeal Obamacare since the day it was passed with only Democrats voting for it and have been campaigning on that promise ever since. While the House voted to repeal the act more than 60 times under the Obama administration,  the May 4 vote was the first one that really counted because the GOP controls Congress and the White House.

Peter Kongstvedt, a Virginia health-industry consultant, said some House Republicans are likely betting the Senate blocks their legislation from going forward. “Nobody wins with this vote — that’s the damnedest part,” he said. “It’s a shallow political statement.”

The vote was about healthcare, but it was a display of political theater, too. Representatives sent a message not to hospitals, doctors and patients but to President Trump and his devoted followers who propelled the GOP to power.

“The president needed a win and so does House Speaker Paul Ryan,” said Jason Fichtner, a healthcare expert at the conservative Mercatus Center at George Mason University, in Fairfax, Va. “With this vote, they can go back to their constituents and say they did something about Obamacare.”

That is, the 217 GOP House members who voted for the bill. Twenty voted no, joining 193 Democrats.

Trump’s team scored him a touchdown, but their run to the goal line wasn’t politically pretty:

  • The bill passed without an updated analysis of costs and benefits from the nonpartisan Congressional Budget Office, whose review in March came before the GOP added sweeteners to win over its conservatives and moderates.
  • Democrats passed Obamacare after a year of debate. The GOP spent only two months hammering out its replacement plan.
  • Business groups — such as the drug and hospital industries — played no part in shaping the AHCA. The Obama administration got both groups on board early on.

The GOP’s focus was not so much on what can lower prices and increase health coverage but how to persuade the right-wing Freedom Caucus to back the legislation.

In the end, passage mattered less about how the bill played in public polls — poorly — or among key interest groups — nearly all opposed. “Coming to agreement and avoiding the embarrassment of not coming to agreement was more important than what was in the final bill,” said Jim Morone, a political scientist at Brown University in Rhode Island. “Republicans have become a deeply ideological party … and they don’t care what interest groups think; they are going to press ahead.”

Part of the unlikely victory is that the bill makes the biggest change to Medicaid since the program was established in 1965 and there hasn’t been as much debate about that as one might expect. The AHCA could lead to huge cuts in federal funding of Medicaid, which now covers more than 75 million Americans.

Alan Levine, a hospital executive who was the top health official under former Republican governors Jeb Bush in Florida and Bobby Jindal in Louisiana, said Republicans who ran on repealing Obamacare felt that they had no choice but to vote for the bill, despite its flaws. “I don’t think Republicans can face voters in 2018 and have a credible argument to keep them in control of Congress, if they did not do their No. 1 campaign priority to repeal Obamacare,” said Levine, CEO of Mountain States Health Alliance, a hospital system based in Johnson City, Tenn.

Besides, he said, even if the GOP bill becomes law, it’s set up so that the changes won’t affect many people before the 2018 midterm elections. “People won’t feel this — good or bad — until well after the election.”


The future of bundled payments

 

Miranda Franco, writing in FierceHealthcare,  discusses the  future of bundled payments. She’s  a senior policy adviser at the law firm of Holland & Knight in the District of Columbia and a member of the firm’s national Healthcare & Life Sciences Team.

Among her observations:

“HHS Secretary Tom Price, M.D., {has} repeatedly expressed concern about CMS’s mandatory bundled-payment programs. Price is an orthopedic surgeon and former Republican congressman who served as the chairman of the House Budget Committee and as a member of the health subcommittee of the House Ways and Means Committee. In that capacity, Price opposed mandatory value-based payment models. {He has often indicated he opposes any cuts in the incomes of U.S. physicians, who are by far the highest paid in the world.}

“{However} bundled payment models are likely here to stay. Given the importance of cost containment in healthcare and the desire to expand APMs and Advanced APMs under MACRA, bundled payment models will likely continue to expand in some form. The continued development of these models is largely due to the promise bundled payments show in reducing costs, while maintaining high-quality care.

“In addition to Medicare, the ACA also pushed insurers, physicians, hospitals and employers to launch their own bundled payment reforms, and they too are expected to continue. We will likely see more of these models developed in the coming months and years, the only question is for what conditions and whether they be mandatory or voluntary.’’

To read her whole essay, please hit this link.

 


CMS seeks to adjust readmission penalties to account for duel-eligibles

revolvingdoor

The Centers for Medicare & Medicaid Services wants to adjust penalties in its Hospital Readmissions Reduction Program according to a hospital’s proportion of dual-eligible (Medicare and Medicaid) patients — a move long supported by hospital-industry stakeholders.

The proposed rule would take effect in fiscal 2019. In it, the CMS laid out several approaches  for determining   hospitals’ proportion of dually eligible patients and other key metrics.The change stems from the 21st Century Cures Act,  enacted last December. The law required Medicare to consider patient background when calculating payment reductions to hospitals under the Hospital Readmission Reduction Program, and to adjust those penalties based on the proportion of patients  dually eligible for Medicare and Medicaid.

The  Medicare Payment Advisory Commission has reported that while these dual eligibles constituted 18 percent of beneficiaries they accounted for nearly a third of total Medicare fee-for-service spending in 2012.

To read more, please hit this link.

 


Looking for middle ground on the ACA debate

By EMILY LAZAR

For Kaiser Health News

Joel Hay, a professor at the University of Southern California, describes his political views as “conservative, free market.” But in a counterintuitive twist, his proposal to fix the Affordable Care Act would expand the largest source of public health coverage in the country: Medicaid.

Hay, who specializes in health policy and economics, envisions an Obamacare replacement plan that would scrap health insurance exchanges such as Covered California, which sell subsidized private market plans.

Instead, he would allow people under the age of 65 to buy into Medicaid, called Medi-Cal in California. Their premiums would be based on family income and a surcharge would be assessed on those who are uninsured at the time they apply. That would be intended as an incentive to keep them from buying insurance only when they’re sick. People could acquire coverage regardless of preexisting conditions.\

Under Obamacare, 31 states and the District of Columbia expanded Medicaid, the federal-state health care program for people with low incomes. In doing so, they added more than 11 million people to the rolls, including about 3.7 million in California.

Hay believes that the Medicaid expansion was the most successful part of the ACA and contends that the health insurance exchanges have struggled to provide affordable plans with adequate networks in many states.

He said expanding Medicaid further could achieve two important goals: slowing the growing costs of health care, which he said is better achieved by Medicaid than private market plans, and giving all Americans access to at least basic health coverage.

Scrapping the exchanges may not be an easy sell in the Golden State, where Covered California has been lauded as a national model.

Laurel Lucia, director of the health care program at the University of California at Berkeley Center for Labor Research and Education, agrees with Hay that the Medicaid expansion has been a success, but she wonders whether middle class consumers will enroll in Medicaid as readily as private market plans.

California Healthline recently interviewed Hay about his proposal, and Lucia for a contrasting point of view. Their comments, below, have been edited for clarity and length.


 

Joel Hay proposes scrapping the Obamacare exchanges and building on the expansion of Medicaid instead. (Courtesy of Joel Hay)

Q: Can you provide an overview of your Obamacare replacement plan?

It would build on the successful part of the Affordable Care Act, namely the Medicaid expansion that is responsible for the majority of the increased coverage.

This is how it would work: Below some family income threshold that would be yet to be determined, the cost of getting Medicaid would be zero. Above that, there would be premiums based on family income up to some maximum threshold, where the cost would be something like 10 percent of family income.

People would always have an option of opting out into a private plan if one is available to them. But this is a backup for anybody that doesn’t have other options.

This plan focuses on the two biggest problems in American health care. No. 1: Not everyone has health insurance. No. 2: We have the highest health care costs in the world.

Medicaid is a no-frills health plan available in all states. It’s not perfect, but it works. There are certainly access problems, but it seems to do a much better job, even in some of these rural areas where we’re seeing problems with the health insurance exchanges.

Q: In some states, such as California, the exchanges seem to be working reasonably well. Why lump all exchanges in one basket?

There’s a philosophical issue here. Is competition across health plans the best way to get affordable, basic care to everyone?

Among the majority of people that are reasonably well-educated, middle class or better, have good jobs and in fact maybe get their insurance through their jobs, the competition between insurance plans works reasonably well. But when you go further down the income scale, that’s where the competition doesn’t seem to work.

The Obamacare experience thus far backs that up. A lot of people just don’t seem to be able to get a good plan either because the premiums are skyrocketing or because the narrowing of the coverage options they have is prohibitive.

Q: Would your plan require everyone to have health insurance?

There is no mandatory requirement for having health insurance, but there are penalties if you go without coverage. If you don’t sign up during open enrollment, the only option you can get outside of that window would be this Medicaid option. The longer you delayed getting into it, the higher your monthly premiums would be.

Q: Would subsidized health plans still be offered through exchanges?

No. The subsidies to help people buy into Medicaid should be targeted to making sure everybody has access to essential care. The subsidies would be focused on helping low-income people get into a no-frills Medicaid health plan. The subsidies will phase out at some upper income level.

If you’re earning $96,000 for a family of four, hopefully the private market will generate options for you. But if you have no other option, this would be available to your family at a premium of 10 percent of your family income. That’s going to work out to be something like $10,000. That’s a lot of money, but that’s the problem we have.

Q: What do you mean when you say “that’s the problem we have”?

We’ve reached the point in this country where the average cost of health care per capita is over $10,000, whereas the median family income is only $54,000. A median family of 2.6 people is going to see over half of their income going to health care.

We have to consider other options. Medicaid is cheaper. It gets the lowest price for drugs by law and negotiates vigorously to get extremely low prices for medical services, hospitalizations, doctors. If you can get your health care through Medicaid, the cost per every unit of service is lower.

Q: Can the already-stressed Medi-Cal program {California’s Medicaid program} handle millions more enrollees?

It’s better than what has been demonstrated in the private health insurance exchanges under Obamacare. In Medicaid, people may have to travel long distances for specialty care, although some of those things can be overcome with telemedicine and other mechanisms. But we’ve seen pretty much a collapse of the private markets to handle people in rural, hard-to-reach places. Yet Medicaid has provided care to people in every state, including in every one of these remote access areas. It’s not perfect. Rural health care access is never going to be perfect.

Q: You have mentioned block grant funding of Medicaid as part of your proposal. That is what Congressional Republicans have been pushing to reduce federal spending on the program. How can you do that and significantly expand Medicaid at the same time?

I certainly wouldn’t want to hang the whole program on whether or not it’s block-granted. The argument in favor of block granting is if you give a certain amount of money per-capita to the states, it’s up to them to allocate the resources efficiently and effectively to provide the highest quality of care. If you continue with the current funding approach for Medicaid, the states have 50 percent or less of the responsibility for how the dollars are spent and so they’re not going to work as effectively to control costs and quality.

Some people on the far right want to actually destroy Medicaid. They think by block granting Medicaid, they can eventually make it go away. That’s not my goal here. My goal is to provide sufficient federal funds to make this thing work.

Q: Have you discussed this idea with any lawmakers?

I’m just beginning. What I see so far is that everybody is so polarized, that there really isn’t any movement in the middle. I’ve presented this to left-wing academics, and they say what they want to do is push through single payer, even if it’s only in California. They’re just not interested in compromise. I’m sure the same would be true of Tea Party Republicans.

No Death Spiral In Obamacare Exchanges

From Laurel Lucia, University of California at Berkeley Center for Labor Research and Education, health care program director

I agree with the conclusion that the Medicaid expansion has been working really well, especially in California. It’s true that Medicaid costs are lower than the costs to cover an equivalent population with private insurance and that Medicaid costs have been growing more slowly than costs in private insurance.

Q: What do you think of Professor Hay’s idea?

But I disagree with the premise that the individual market components of the ACA are failing. In California, the individual market reforms and subsidies have been working very well, and nationally I’d say they’re mostly working.

In California, we’ve had very high enrollment and we still have significant competition in the individual market. The vast majority of Californians have a choice of at least three insurers through Covered California.

Nationally, millions of people have been newly insured as a result of the individual market subsidies under the ACA. And affordability has improved significantly for low- and middle-income people who don’t have job-based coverage and need to rely on the individual market.

Both nationally and in California, I would not say that the individual market is in a death spiral.

Q: Aren’t there places where premiums have skyrocketed and choices have decreased?

There are places in the United States where much more plan choice is needed. We need to build on the Affordable Care Act reforms in the individual market to ensure greater choices and greater competition, rather than starting from scratch.

Q: It doesn’t seem like the current Congressional leadership wants to build on the ACA.

If there’s bipartisan will to make the ACA work better in terms of the individual market, it’s very possible to do with some policy changes. And in some places, like California, it is already working well.

Q: So why not end subsidized private plans and allow people to buy into Medicaid instead?

It’s an interesting idea to expand upon Medicaid. There is a question of whether middle-class consumers would enroll at the same rate in a Medicaid-type plan as they do in private insurance.

The provider networks in Medicaid are often quite different than those in plans offered through Covered California. Some consumers may be less likely to enroll in Medi-Cal if they have a strong attachment to their provider and that provider is not in the Medi-Cal network or isn’t accepting new Medi-Cal patients.

Q: Would middle-class consumers be less likely to sign up for Medicaid because of a perception or stigma that it’s just for poor people?

I just don’t know how Californians or Americans at higher income levels would perceive a new program like this that builds upon Medicaid.

If you were going to expand Medicaid to a broader population, you would want to make sure that it is adequately funded. One part of Professor Hay’s proposal would fund Medicaid through block grants, which would actually do just the opposite.

Most research has indicated that block-grant funding for Medicaid would result in substantial cuts to federal Medicaid spending over time without resulting in better cost efficiency. The loss of federal funding would force states to make difficult decisions like cutting eligibility, cutting benefits or implementing enrollment caps.

Block-grant funding would not only threaten Medicaid coverage for existing enrollees, but it would also be especially harmful if you were considering expanding the Medicaid population at the same time.

Q: What can be done to moderate health care cost growth, if not through Medicaid?

Cost containment is an important next step in federal health policy and state policy as well. Costs are growing too rapidly, not just in the individual market but also in job-based coverage, but those are trends that started well before the ACA.

They’re not due to the ACA. In fact, since the ACA, private insurance premiums have grown at a slower rate.

But we do need more focus on slowing the rate of cost growth. I think a lot of the barrier there is political. There have been a lot of solutions proposed to reduce costs, for example allowing Medicare to negotiate with drug companies on drug prices. And often Congress doesn’t want to take on the drug industry or the hospital industry or other aspects of the health care industry to reduce costs.

 


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