I'm including this article by Jeffrey Sachs in this blog today because I think his comments about the military budget crowding out spending for domestic projects (like healthcare) is relevant to a blog about health care. It is relevant because there are those who say we "can't afford" to provide health care to all US residents. Interestingly, Sachs does not include health care in his list of domestic priorities that could be better addressed if our military spending was reduced.
Why not? Perhaps he thinks we already spend enough (or too much) on medical care, and could expand coverage to everybody if we had a more efficient system, and that spending more on our existing dysfunctional system would be more money down a rat-hole.
Food for thought?
-SPC
The fatal expense of American imperialism
by Jeffrey Sachs - Columbia University - Director, Center for Sustainable Development - Columbia University
THE SINGLE MOST important issue in allocating national resources is war versus peace, or as macroeconomists put it, “guns versus butter.” The United States is getting this choice profoundly wrong, squandering vast sums and undermining national security. In economic and geopolitical terms, America suffers from what Yale historian Paul Kennedy calls “imperial overreach.” If our next president remains trapped in expensive Middle East wars, the budgetary costs alone could derail any hopes for solving our vast domestic problems.
It may seem tendentious to call America an empire, but the term fits certain realities of US power and how it’s used. An empire is a group of territories under a single power. Nineteenth-century Britain was obviously an empire when it ruled India, Egypt, and dozens of other colonies in Africa, Asia, and the Caribbean The United States directly rules only a handful of conquered islands (Hawaii, Puerto Rico, Guam, Samoa, the Northern Mariana Islands), but it stations troops and has used force to influence who governs in dozens of other sovereign countries. That grip on power beyond America’s own shores is now weakening.
The scale of US military operations is remarkable. The US Department of Defense has (as of a 2010 inventory) 4,999 military facilities, of which 4,249 are in the United States; 88 are in overseas US territories; and 662 are in 36 foreign countries and foreign territories, in all regions of the world. Not counted in this list are the secret facilities of the US intelligence agencies. The cost of running these military operations and the wars they support is extraordinary, around $900 billion per year, or 5 percent of US national income, when one adds the budgets of the Pentagon, the intelligence agencies, homeland security, nuclear weapons programs in the Department of Energy, and veterans benefits. The $900 billion in annual spending is roughly one-quarter of all federal government outlays.
The United States has a long history of using covert and overt means to overthrow governments deemed to be unfriendly to US interests, following the classic imperial strategy of rule through locally imposed friendly regimes. In a powerful study of Latin America between 1898 and 1994, for example, historian John Coatsworth counts 41 cases of “successful” US-led regime change, for an average rate of one government overthrow by the United States every 28 months for a century. And note: Coatsworth’s count does not include the failed attempts, such as the Bay of Pigs invasion of Cuba.
This tradition of US-led regime change has been part and parcel of US foreign policy in other parts of the world, including Europe, Africa, the Middle East, and Southeast Asia. Wars of regime change are costly to the United States, and often devastating to the countries involved. Two major studies have measured the costs of the Iraq and Afghanistan wars. One, by my Columbia colleague Joseph Stiglitz and Harvard scholar Linda Bilmes, arrived at the cost of $3 trillion as of 2008. A more recent study, by the Cost of War Project at Brown University, puts the price tag at $4.7 trillion through 2016. Over a 15-year period, the $4.7 trillion amounts to roughly $300 billion per year, and is more than the combined total outlays from 2001 to 2016 for the federal departments of education, energy, labor, interior, and transportation, and the National Science Foundation, National Institutes of Health, and the Environmental Protection Agency.
It is nearly a truism that US wars of regime change have rarely served America’s security needs. Even when the wars succeed in overthrowing a government, as in the case of the Taliban in Afghanistan, Saddam Hussein in Iraq, and Moammar Khadafy in Libya, the result is rarely a stable government, and is more often a civil war. A “successful” regime change often lights a long fuse leading to a future explosion, such as the 1953 overthrow of Iran’s democratically elected government and installation of the autocratic Shah of Iran, which was followed by the Iranian Revolution of 1979. In many other cases, such as the US attempts (with Saudi Arabia and Turkey) to overthrow Syria’s Bashar al-Assad, the result is a bloodbath and military standoff rather than an overthrow of the government.
. . .
WHAT IS THE DEEP motivation for these profligate wars and for the far-flung military bases that support them?
From 1950 to 1990, the superficial answer would have been the Cold War. Yet America’s imperial behavior overseas predates the Cold War by half a century (back to the Spanish-American War, in 1898) and has outlasted it by another quarter century. America’s overseas imperial adventures began after the Civil War and the final conquests of the Native American nations. At that point, US political and business leaders sought to join the European empires — especially Britain, France, Russia, and the newly emergent Germany — in overseas conquests. In short order, America grabbed the Philippines, Puerto Rico, Cuba, Panama, and Hawaii, and joined the European imperial powers in knocking on the doors of China.
As of the 1890s, the United States was by far the world’s largest economy, but until World War II, it took a back seat to the British Empire in global naval power, imperial reach, and geopolitical dominance. The British were the unrivaled masters of regime change — for example, in carving up the corpse of the Ottoman Empire after World War I. Yet the exhaustion from two world wars and the Great Depression ended the British and French empires after World War II and thrust the United States and Russia into the forefront as the two main global empires. The Cold War had begun.
The economic underpinning of America’s global reach was unprecedented. As of 1950, US output constituted a remarkable 27 percent of global output, with the Soviet Union roughly a third of that, around 10 percent. The Cold War fed two fundamental ideas that would shape American foreign policy till now. The first was that the United States was in a struggle for survival against the Soviet empire. The second was that every country, no matter how remote, was a battlefield in that global war. While the United States and the Soviet Union would avoid a direct confrontation, they flexed their muscles in hot wars around the world that served as proxies for the superpower competition.
Over the course of nearly a half century, Cuba, Congo, Ghana, Indonesia, Vietnam, Laos, Cambodia, El Salvador, Nicaragua, Iran, Namibia, Mozambique, Chile, Afghanistan, Lebanon, and even tiny Granada, among many others, were interpreted by US strategists as battlegrounds with the Soviet empire. Often, far more prosaic interests were involved. Private companies like United Fruit International and ITT convinced friends in high places (most famously the Dulles brothers, Secretary of State John Foster and CIA director Allen) that land reforms or threatened expropriations of corporate assets were dire threats to US interests, and therefore in need of US-led regime change. Oil interests in the Middle East were another repeated cause of war, as had been the case for the British Empire from the 1920s.
These wars destabilized and impoverished the countries involved rather than settling the politics in America’s favor. The wars of regime change were, with few exceptions, a litany of foreign policy failure. They were also extraordinarily costly for the United States itself. The Vietnam War was of course the greatest of the debacles, so expensive, so bloody, and so controversial that it crowded out Lyndon Johnson’s other, far more important and promising war, the War on Poverty, in the United States.
The end of the Cold War, in 1991, should have been the occasion for a fundamental reorientation of US guns-versus-butter policies. The occasion offered the United States and the world a “peace dividend,” the opportunity to reorient the world and US economy from war footing to sustainable development. Indeed, the Rio Earth Summit, in 1992, established sustainable development as the centerpiece of global cooperation, or so it seemed.
Alas, the blinders and arrogance of American imperial thinking prevented the United States from settling down to a new era of peace. As the Cold War was ending, the United States was beginning a new era of wars, this time in the Middle East. The United States would sweep away the Soviet-backed regimes in the Middle East and establish unrivalled US political dominance. Or at least that was the plan.
. . .
THE QUARTER CENTURY since 1991 has therefore been marked by a perpetual US war in the Middle East, one that has destabilized the region, massively diverted resources away from civilian needs toward the military, and helped to create mass budget deficits and the buildup of public debt. The imperial thinking has led to wars of regime change in Afghanistan, Iraq, Libya, Yemen, Somalia, and Syria, across four presidencies: George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama. The same thinking has induced the United States to expand NATO to Russia’s borders, despite the fact that NATO’s supposed purpose was to defend against an adversary — the Soviet Union — that no longer exists. Former Soviet president Mikhail Gorbachev has emphasized that eastward NATO expansion “was certainly a violation of the spirit of those declarations and assurances that we were given in 1990,” regarding the future of East-West security.
There is a major economic difference, however, between now and 1991, much less 1950. At the start of the Cold War, in 1950, the United States produced around 27 percent of world output. As of 1991, when the Dick Cheney and Paul Wolfowitz dreams of US dominance were taking shape, the United States accounted for around 22 percent of world production. By now, according to IMF estimates, the US share is 16 percent, while China has surpassed the United States, at around 18 percent. By 2021, according to projections by the International Monetary Fund, the United States will produce roughly 15 percent of global output compared with China’s 20 percent. The United States is incurring massive public debt and cutting back on urgent public investments at home in order to sustain a dysfunctional, militarized, and costly foreign policy.
Thus comes a fundamental choice. The United States can vainly continue the neoconservative project of unipolar dominance, even as the recent failures in the Middle East and America’s declining economic preeminence guarantee the ultimate failure of this imperial vision. If, as some neoconservatives support, the United States now engages in an arms race with China, we are bound to come up short in a decade or two, if not sooner. The costly wars in the Middle East — even if continued much less enlarged in a Hillary Clinton presidency — could easily end any realistic hopes for a new era of scaled-up federal investments in education, workforce training, infrastructure, science and technology, and the environment.
The far smarter approach will be to maintain America’s defensive capabilities but end its imperial pretensions. This, in practice, means cutting back on the far-flung network of military bases, ending wars of regime change, avoiding a new arms race (especially in next-generation nuclear weapons), and engaging China, India, Russia, and other regional powers in stepped-up diplomacy through the United Nations, especially through shared actions on the UN’s Sustainable Development Goals, including climate change, disease control, and global education.
Many American conservatives will sneer at the very thought that the United States’ room for maneuver should be limited in the slightest by the UN. But think how much better off the United States would be today had it heeded the UN Security Council’s wise opposition to the wars of regime change in Iraq, Libya, and Syria. Many conservatives will point to Vladimir Putin’s actions in Crimea as proof that diplomacy with Russia is useless, without recognizing that it was NATO’s expansion to the Baltics and its 2008 invitation to Ukraine to join NATO, that was a primary trigger of Putin’s response.
In the end, the Soviet Union bankrupted itself through costly foreign adventures such as the 1979 invasion of Afghanistan and its vast over-investment in the military. Today the United States has similarly over-invested in the military, and could follow a similar path to decline if it continues the wars in the Middle East and invites an arms race with China. It’s time to abandon the reveries, burdens, and self-deceptions of empire and to invest in sustainable development at home and in partnership with the rest of the world.
There's only one rational response to the article and diagram by Margot Sanger-Katz of the New York Times - as the lawyers say "Res Ipsa Loquitur" (the thing speaks for itself)"
Single Payer anyone??
-SPC
Need to Pick an Insurance Plan? Start Here
Jason Logan
President Obama once promised that the Obamacare exchanges would make buying insurance as easy as selecting a TV on Amazon. Just a few clicks, and you could comparison-shop and pick the plan that’s right for you.
In a way, the president was right: The marketplaces set up under the Affordable Care Act make a really confusing and expensive purchase a lot easier. But insurance remains a complex financial product. Making the best choice is going to depend on your values and preferences, and some good luck in predicting your future health.
That’s why, even three years into Obamacare, many customers are still relying on one-on-one meetings with experts, who ask the right questions and help steer people to the plan that’s likely to be best for them. And it’s the reason I still get calls every year from friends and colleagues asking me which employer plan they should choose.
We wanted to try to help make a tricky choice a little easier. Obamacare customers can start selecting their 2017 plans today, and fall is open enrollment season for a lot of companies, too.
We made flow charts to explain how to choose, one for people buying insurance on the Obamacare marketplace, another for those choosing an employer-sponsored plan. We got advice from groups that provide in-person assistance, economists who have studied insurance choices and executives at companies that are devising products to help make choosing easier.
These are simple charts, so there may be special considerations for certain people with distinct needs (more about that later). But this boiled-down process is intended to address the most important questions you will face as you compare any array of plans with metallic names or obtuse abbreviations.
Let’s start out with one important point: Unless you can afford to pay millions of dollars without blinking, you should really have health insurance to protect against financial ruin. About one in five Americans spends more than $5,000 on health care in a given year, and about one in 20 spends more than $10,000. If uninsured, you are exposed to huge bills when unexpected things happen.
Insurance can be expensive, and some people still struggle to afford it. But if you can squeeze a health plan into your budget, our advice is: Do it. If you buy insurance through work, your employer probably helps pay a big chunk of the premiums. And people in the Obamacare marketplaces often have access to federal subsidies that can knock down a plan’s sticker price considerably.
Our questions are intended to help you think about three key issues in choosing insurance. The numbers are devised for single people buying coverage for themselves. Payment and income cutoffs will be a little different for people shopping for family coverage.
Jason Logan
How sick are you?
This can be a tough question to answer, because health emergencies often come without warning. But some people know ahead of time that they are going to use a lot of health care services. If you have an expensive chronic condition that requires a lot of drugs and doctors’ visits, or you have a planned surgery or will be having a baby, you are better off buying more generous insurance that will pay for more of your health care.
A number of companies have now put together calculatorsthat can help you estimate just how much health care you are likely to use for conditions you know about. And at least one is trying to use data from large numbers of patients to calculate the odds that something unexpected — like an accident or a heart attack — might happen to you. None of these tools are perfect, but they will probably get better over time, eliminating the need for patients to do their own back-of-the-envelope estimating about what their care will cost under different plans.
Generally speaking, the experts I spoke to said that anyone with known health problems should buy a plan with a deductible under $2,000 — for Obamacare shoppers, those plans are called silver. But people with major health care needs should shop for more generous plans, and may benefit more from reading the detailed “summary of benefits and coverage” documents about limits on certain kinds of visits, or the details of co-payments and deductibles.
For Obamacare shoppers, there is one exception to this advice: people who earn incomes less than twice the federal poverty level. A single person earning less than $24,000 or a family of four with an income less than $49,000 is nearly always best off buying a “silver” plan. Because of extra subsidies, you’ll end up with the equivalent of a more generous “gold” plan without paying extra.
How sensitive are you toward risk?
If you’re healthy, something bad might still happen to you, but it might make more financial sense to take a gamble and buy a cheaper, high-deductible plan, rather than pay for extra protection you might not need. That plan will still protect you from really high bills, but you’d have to dig out several thousand dollars from your pocket first for a big emergency. For people with employer coverage, these plans are often called “consumer-directed” or “H.S.A.” plans. In the Obamacare markets, they are called “bronze.” Fewer than one in five Americans spend more than $5,000 in a given year.
Most insurance products — like car insurance or homeowner’s insurance — aren’t set up to pay for every last service. Instead, they are intended to protect you if something goes really wrong. Your car insurance doesn’t pay for oil changes, but it does replace your car if it is totaled in a crash. Some people think about health insurance in the same way, as a protection from financial catastrophe. The Obamacare law makes every plan cover preventive health care like checkups, flu shots and mammograms at no charge.
But, beyond that, plans that ask you to pay out of pocket for the first few visits and prescriptions tend to be cheaper than plans that have you pay a portion of every single bill. If you have savings or the ability to easily borrow some money, it often pays to buy a cheaper plan with a higher deductible. If you don’t get sick, you’ll save money. And if you do, you will have the financial cushion to pay a bigger share of health care costs that year.
If you don’t have any savings or the ability to borrow money, you might prefer to use insurance as a way to smooth out your costs over the year. Buying a more comprehensive plan will cost you more every month, but you might decide it’s worth the extra money to avoid the financial consequences of an unexpected bill.
How much will you pay for choice?
Some of the least expensive plans in the Obamacare marketplace are plans that cover only a limited set of doctors and hospitals. The plans, called narrow networks, can be a good deal. But buying one may mean you have to give up a doctor you already know well, or you’ll be steered away from a hospital you prefer because it is deemed too expensive to use. These are tough trade-offs, and different people will feel differently about what’s important to them.
If you have a lot of known health problems, and have strong relationships with doctors and hospitals, you will need to search through the plans’ network listings to make sure you can continue to receive the care you want. The same goes if you have a particular set of medications. This may require some shoe-leather investigation, since the network directories are often confusing and out of date. If there are doctors you can’t live without, call to make sure they are covered.
You may be able to get a more affordable plan if you’re willing to use a plan that covers a particular set of doctors and hospitals. Plans that do this are often called H.M.O.s or E.P.O.s — though other types of plans are also increasingly limiting their list of covered doctors.
Even some people who don’t currently have doctors might want to have a broad choice if they do get sick. Plans that allow patients to get coverage for so-called out-of network providers, generally called P.P.O.s, tend to be more expensive. Look at the plan summary to see what these plans will pay for a doctor who is “out of network.”
What about quality?
Ideally, health insurers would be competing on the basis of customer service, and not just price. But the experts I talked to said there’s still no good way to compare the plans on the basis of quality. So, if you have found a plan that’s a good deal, has a deductible you can afford and covers the doctors you care about, it’s probably a solid choice. There’s still a chance that you’ll end up having to fill out annoying paperwork or get stuck on hold for hours to make an appointment. But that might have been true with another insurance company, too.
On a brilliantly sunny afternoon last October, twenty-eight New Yorkers—some clutching walkers, others in wheelchairs—crammed into a tiny space at the back of Manhattan’s East Side Cafe. While waiters set down blueberry coffee cake, grape jelly, coffee, and orange juice, Maxine Davis, a Medicare account representative from Empire BlueCross BlueShield, raced through the first several pages of the company’s sales booklet. She was promoting MediBlue Plus (HMO), a private plan that Empire offers as an alternative to traditional Medicare. “The maximum amount you pay out of pocket for major medical expenses is sixty-seven hundred dollars. This makes it a predictable health-care cost. We never make you pay more,” Davis promised.
One senior asked, What if someone had cancer?—a diagnosis whose costs could quickly escalate. The patient’s share of such costs was “written in black and white,” Davis answered, vaguely referring him to page 6 of the booklet while That crucial point probably went over the heads of most attendees at the coffee shop. Lured to the sales event with a mailing that promised no monthly premiums for their plan coverage, they came seeking a way to stretch their budgets; “free” health insurance is almost as irresistible as free food. One man wanted to know if the next year’s premium would be free as well. Davis simply said, “For 2016 there’s a zero-premium plan.” Clearly eager to reiterate that magic number, she added, “All your preventive care is covered at zero dollars.” She went on to pitch as special perks such services as colonoscopies and mammograms, which the federal government makes available for free to all Medicare beneficiaries.
Davis didn’t dwell on the fine print. And she knew all the right words to get the seniors to sign up. “I find it really wonderful there’s a nurse help line for you twenty-four hours a day,” she said. She mentioned “one of Empire’s most prized benefits,” the SilverSneakers program, which granted free gym memberships to enrollees. Empire “was innovative.” As proof, Davis said, “You can see your doctor online and call customer service.” When a woman complained that it was hard to reach Empire on the phone, Davis was reassuring. “You are important to me. I carry my cell whenever I go shopping.”-dollar copay for chiropractors.” Page 6 didn’t actually address his question, but pages 7 and 12 did. There he could have read that beneficiaries were on the hook for 20 percent of the cost for radiation treatment and 20 percent of the cost for chemotherapy, up to the $6,700.
When Lyndon Johnson signed Medicare into law fifty-one years ago, on July 30, 1965, he made a number of ambitious promises:
No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime. . . . No longer will young families see their own incomes and their own hopes eaten away simply because they are carrying out their deep moral obligations to their parents, and to their uncles, and to their aunts.
Medicare, the president told the crowd at the Harry S. Truman Library in Independence, Missouri, was another important part of the social-insurance structure designed by Franklin Roosevelt thirty years earlier—a structure, FDR said at the time, that was “by no means complete.”
After LBJ ended his remarks, New York Times Washington correspondent Max Frankel approached him. “My mother thanks you,” Frankel said. “No,” the president replied. “It’s you who should be thanking me.” Johnson intended for Medicare, crafted according to the same principles as Social Security, to be a safety net not only for Frankel’s mother but also for all Americans into the future. The idea, then as now, was to provide health insurance to millions of older, sicker people at a cost more reasonable than what the private market could or would provide.
For the time being, the basics of the program Lyndon Johnson called for are still in place. Everyone who pays into the system during their working years—contributing 1.45 percent of each paycheck, which is then matched by their employer—earns the right to common benefits at age sixty-five. Those contributions cover a substantial amount of hospital care, home care, and skilled nursing care. There is a deductible required for hospital care, which is adjusted for inflation each year, as well as coinsurance, the patient’s share of the cost.1 This section of the program is labeled Part A.
1 The deductible for 2016 is $1,288 per benefit period; coinsurance is $322 per day for hospital stays lasting from sixty-one to ninety days.
Under a separate plan, called Part B, beneficiaries are covered for medical and surgical fees incurred in or out of the hospital, lab tests, medical equipment, and outpatient care. Part B does in fact require additional contributions from patients, who pay a monthly premium that is adjusted annually. The government, through general tax revenues, funds the rest.2
2 This year, most people pay $121.80 for their Part B premium, as well as 20 percent coinsurance and a separate deductible—currently $166—for all Part B services.
A key fact: Medicare was never meant to cover all of a beneficiary’s medical expenses. To fill this gap in coverage, a separate industry sprang up to sell supplemental insurance, known as Medigap policies. Standardized by the government in 1991, these policies are now purchased by millions of seniors, and many companies offer similar supplemental coverage to former employees.
Soon after it was signed into law, Medicare gained favor with the general public. “Polls repeatedly show that Medicare is one of the most popular domestic programs,” says Robert Blendon, the director of the Harvard Opinion Research Program. “It’s seen as highly important to people’s lives.”
Medicare’s popularity, however, comes with almost no understanding of what the program is and how it works. “I don’t want government-run health care,” a woman wrote to President Obama in 2009. “I don’t want socialized medicine. And don’t touch my Medicare!” That confusion has made it hard to defend Medicare against Washington’s slash-and-burn campaigns aimed at killing the country’s social programs. Under discussion now in the halls of Congress and in the opinion columns of the news media is a plan to transform Medicare into a more privatized system. Not only would this break apart the social compact and render Johnson’s promises a distant memory—it would also pass more of the program’s expenses on to the elderly and disabled.
Johnson’s social compact, however, began to erode as far back as the 1970s, when oil shocks, a stagnant economy, and inflation came to dominate the national agenda. The liberals’ goal of rounding out LBJ’s vision by expanding Medicare to all Americans disappeared. Meanwhile, the cost of health care itself began to skyrocket. Between 1970 and 1985, the cost of such care as a percentage of GDP rose by nearly fifty percent. Expensive new technology such as imaging machines and lithotripters to pulverize kidney stones flooded the market. Hospitals and physicians rushed to buy these new machines, and then used them freely to cover the cost of their investments, driving up prices even faster. And all along, Medicare kept paying the bills.
This gave an opening to Medicare’s enemies. “If you couldn’t attack the program directly, you attacked it as unaffordable and uncontrollable,” says Yale professor emeritus Theodore Marmor, whose 1970 book The Politics of Medicare describes the contentious politics and compromises that led to the creation of the program.
By the 1990s those attacks were being taken seriously in Washington, and policy discourse around Medicare was soon reframed. Now the virtues of the marketplace—competition, individual choice—were touted over the virtues of social insurance, especially as a means to contain costs. Soon it was clear that Medicare was no longer untouchable. In 1995, John Kasich, then chairman of the House Budget Committee and now governor of Ohio, proposed slicing $270 billion from Medicare’s budget to pay for a $90 billion increase in defense spending. It was part of a “bold plan,” Kasich announced, to “downsize government.”
His boss at the time, House Speaker Newt Gingrich, had his own vision for Medicare. If private alternatives were available, he predicted, people would voluntarily switch. Medicare would “wither on the vine.” Persuaded by Gingrich, along with other Republicans and many Democrats, the government began to make that happen, using a combination of salami tactics and stealth.
The right-wing Heritage Foundation provided the intellectual blueprint. It proposed transforming Medicare into a system like the Federal Employees Health Benefits Program, whose beneficiaries choose coverage from a menu of government-subsidized private plans. The idea quickly gained respectability, with the help of favorable and unquestioning media coverage and an influential paper written in 1995 by Henry Aaron and Robert Reischauer, Democratic economists from the Brookings Institution. They called for a system of “premium support”—a sum of money the government would give beneficiaries to buy their own insurance in the private market. (Some critics called this a voucher system.) If the government sum was too small, beneficiaries would have to pay the difference themselves.
Aaron himself later changed his mind about such arrangements. “What we were defending in the article was a different proposal than the one that has emerged in the last ten years,” he told me. “I came to the conclusion it is not workable now.”
Aaron’s change of heart didn’t stop the march toward privatization, though. The idea of Medicare transforming itself from social insurance into a private, market-based system had caught on. In 1997, Congress continued to push privatization with a new program called Medicare + Choice—a largely managed-care model that beneficiaries could choose as an alternative to traditional Medicare. Crucially, private insurers, not the government, would provide the benefits.
Medicare + Choice proved a costly and fateful step. Insurers soon demanded more money from the government in order to sell private plans, especially in smaller, rural markets where they were reluctant to go. It came down to “how much money on the table was necessary,” says a former high-level Democratic staffer on Capitol Hill, who agreed to talk to me only on the condition of anonymity. “We were bribing them.”
In the end it took billions to get insurers on board, and to keep them there. By 2009, Congress was doling out 12.4 percent more to private insurers than it would have spent to provide the same benefits via traditional Medicare. “For most of the program’s history, Congress has thrown money into the pot to assure a robust expansion of private plans and provide extra benefits for beneficiaries signing up,” says Robert Berenson, an institute fellow at the Urban Institute.
In 2003, as part of the Medicare Modernization Act, Congress authorized private companies to offer yet another type of plan, called Medicare Advantage—which is what Maxine Davis was selling at the East Side Cafe. Because of generous government payments, many MA plans require no premiums (although seniors still must pay their Part B premiums to the government). Often, they will also offer extra benefits that are not part of the standard Medicare benefit package, such as eyeglasses, hearing and dental exams, and gym memberships like the SilverSneakers program Maxine Davis mentioned. Many come with high out-of-pocket maximums (for instance, Empire’s $6,700), after which the insurer will pay 100 percent of the cost of medical care—to in-network providers only.3
But Congress was not yet done tilting the scales toward private insurers. In the same law, it introduced the Part D drug benefit. This provision allowed only commercial insurers to offer drug coverage. Both the government and Medigap plans, which had previously offered such coverage, were now forbidden to do so. Even people still covered by traditional Medicare now had to buy separate drug plans from private carriers.
The Medicare Modernization Act poked yet another hole in Lyndon Johnson’s fraying compact. It called for wealthier beneficiaries—people with incomes above $85,000 if single or $170,000 if married—to pay higher premiums for Part B benefits. The provision moved through Congress with “unexpected support from some Democrats,” the New York Times reported. As the law neared final approval, though, the Times noted that AARP, the UAW, and liberal Democrats, including Senator Edward Kennedy, viewed some of its proposals as a “dangerous first step in turning Medicare from a universal social insurance program into a welfare program.”
In a sense, the conservative assault on Medicare is two-pronged. On the one hand, there is a drive to privatize. On the other, critics hope to rebrand Medicare as a variety of welfare. The former Hill staffer says that the Republicans have “been on a very consistent march for decades now. They basically want to get rid of the entitlement and want everything means-tested.” Means-testing—that is, basing eligibility for benefits on whether a person has the means to do without that help—saves billions for the government. But it would also make Medicare into the equivalent of food stamps or Medicaid. And that, of course, is the objective.
So far, privatization remains the more politically correct solution for Medicare’s financial shortfalls. These are real, at least potentially. In large part, they have been caused by the lack of serious cost controls, and exacerbated by the influx of millions of baby boomers needing medical services. Even the government’s attempts at cost control introduced during the Reagan era failed to permanently curb medical inflation. Indeed, containing the prices charged by the doctors, hospitals, drug makers, nursing homes, and home-care agencies that rely on the Washington gravy train has been an almost impossible task. The 2003 prescription-drug law, for example, prohibits Medicare from negotiating the prices it pays for drugs. “There are obstacles statutorily and politically,” says former Medicare administrator Don Berwick. “We can’t negotiate for purchasing, in one of the largest insurance systems in the world. The moneyed interests are calling the shots.”
Many of those moneyed interests sell health-care technology, which has long been a major cause of exploding costs. Richard Foster, who was Medicare’s chief actuary from 1994 to 2013, describes the situation: “As long as there’s an automatic market for new technology, even if it’s not any more effective, cost growth will keep going up.” In fact, Medicare has historically not considered cost effectiveness when deciding whether to cover new drugs and technologies. Two years ago, a study published in JAMA Internal Medicine revealed that Medicare spent $8.5 billion for low-value services—CT scans for uncomplicated sinus infections, prostate-cancer screenings for men over seventy-five.
Even when Medicare has limited the use of technologies, health providers sometimes use them anyway. In the past year, for example, the Justice Department has announced settlements with 508 hospitals that had used implantable cardioverter defibrillators in some 10,000 patients. The DOJ fined the hospitals—including some of the biggest names in the business, such as the Cleveland Clinic and NewYork-Presbyterian—for violating Medicare’s “national coverage determination” for I.C.D.’s. According to Sanket Dhruva, a cardiologist and researcher at Yale, these patients may also have been subjected to unnecessary harm. So why were hospitals using the devices? Because they were, needless to say, hugely profitable—between 2010 and 2015, when news of the investigation caused I.C.D. use to drop 28 percent, Medicare saved about $2 billion.4
The pharmaceutical companies are equally adept at gaming the system. Over the past few months, cancer doctors and arthritis specialists have waged a very public fight to scare patients into believing they aren’t going to get expensive Part B drugs. Medicare pays 80 percent of the cost of these drugs, which are typically administered in physicians’ offices. But the current system, which Medicare wants to change, pays doctors a percentage-based profit, which encourages them to use more expensive drugs. “Doctors are carrying water for the pharmaceutical corporations because their interests are aligned,” says Peter Bach, the director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering, in New York City. “I know of no other system where raising the price of your product makes it more attractive.” Medicare recently reported that the total cost of prescription drugs for its 38 million beneficiaries rose 17 percent in 2014, even though the number of claims rose only 3 percent.
Insurers get their way, too, when it comes to protecting Medicare Advantage plans. In March, the government quietly changed the regulations for its widely touted MA star-rating system so that Cigna, one of the country’s largest insurers, could continue receiving the bonuses that are awarded for higher ratings. Two months earlier, as it happens, Medicare had sent the company a strong letter of sanction citing “serious violations” and barring the carrier from enrolling new members. The letter said that beneficiaries had experienced inappropriate delays and denials of medical services and medications, received inaccurate and incomplete information, and been denied timely resolution of requests for coverage—infractions that hardly suggest a plan meriting four or five stars. Cigna was in danger of losing as much as $350 million in bonuses. Then came the rule change—and two days later, a 2 percent surge in the value of Cigna stock.
According to the Center for Public Integrity, MA sellers collected nearly $70 billion between 2008 and 2013 by overstating patients’ health risks. In May, the General Accountability Office issued a report showing that Medicare often failed to audit private health plans and recoup overpayments. The GAO called for “fundamental improvements” in Medicare’s operations.
Given the monumental sums Medicare has been paying out, it’s hardly surprising that for years the annual report issued by the program’s trustees has argued that it needs more revenue. This year’s report, released in June, warns that although Medicare’s costs are low by historical standards, there is substantial uncertainty regarding the adequacy of future Medicare payment rates under current law. The report also notes that the depletion date for the hospital trust fund is now 2028.
Contrary to the claims of Medicare’s opponents, though, it is not going broke or running out of money. Actually, in 2014 Medicare spent $1,200 less per person than in 2010, largely because of cuts mandated by the Affordable Care Act. And even the trustees conceded that in 2028 Medicare would still be able to pay 87 percent of the benefits it now provides. Nevertheless, concerns about long-term financing remain, and containing costs is crucial.
According to Richard Foster, Medicare’s former chief actuary, Part D drug expenditures grew by more than 12 percent in 2014, and another 15 percent in 2015. Costs for medical services will go up, too. Foster believes that payment increases for doctors and hospitals will not be adequate as time goes on, and may reach a point where providers become unwilling to treat patients. In this year’s trustees’ report, the current chief actuary, Paul Spitalnic, made a similar argument:
Absent an unprecedented change in health-care delivery systems and payment mechanisms, the prices paid by Medicare for most health services will fall increasingly short of the cost of providing such services.
Medicare is placing its bet for cost control on new ways to pay doctors, penalties for bad care, rewards for good care, and more coordinated care. Whether these practices will work and how much they will slow down the growth in costs is unknown, and most Medicare experts on both the left and the right believe that new revenue will be needed. Along with her colleagues at the American Institutes for Research, former Medicare trustee Marilyn Moon (who remains skeptical of privatization) believes that critics often overstate the program’s financial challenges. At the same time, they admit such challenges are real: “We cannot objectively argue that there is no problem or that no changes should be made to the program to try to reduce its costs over time.”
The big question is who should bear the burden of necessary revenue increases—taxpayers or Medicare beneficiaries. So far the answer from the government, many economists, and conservative advocacy groups is, unequivocally, the beneficiaries. Moon and her colleagues note that the “potential depletion of the trust fund in the future is taken as ‘proof’ that benefits must be reduced.” But in a subsequent interview, she warns that as more of the cost burden is shifted to the beneficiaries, “the likely reaction will be that benefits become so small Medicare won’t remain viable. It would destroy the program.”
It’s ironic that when it comes to one of the government’s most popular public programs, there’s no talk of raising taxes—an option polls show much of the public is willing to support. The failure of policymakers to consider revenue increases reflects the success of the right’s thirty-year crusade to change the conversation. “Those of us at the Heritage Foundation and allied public-policy institutions like the American Enterprise Institute have effectively defined the terms of the debate on Medicare reform,” says Robert Moffit, a senior fellow at Heritage. The Democrats, he adds, “are debating our proposals. We’re not debating theirs.” Former Iowa senator Tom Harkin tells me that his fellow Democrats were poor strategists, always finding themselves in rearguard actions trying to block provisions they didn’t like. “The Democrats were talking a good game for the immediacy, not the long term. It’s like checkers,” he says. “They knew how to block the next move, but were not seeing the row lined up at the back of the board.”
Whether out of capitulation or conviction, Democrats have teamed up with the G.O.P. to open the government’s coffers to sellers of MA plans. In 2013, according to Mark Farrah Associates, a publisher of business information and analytics, publicly traded insurance companies like Humana, WellCare Health Plans, and UnitedHealthcare depended on government largesse for at least 40 percent of their total revenue. In the company’s February 2016 report to Wall Street analysts, Aetna CEO Mark Bertolini gloated, “The fourth quarter capped off an outstanding year for our government business, which continues to be a key growth engine for Aetna.”
Insurers owe the extraordinary profitability of MA plans in no small measure to the Coalition for Medicare Choices, a phony consumer group created by their trade association, America’s Health Insurance Plans, in 1999. The Coalition represents a gentle conspiracy between seniors who get extra benefits and the MA plans that use those seniors to advocate for the higher reimbursements that make eyeglasses and gym memberships possible. Every year, when Medicare announces proposed rates for the following year, AHIP mobilizes its army, flying its soldiers to Washington to testify before friendly congressional committees about the need for more money to prevent benefit cuts. It also encourages seniors to send emails, make phone calls, and appear at town-hall meetings.
Last spring, AHIP’s seven-figure advertising blitz opened a new phase of its Seniors Are Watching campaign, which began in 2014, with a press release proclaiming that Coalition members “are paying attention to policy decisions that impact their coverage—and they vote.” The AHIP website warns, “When Seniors Act, Congress Listens: Bertha Shinn is watching. Lori Chen is watching. Sen. Chuck Schumer is listening.”
New York’s senior senator did listen. Schumer and Senator Mike Crapo, a Republican from Idaho, persuaded fifty-nine of their colleagues to send letters urging Medicare not to cut payments to MA plans. They were joined by more than 360 House members, who shared their contention that cuts “have the potential to stifle innovation and impede beneficiary access to high quality health care.” (When I called Schumer’s office to talk to him about his support for MA plans and the government’s role in eroding traditional Medicare, I got no response.)
This sort of epistolary campaign seems to be working. For the past three years, Medicare has given MA plans increases after initially announcing payment cuts. This year, Medicare proposed an increase of about 1 percent after adjustments. A six-week lobbying blitz succeeded in tripling the increase.5
It’s hard for legitimate consumer organizations to fight against this well-financed message machine and the confusion it creates for seniors. Pamela Tainter-Causey, communications director for the National Committee to Protect Social Security and Medicare, decries the use of such tactics: “What they tell seniors is that Congress is going to cut its spending. They tell them it’s a cut to their benefits, when this is really about reimbursement cuts for the plans. What they don’t say is Medicare is trying to rein in runaway health-care costs. It’s not about Congress trying to cut seniors’ benefits, but that’s how they portray it.”
The 2016 election could well decide the future of Medicare, a topic that is bubbling beneath the surface, waiting to erupt into a full-blown policy debate whose stakes the public and the media have yet to comprehend. In September, a poll from the Kaiser Family Foundation revealed that Medicare (along with access to and affordability of health care) was the top health-related issue that registered voters wanted candidates to discuss. So far, though, except for Bernie Sanders’s fling with Medicare for All, the program has not been a focus during the campaign. It may be the program’s very popularity that has prevented candidates from talking about it. A few years ago, a candid if rhetorically challenged Donald Trump told a group of Republicans, “If you think you are going to change very substantially for the worse Medicare, Medicaid, and Social Security in any substantial way, and at the same time you think you’re going to win elections, it just really is not going to happen.” (As recently as September, Trump suggested that he would not change Medicare benefits—a position totally at odds with his own party’s platform.)
A fact sheet from Hillary Clinton calls her “a champion for America’s seniors,” noting that she will “defend Medicare” and “fight against Republican threats to end Medicare as we know it by privatizing or ‘phasing out’ the program.” As for containing the program’s costs, Clinton will “continue to reward quality and improve value in Medicare by building on delivery-system reforms that began as initiatives and pilot projects under the Affordable Care Act.”
No tough stuff here, and lots of hazy language that would allow a President Clinton to do almost anything in the legislative give-and-take. The devil is in the details, and she has yet to commit to any of those.
Her promises may be vague, but it is much clearer who has her ear. According to the Center for Responsive Politics, Clinton has received more than $10 million from the drug industry this election cycle. Clinton has said she favors Medicare price negotiations with the drug industry, but a careful reading of her website reveals that she would use the government’s negotiating muscle only as a “backstop” when competition alone isn’t sufficient to drive prices down. Perhaps pandering to Bernie Sanders’s supporters, however, Clinton has floated the idea of allowing people aged fifty or fifty-five to buy into Medicare, a proposal that surfaces from time to time.
Of course, what candidates say on the campaign trail doesn’t always reflect what they will do once they reach the Oval Office. Barack Obama repeatedly vowed to cut excess payments to Medicare Advantage plans. As of this date, the government still pays MA plans about 2 percent more on average than it costs to provide the same benefits in traditional Medicare. For that matter, as a senator in 2008, Obama voted against a Republican amendment that would have required wealthier seniors to pay more for their drug benefits. (Senator Hillary Clinton also voted against it.) But the president’s Affordable Care Act called for the same income-related premiums, and his budgets from fiscal year 2013 on have also embraced them.
This year, the political action on Medicare has taken place out of public view, in congressional offices and committee rooms. There, staffers led by House Ways and Means chairman Kevin Brady, a Texas Republican, have been crafting legislation that would begin to convert Medicare from social insurance to a premium-support or voucher arrangement. In June, House Republicans declared that they were taking a fresh look at the program, “redesigning it so that it fits the seniors’ needs more closely, offering new options so seniors can take that backpack into their retirement years.” This language can mean anything, including change so radical as to destroy Medicare once and for all.
Will Brady’s proposed premium support be large enough to keep pace with health-care inflation? Will the personalized option he envisions leave beneficiaries, about half of whom live on less than $24,000 a year, holding the bag for thousands of dollars in out-of-pocket costs? Will Medigap policies disappear altogether, forcing the millions of Americans now relying on them into Medicare Advantage plans?
In other words, the details will matter a lot. Currently, MA plans must offer the same basic benefits as traditional Medicare—but as the Kaiser Family Foundation has noted, that may no longer be the case with a premium-support system. Some proposals are aimed at giving sellers of MA plans the freedom to change benefits, premiums, and copays at will, further destroying the idea of social insurance. It’s possible these proposals would attract younger seniors, who are likely to be healthier, leaving only the older, sicker beneficiaries in traditional Medicare. If this happens, Medicare’s risk pool would be destabilized, leading to ever-higher premiums for those who remain and, eventually, to what the insurance industry calls a death spiral.
Brady and House Speaker Paul Ryan may move to revamp Medicare as soon as next year. In December 2014, Ryan told Politico, “The best days are yet ahead on comprehensive Medicare reform and premium support. . . . It’s an idea that has been normalized.” One thing is clear: the pitch for “saving” Medicare will exploit seniors’ fears of losing their benefits and obscure what the proposed changes really mean.
Gail Wilensky, the head of Medicare under the first George Bush and now a senior fellow at Project Hope, favors premium support. She tells me that the slowdown in Medicare costs may not last. It’s already too late, she says, to make changes and allow all of today’s seniors to stay in traditional Medicare with their Medigap policies—something that was always promised in earlier discussions of premium support. “Not everyone coming on in the next decade will get a pass,” she says. If Wilensky is right, people now in their fifties and early sixties may have little choice but to accept a privatized version of Medicare, with a narrow network of providers and possibly less comprehensive coverage and more out-of-pocket costs.
Although it’s clear that Medicare will need an infusion of new revenue in the coming years, beneficiaries should not be the piggy bank that saves the program. If LBJ’s vision is to be maintained for the community now and in the future, the community as a whole—taxpayers—must protect it. So far the acceptable solution is to make beneficiaries bear the escalating cost of medical care and thereby shift the burden away from government. But this is the swiftest route toward shredding the social compact that Johnson enunciated back in 1965. The burden of cost containment must fall on providers and others in the health-care industry, not on beneficiaries, who are least able to handle the increasing costs.
There are still those who regard Medicare as the solution, not the problem. “Instead of voucherizing Medicare, we should be expanding it,” says former administrator Don Berwick. Moving to Medicare for all, which Berwick would like to see, will be difficult, given the politics of interest groups and the power of Medicare providers, who are doing just fine under the current system. It may be that the best we can do now is to somehow reconcile traditional Medicare and Medigap policies with MA plans. To do this, traditional Medicare would have to be made more attractive, with a reasonable spending cap that would benefit the millions of beneficiaries who can’t afford Medigap premiums or the out-of-pocket spending required by Medicare Advantage plans.
Yet the drive toward privatization goes on. Who has the most to gain from it? Clearly, insurers would benefit mightily from all the new business that would come their way. Privatization would also appeal to those who favor a smaller federal budget as well as smaller government.
And what of beneficiaries? For them, the answer is mixed. Seniors with enough financial resources would be able to buy whatever private insurance they want to cover Medicare’s gaps, but those with modest means would likely struggle to maintain access to providers they like and trust, especially if policies offered in the private market have narrow networks—a likely possibility. (A recent Kaiser study of twenty counties found that, on average, MA plans included only about half of the hospitals, while 40 percent did not include a National Cancer Institute–designated cancer center.)
Seniors who buy MA plans because of the extra benefits may also lose in the long run. Very little is really known about how these plans care for people who become seriously ill or need specialty treatment. Although seniors have the opportunity once each year to return to traditional Medicare, they cannot necessarily then buy a Medigap plan to supplement their coverage, since the rules governing such purchases vary from state to state.
A real marketplace assumes that buyers have good information. But after writing about this program for twenty-eight years, I’ve concluded that one of Medicare’s biggest deficiencies is the lack of information we have about how it works, how to navigate it, and how to make good choices. For instance, it’s unlikely that those currently considering MA plans know that in June, the Senate Appropriations Committee voted to eliminate $52 million in funding for the State Health Insurance Assistance Program, which offers unbiased counseling to people coming into Medicare, those already in the program, and disabled people. The SHIPs, located in every state, served more than 7 million people last year. According to Roy Blunt, a Republican senator from Missouri, however, they were among the “unnecessary federal programs”—and so their funding was axed.
Without SHIPs, more would-be beneficiaries will be easy targets for sellers of MA plans. The legitimate consumer organizations that could help provide vital information often have chronic funding shortfalls. Giant AARP has competing business interests. Its partner, UnitedHealthcare, sells a lot of MA plans, as well as Medigap plans. In the current marketplace, there’s no standardization of benefits so that seniors can tell what their policies really cover, as there is for Medigap plans. In many parts of the country, especially urban areas, there are simply too many choices—as many as thirty or more. How are beneficiaries supposed to navigate an annual shopping process that, as Marilyn Moon puts it, is “hopelessly complex”? That leaves the sellers of MA plans to guide the shopping decision. Dan Adcock, the director of government relations for the National Committee to Preserve Social Security and Medicare, says, “Some in the advocacy community thought the experiment with private plans would die under its own weight.” But they were wrong, he admits, and carriers had little difficulty in selling their products. “Insurers knew how to exploit seniors’ precarious financial conditions with free food, free gym memberships, and sales pitches touting no premium.”
He’s right. Back at the East Side Cafe, as the sales pitch wound down, I approached a man who was struggling to find a pen. I asked if he was signing up, hoping to engage him in conversation. He wasn’t interested in talking. He said he wanted to finish the application before the coffee ran out.
Can private insurers cover Medicaid patients without going broke?
That’s the pressing question raised by last week’s news that Neighborhood Health Plan will stop enrolling Medicaid customers until it can sort out its money-losing contracts with hospitals and other providers.
The answer is far from clear.
As dramatic as Neighborhood’s financial problems are — it has lost $241 million in the past 2½ years — it is hardly the only insurer to struggle. Other Medicaid health plans, which cover poor and low-income families, have also experienced losses in recent years and have had to make changes as a result. That includes slashing payments to hospitals and in some cases kicking expensive hospitals out of their networks.
Neighborhood is one of six insurers that the state pays to manage care for residents on MassHealth, as Medicaid is known here. Of the 1.8 million people covered by MassHealth, about 858,000 people are members of these plans, while others access services directly without enrolling in a health plan.
The red ink at MassHealth insurers underscores two challenges faced by the joint federal-state program.
First: Government payments are far lower than what commercial insurers pay, so there’s simply less money to go around.
Second: The population covered by MassHealth tends to include people with complex medical issues that are expensive to treat.
Neighborhood’s plan is to seek to renegotiate its contracts as part of a “corrective action plan” developed with state officials. The insurer, the largest MassHealth carrier, with nearly 312,000 members, pays certain hospitals significantly above state guidelines, and officials have asked the insurer to correct this.
Neighborhood is owned by Partners HealthCare and is the only Medicaid insurer to include access to Partners’ big teaching hospitals, Massachusetts General and Brigham and Women’s. (Other MassHealth members have access to these hospitals through other avenues.)
Partners is the priciest hospital network in the state, but Neighborhood insists that it pays Partners hospital at state-mandated levels, except for transplant surgeries. The insurer declined to say which hospitals are breaking its budget.
Tufts Health Plan, whose MassHealth business stems from its acquisition of the insurer Network Health in 2011, has about 219,000 MassHealth members. Tufts is on track to break even in its MassHealth unit this year, but that’s after it renegotiated all of its contracts for MassHealth members and stopped doing business with Partners.
“We substantially reengineered our network with a deliberate eye to reducing the unit cost,” said Dr. Christopher “Kit” Gorton, president of Tufts’ public plans division.
Boston Medical Center HealthNet Plan recontracted with 18 health care providers last year and cut three others out of its network — Boston Children’s Hospital, Baystate Health, and Berkshire Health Systems — after failing to reach agreement on lower rates.
“These are hard conversations to have; we don’t welcome them,” said Susan Coakley, president of BMC HealthNet. “[We have to say] this is what the state’s giving us and this is what we can pay you. The conversations can take a long period of time.”
BMC HealthNet, which insures about 188,000 people on MassHealth, was in the black last year but expects to lose money again this year.
At Neighborhood Health Plan, a spokeswoman said the insurer has taken steps to control costs but did not say which contracts it has renegotiated. Neighborhood has not cut any hospitals from its network, but it added restrictions that make it harder for members to go to Boston Children’s Hospital.
“We are working with our provider partners to control costs and have been for the past two years,” spokeswoman Pam Jonah said in an e-mail. “These contract negotiations are private and would be inappropriate to discuss publicly.”
The temporary freeze of enrollment for MassHealth members at Neighborhood will last at least until February, when state officials expect to evaluate the insurer’s progress.
Neighborhood’s struggles with the MassHealth program come as the entire industry braces for big changes to MassHealth. Governor Charlie Baker’s administration is planning to move to new models of “accountable” care, which set budgets for providing care while encouraging doctors to keep patients healthy.
It’s unclear whether these big changes will provide more stability for insurers.
Gorton, of Tufts, said the MassHealth redesign will add uncertainty for insurers, at least in the near term.
“The plans and how rates are set — I don’t think this helps,” he said. “We’re supportive of the state’s direction, and I think ultimately Massachusetts will end up with a stronger delivery system, but I don’t think in the near term it’s going to make things easier.”
INSURER defections and double-digit premium increases may be making consumers wary of seeking health insurance through Affordable Care Act marketplaces. But despite the turmoil, health care advocates are still urging people to shop for 2017 coverage when the annual open enrollment period begins on Tuesday.
“Go shopping,” said Elisabeth Benjamin, vice president for health initiatives with the Community Service Society in New York. “You may be eligible for more financial help than you think.”
Premiums for benchmark plans on HealthCare.gov, the federal marketplace, are increasing by an average of 25 percent, the government said. But 85 percent of those insured through the marketplace are eligible for tax credits that can significantly lower those premiums.
In many parts of the country, tax credits can reduce premium increases to “essentially zero,” Cynthia Cox, associate director of Kaiser Family Foundation’s program for the study of health reform and private insurance, said this week in a call with reporters.
And because tax credits and financial help increase when premiums increase, some people may be eligible for assistance next year even if they weren’t this year. “As premiums go up, so do premium tax credits,” said Elizabeth Hagan, senior policy analyst with Families USA, an advocacy group.
The catch is that keeping the lowest possible premium may require consumers to change plans, which can mean switching doctors — a hassle many people want to avoid, especially if they have complex medical conditions.
Still, “as long as they’re willing to shop around and change plans,” Ms. Cox said, they can save money.
About 11 million people are enrolled in marketplace plans. The federal government estimates that 2.5 million people who pay full price by buying individual coverage could qualify for financial help if they shopped on the marketplace instead.
Changes in premiums for 2017 plans vary widely, according to an analysis from the Kaiser foundation.
Cities like Phoenix and Birmingham, Ala., will have sharp increases in premiums for “benchmark” silver plans before the application of tax credits. But premiums for such plans in Indianapolis, Cleveland and Providence, R.I., will decrease.
Even in markets where just one insurer is participating, however, consumers generally have a choice of plans, Ms. Hagan said.
In New York, where the average increase is about 17 percent, Ms. Benjamin said low-income families and individuals could qualify for an “essential” plan that has no deductible and a monthly premium of either nothing or $20 a month. The option was offered for the first time for 2016, and about 360,000 people are enrolled, she said.
Here are some questions and answers about marketplace open enrollment:
When is open enrollment for marketplace plans this year?
Open enrollment runs from Nov. 1 until Jan. 31, 2017. But you must enroll by Dec. 15 if you want your coverage to start on Jan. 1.
Consumers can’t enroll in coverage until Tuesday, but they can prepare now by previewing available plans on HealthCare.gov.
Where can I get help choosing a plan?
Advocates recommend meeting in person with a trained assister or “navigator,” who can help you compare options. “This is hard stuff,” Ms. Benjamin said. “Don’t do it by yourself.” On HealthCare.gov, you can click on “find local help” to search for assistance by ZIP code. You will also find a checklist of information and documents you will need to enroll.
Advocates recommend setting up an appointment soon, so you will have time to consider options and ask questions without pressure. “Try not to wait until the last minute,” said Erin Singleton, chief of mission delivery for the Patient Advocate Foundation.
What is the penalty for going without health coverage?
Increase in Health Act Premiums May Affect Arizona Vote
by Abby Goonough - NYT
PHOENIX — Arizona was shaping up to be one of the more unlikely battlegrounds of the 2016 campaign when a political bombshell appeared to explode last week: The Obama administration revealed that the cost of midlevel plans on the Affordable Care Act’s health insurance marketplace here would increase next year by 116 percent on average.
Senator John McCain, running for re-election against the headwind of Donald J. Trump, took the bad news as a gift, highlighting it in a new television ad that begins, “When you open up your health insurance bill and find your premiums are doubling, remember that McCain strongly opposes Obamacare.” Other Republican candidates here also seized on the rate increases, counting on the issue to buoy them with Election Day imminent and Mr. Trump losing ground in the Republican-dominated state.
But as with everything related to the Affordable Care Act, it is complicated. The rate increases had been predicted for months as insurer after insurer announced plans to drop out of the marketplace here. Very few Arizonans are directly affected. Voting has already begun, and the political environment has been largely fixed for months, defined by deep divisions over immigration, Hillary Clinton’s emails and Mr. Trump’s fitness for office.
The rate increases, in fact, are unlikely to be a deciding factor.
Leslie Rycroft of Scottsdale, who works in human resources, is paying $1,100 a month this year for a United Healthcare plan that has a $13,000 deductible for her family of four. Their income was a little too high to qualify for a subsidy, she said. When she looked at her options on HealthCare.gov last week, she said she was “absolutely horrified” to see only one insurer, Health Net, offering plans that started at $2,200 a month. “It’s beyond ridiculous,” she said. “All of a sudden you are paying $26,000 a year,” Ms. Rycroft said, “just for catastrophic health insurance.”
Still, Ms. Rycroft, 59, said she had already cast her vote for Hillary Clinton. A registered Republican, she finds Mr. Trump “abhorrent,” she said. She did split her ticket and voted for Mr. McCain instead of his Democratic opponent, Representative Ann Kirkpatrick, because of his national security experience, she said.
Shortly after Ms. Rycroft learned about her rate increase, she got a reprieve in the form of a job offer. Her new job will provide insurance starting in January.
On Monday, the Obama administration confirmed what many Arizonans had already suspected, publishing premiums for policies offered under the Affordable Care Act that revealed that Arizona faces the biggest average rate increase in the country. The news was even worse in Phoenix, the nation’s sixth-largest city, where the price of a midlevel plan will increase by 145 percent on average.
Insurers rushed into the Phoenix market in the early years of the Affordable Care Act, offering some of the lowest prices in the country. But many younger, healthier people failed to enroll, and sick people flocked to the Arizona exchange, taking advantage of the law’s prohibition on denying coverage for pre-existing medical conditions. It now appears that many insurers severely underpriced their premiums, and they are now making up for that error by either jacking up rates or simply leaving the marketplace.
The fourth open enrollment for Affordable Care Act plans starts Tuesday, and in Phoenix and its suburbs, only one insurer, Health Net, a subsidiary of Centene, is offering plans for next year, compared with eight this year.
Many customers, particularly those with lower incomes, will not be affected by the price increase; the subsidies that the law provides to help pay premiums will cover most or all of it. Seventy-four percent of Arizonans with marketplace plans got subsidies this year, and the percentage is expected to grow next year.
But for those whose incomes are too high to qualify for premium subsidies — people who earn more than 400 percent of the federal poverty level, or $97,200 for a family of four — the price increases will be excruciating.
“When things flare up around Obamacare, it tends to motivate Republicans,” said Glenn Hamer, president and chief executive of the Arizona Chamber of Commerce and Industry. “I would say with 100 percent certainty that this is going to help Republicans. How much? Who knows?”
Most Arizonans have health insurance through their jobs. About 180,000, or less than 3 percent of the population, had insurance through the Affordable Care Act marketplace as of March, the most recent data the federal government has released. Others — it is unclear how many, because the state says it does not keep track — buy essentially the same plans outside HealthCare.gov, going directly to insurers. They cannot receive subsidies but will be affected by the rate increases.
Dante Fierros of Tempe, who owns a small manufacturing business, blames the health law for the rising cost of insuring his 30 employees, although the connection, if any, is unclear. Like many of the law’s opponents, he also considers it an example of government overreach. The turbulence in the Affordable Care Act marketplace here only solidified his support for Mr. Trump. “I think it will help him,” Mr. Fierros said of the rate hikes. “It’s kind of late, though.”
Hostility toward the health law is considerable here, but not overwhelming. A poll conducted this month by The Arizona Republic, the Morrison Institute for Public Policy and Cronkite News found that voters here remain divided on the Affordable Care Act, with 53 percent opposing and 40 percent supporting it. That is somewhat more negative than the national view, according to the latest Kaiser Family Foundation tracking poll, which found 45 percent of Americans opposing the law and 45 percent supporting it.
Mr. McCain has made the health law’s troubles a centerpiece of his re-election campaign, attacking it for months now in ads and on the stump. It is a particularly potent issue with the Republican base, whose support he has sought to solidify after many voted for his primary opponent. He has hammered Ms. Kirkpatrick for voting for the law in 2010 and calling it her “proudest moment” in Congress, a claim she stood by in a debate on Oct. 10. Like Mrs. Clinton, Ms. Kirkpatrick — whom polls show trailing far behind Mr. McCain, a four-term incumbent and his party’s presidential nominee in 2008 — says the law needs to be fixed, not repealed.
Allen Gjersvig, who helps oversee Affordable Care Act enrollment efforts around the state, said he had been running the numbers and finding many plan holders might even spend less on premiums next year because subsidies were jumping along with rates.
“What the headline or social media or your neighbor says may not be your reality,” said Mr. Gjersvig, the director of navigator and enrollment services for the Arizona Association of Community Health Centers.
He added, however, that people in Maricopa County, which includes Phoenix, Scottsdale and Tempe, would have a narrower network of hospitals to choose from next year. The same goes for Pima County, home of Tucson, where Blue Cross Blue Shield of Arizona is selling only “catastrophic” plans through the marketplace next year, and only to people younger than 30. For everyone else, the only insurer will be Health Net.
Kathy Hornbach, 60, a breast cancer survivor in the Tucson area, was certain the rate increases and insurer exits would not affect her, as she receives a generous subsidy and had heard Blue Cross Blue Shield, her current insurer, was staying in the marketplace in her county. Then she looked on HealthCare.gov.
“Disaster!” she wrote in an email, after learning Blue Cross would no longer cover people in her age group and her only option was a plan from Health Net. “I know nothing about this company, they know nothing about this market, I have no idea how restricted their plan is, and there is no information available for me to review.”
On a brighter note, her monthly premium, now $195 after her subsidy, will drop to $79 while her subsidy more than doubles. Ms. Hornbach, while shaken, is a self-described liberal Democrat who will still vote for Mrs. Clinton.
As Health Premiums Jump, Obama Wields an Imperfect Shield
by Robert Pear
WASHINGTON — Urging people to sign up for coverage under the Affordable Care Act, President Obama said last week that while premiums might be rising, most consumers need not worry. “Premiums going up,” he said, “don’t necessarily translate into higher premiums for people who are getting tax credits.”
Federal subsidies will generally grow with premiums, the administration says, even as rates soar 25 percent to 50 percent or more in some markets. “Most people are going to be pleasantly surprised at just how affordable their options are,” the president said.
But left unmentioned in the pitch to consumers are what economists and health policy experts describe as possible reasons to be concerned about rising premiums:
■ Higher subsidies mean higher costs for taxpayers.
■ Many people buying insurance on their own do not receive subsidies. And for many others, the subsidies are small.
■ Premium increases indicate the magnitude of cost increases for insurers. The continued increases in these costs help explain why the marketplace has been unstable and some insurers have pulled out.
“You should be concerned anytime prices go up rapidly,” said Robert D. Reischauer, a former director of the Congressional Budget Office. “This is increasing costs to the government.”
Moreover, federal officials say, publicity about rising sticker prices may discourage some people from seeking coverage in the marketplace, whose annual open enrollment period begins Tuesday. Research by the government and insurers suggests that many of the uninsured are unaware of the subsidies they may be able to obtain through the marketplace.
The Congressional Budget Office estimates that federal spending on premium subsidies will total $43 billion in the current fiscal year and $672 billion over the coming decade — costs that could increase if premiums and subsidies continue to rise. Still, the subsidy costs are much less than the budget office originally predicted because enrollment is much lower and health costs have grown more slowly.
In his remarks last week on the Affordable Care Act, made in a conference call with thousands of supporters and health insurance counselors, Mr. Obama said that after subsidies are taken into account, “more than seven in 10 consumers will be able to find a plan for less than $75 a month.”
But 15 percent of the 10 million people with marketplace coverage under the 2010 health law do not receive subsidies, mainly because their incomes are too high. And the administration estimates that 6.9 million people buy insurance on their own outside the marketplace, so they cannot obtain subsidies, which are available only through the exchanges. One-third of them might qualify for tax credits if they bought insurance through the exchange, federal officials said.
Emily Odza, a part-time librarian in Oakland, Calif., said the monthly premium for her Kaiser Permanente plan was rising next year to $900, from $800. Subsidies cover about half of the cost. She recently took a second part-time job.
“I worry most about the fact my income may rise slightly above the cutoff point,” Ms. Odza said. “If you want to earn as much as you can just to survive, the government takes away the subsidy.” Financial aid becomes unavailable when an individual has income of more than $47,520 a year.
The Obama administration says people can usually avoid a big increase in premiums if they shop around. Ms. Odza called that advice “totally maddening.”
“It took me several years to settle down with my doctors at Kaiser,” she said. “They expect me to switch every year to find the best price?”
Angela Gehm, a retired school administrator in Long Beach, Ind., said the increase in her premiums for 2017 outstripped the expected increase in her subsidy.
Ms. Gehm said she had recently received a notice from her insurer, Anthem Blue Cross and Blue Shield, saying the premium for her midlevel “silver” plan would rise to $1,007 a month next year, from $827 this year. The subsidy, $583 a month, will be the same, she said, so her cost will rise 74 percent, to $424 a month, from $244. It was not immediately clear how her subsidy had been calculated, but the subsidy is based on the cost of a reference, or benchmark, plan.
Ms. Gehm said she remained a staunch supporter of the Affordable Care Act. She said her views of the 2010 health law were informed by personal experience. She was treated for breast cancer in 2011-12 and benefited from a special insurance program created by the law for people with pre-existing conditions.
Two years before the law was enacted, she recalled, she sought insurance for herself and her son. He had Type 1 diabetes, she said, and the insurance company “said flat-out, ‘That’s an automatic denial.’” The law now forbids such discrimination.
The White House says the cost of the subsidies is small compared with the overall savings of the health care law. Health costs are lower than expected, and “we should use some of that money, some of those savings to now provide more tax credits for more middle-income families,” Mr. Obama said in a recent speech in Miami.
George C. Halvorson, a former chief executive of the Kaiser Permanente health plan, said the rate increases were a reflection of the problems insurers faced. The premium, he said, reflects the average cost of care for an insured population.
“Every insurance company in the exchange has to figure out how to bring down that cost,” he said. “They can manage care better, pay less for each service or bring in a healthier population.”
Dr. David T. Feinberg, the president and chief executive of the Geisinger Health System, in Pennsylvania, said, “We are going through bumpy waters, but I think the market is stabilizing.” The Pennsylvania insurance commissioner has just approved rate increases averaging slightly more than 40 percent for Geisinger’s health plan in 2017.
State insurance regulators have reviewed and approved most of the big rate increases taking effect in January. Insurers submitted data showing that they had lost tens of millions of dollars in the exchanges because customers were sicker than expected and, in some cases, dropped their coverage after receiving expensive care.
Many Democrats, including Mr. Obama and Hillary Clinton, who hopes to succeed him as president, want to increase subsidies to protect consumers against further increases in insurance costs. But some Democrats say that is not enough.
“Subsidies and more taxpayer dollars are not the only answer,” said Jamie Court, the president of Consumer Watchdog, a liberal advocacy group. “Insurance companies that get more subsidies will just keep asking for more subsidies, without controlling costs.”
Anthem is cutting out-of-network health coverage in a 'bait and switch,' lawsuit says
by Melody Peterson - LA Times
On the first day of Obamacare open enrollment, a consumer group sued Anthem Blue Cross for attempting to automatically renew policies that no longer cover out-of-network costs for hundreds of thousands of Californians.
A lawyer for Consumer Watchdog said Tuesday that Anthem was “railroading existing members into bare-bones plans” without properly disclosing the change to them in recent renewal letters.
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On top of the loss of out-of-network coverage, many of the customers also face big premium hikes.
Los Angeles resident Paul Simon, one of the patients involved in the lawsuit, would pay 33% more next year for his policy — $655.72 a month, up from $491.54 this year, according to his renewal letter.
Consumer Watchdog’s lawsuit says Anthem engaged in a “bait-and-switch” scheme. The group’s attorneys said Anthem should have sent the customers a “discontinuation” notice to properly inform them that they were losing their out-of-network coverage. Instead the insurer sent notices saying the policies would automatically renew if the member takes no action by Dec. 15.
“We believe that Anthem is trying to take advantage of consumers during the open enrollment period,” said Travis Corby, a lawyer representing the consumer group. “They are selling 2017 Affordable Care Act health plans as being the same as their 2016 products.”
Anthem customers are not the only ones facing big premium hikes for 2017.
Statewide average premiums on the online marketplace known as Covered California will rise an average of 13.2% in 2017. That is roughly half as much as the 25% rise for a mid-level plan on the federally run online marketplace used by 39 other states.
Darrel Ng, an Anthem spokesman, said his company had changed the plans’ design “to mitigate rate increases and keep monthly premiums affordable.”
He said Anthem believes that the lawsuit “is without merit.”
“The benefit package being offered in 2017 was approved by the Department of Managed Health Care and Covered California and is consistent with federal guidance,” Ng said. “Affected members have been mailed written notice of this change so they can make an informed decision on their healthcare needs during the open enrollment period for the coming year.”
The change, effective Jan. 1, affects policyholders who had signed up for Anthem’s preferred provider organization, or PPO.
In most areas in the state, Anthem is changing its PPO into a so-called exclusive provider organization, or EPO — which means that it will no longer pay even a portion of bills from doctors or hospitals not in its network.
Leslie Burkes of Los Angeles, another Anthem customer, said Tuesday that she had picked Anthem’s PPO because a family member has a serious medical condition and sees specialists outside the network.
“I’m trapped in a double blind,” she said. “We will have no coverage to doctors we need.”
The lawsuit, filed in Los Angeles County Superior Court, asks the judge to force Anthem to renew the plans as PPOs for 2017. It also seeks monetary damages for customers who are harmed and payment of the consumer group’s attorney fees.
Open enrollment, a period when consumers can sign up for or change their health insurance coverage for next year, began Tuesday on Covered California. To get coverage that begins Jan. 1, people must sign up by Dec. 15. For insurance with later start dates, people can sign up through Jan. 31.
Jan Spencley, executive director of San Diegans for Healthcare Coverage, a nonprofit that offers free enrollment counseling, said her phone has been ringing as beneficiaries open notices from their current carriers showing how much their premiums will climb next year.
Rate increases are softened significantly for most enrollees because they receive taxpayer-supported subsidies based on their income.
But for many people, the subsidies are rising more slowly than their premiums, Spencley said. That may mean a large rate hike unless they are willing to switch to a less expensive policy.
“Some of the calls I get from people are just heartbreaking,” Spencley said, “because they’re one flat tire or dead car battery away from not being able to pay for health insurance anymore.”
Inside those big Obamacare rate increases: State hostility to the law costs residents plenty
by Michael Hiltzik - LA Times
In all the knee-jerk hand-wringing over the announced rate increases for Affordable Care Act exchange insurance (sorry for the mixed metaphor, but it’s apt), one factor in the increases has been consistently overlooked. On average, states that have been hostile to Obamacare are facing the largest premium increases for 2017. Residents in states that have embraced the law will do much better.
This points to one indisputable flaw in the law as it was enacted in 2010: The ACA gave the states too much power to implement its provisions. Their authority was enhanced by subsequent tweaks to the law by the White House and Supreme Court.
Given the extent to which ideology has clouded minds in many statehouses across the country, this was a real blunder. It was only magnified by the decision of Chief Justice John Roberts to transform the law’s mandated expansion of Medicaid to bring insurance to the poorest Americans into a state-level option.
Charles Gaba, that indispensable tracker of ACA rates and policies, has fleshed out this phenomenon by comparing the weighted average premium increases for states that implemented the ACA cooperatively, even enthusiastically, with the increases in states that have resisted. (Gaba weights the increases by the enrollments of the insurance companies; in other words, a rate increase by a company with 100,000 customers counts more than one by a company with a few hundred customers.)
He finds that the weighted average rate increase for states that expanded Medicaid is 22.1% for 2017; among the 19 states that still have not expanded the program, it’s 28.9%. In states that formed their own marketplace to enroll Obamacare consumers, the increase is 17.3%; among those that rely on the federal government’s exchange, healthcare.gov, it’s 28%.
Finally, among states that refused to allow consumers to remain in pre-ACA insurance plans that didn’t comply with the new law as of 2014, the weighted average increase is 18.8%; among those that capitulated to hysteria over canceled pre-ACA insurance plans by grandfathering the non-compliant plans for as long as three years, it’s 28.4%.
Put these three factors together, and the states that fully embraced Obamacare will see increases of 18.2%. Those that fully resist will see increases of 29.8%.
“Fully embracing the ACA (expanding Medicaid, running your own full exchange, sticking with the original timeline, etc.),” Gaba observes, “is a pretty good way to help keep rate hikes down.”
A few caveats are in order. Figures for the resisting group may be skewed by Oklahoma, which will experience an off-the-chart premium increase of 76%, in part because it has only one insurance provider, Blue Cross/Blue Shield. The effect, however, is marginal, since Oklahoma has only about 164,000 enrollees in ACA plans; Gaba calculates that the total rate increase would fall to 28.4% from 29.8% if Oklahoma is excluded. California, which has embraced Obamacare and where rates will rise an average 13.2% for next year, has about 2.2 million individual market enrollees.
The pro-ACA grouping is similarly skewed by Minnesota, where the weighted rate increase is more than 55%, in part because the state’s basic health plan appears to have siphoned off a large number of people who would otherwise be in the Obamacare pool, driving up costs for the latter.
The enrollment figures include on-exchange buyers and those who have purchased individual plans off the exchanges. The premium rates are pre-subsidy; the vast majority of exchange enrollees are eligible for government subsidies that can cut their monthly costs to as little as a few dollars per month.
Remember that these are averages; some states in the resistance group will have small increases, and some in the embrace group will have large ones. The two states with the lowest increases, for instance, are bluer-than-blue Rhode Island and deep-red North Dakota.
Finally, expressing the rate increases as percentages may obscure that some low-increase states may already have had higher rates than those in the high-increase category, so their absolute rates may be higher.
Even in light of all that, Gaba makes the case that partisan and ideological leanings have influenced rate trends. The biggest divergence is between states with their own marketplace exchanges and those using the federal healthcare.gov. It’s not clear why that is, though it’s possible that the refusal to open a state exchange serves as a proxy for all the silly, niggling ways a state government can throw obstacles in the way of Obamacare, such as refusing to fund “navigators” to help residents find the best plan for themselves, or failing to negotiate with insurers to secure the best prices.
The next biggest divergence is between Medicaid expansion and non-expansion states. Nineteen states, all controlled by Republican governors or legislative majorities, or both, still haven’t accepted the expansion, to the certain disadvantage of their citizens and their state budgets. The federal government covered 100% of the expansion cost for the first three years, and 90% or more after that.
The benefits of Medicaid expansion, in public health and fiscal health, have been well-documented. Expansion states have lowered their uninsured populations and costs to local hospitals of uncompensated care. Moreover, according to the Kaiser Family Foundation, “states expanding Medicaid under the ACA have realized budget savings, revenue gains, and overall economic growth.” Throw in Gaba’s findings of larger premium increases, and expansion Medicaid looks even more like a no-brainer. That should raise questions about the brains inhabiting the statehouses of the states still turning it down.
The smallest difference in premium increases — albeit still a significant difference — is between states that grandfathered pre-ACA plans and those that held fast to the deadline of Jan. 1, 2014. The federal government’s decision to allow noncompliant plans to remain in effect was a reaction to a political uproar over cancellations of old plans, which challenged President Obama’s assertion that “if you like your plan, you can keep it.”
This always was a bogus controversy. As we observed at the time, the notion that loyal customers were being deprived of plans they absolutely adored, like the family dog, was almost certainly mythical. In any event, the category of customers who lost their old plans and couldn’t find new ones for the same rates or less turned out to be minimal — probably about 1 million.
Many health economists thought that grandfathering old plans was a bad idea. Their policyholders had been cherry-picked as low-risk customers, and keeping them out of the overall individual insurance pool was sure to force rates in the pool higher, while fostering confusion among insurers about the market they were serving in the ACA. Those concerns tended to be well-founded.
Maybe the person working near you, the one who dragged himself to work and is now coughing and sneezing, couldn’t afford to stay home.
Each week about 1.5 million Americans without paid sick leave go to work despite feeling ill. At least half of employees of restaurants and hospitals — two settings where disease is easily spread — go to work when they have a cold or the flu, according to a recent poll.
To address that issue, Chipotle began offering paid sick leave to all its employees in the United States this year. The restaurant chain is hoping to reduce the spread of infectious disease — like the norovirus outbreaks traced to its restaurants last year and earlier this year. Though many other industrialized countries already require employers to offer paid sick leave to all employees, the United States does not.
Paid sick leave is not free, of course. Economic theory suggests that its cost would be passed from employers to their employees in the form of lower wages or reductions in other benefits like vacation time. Yet employees and their co-workers may be better off with an incentive to take time off when sick.
A number of recent studies point to the benefits. A study by Philip Susser, now a medical student, and Nicolas Ziebarth, a Cornell economist, backs up Chipotle’s theory that paid sick leave could reduce the spread of contagion. Their study, published in the journal Health Services Research, estimated that 45 percent of the American work force does not have paid sick leave; that’s about 50 million workers.
Low-income mothers are particularly likely to work while sick. Another study, by LeaAnne DeRigne of Florida Atlantic University and colleagues, explains why. It found that families with less ability to afford unpaid time off are more likely to lack paid sick leave. According to the study, published in Health Affairs, 65 percent of families with incomes below $35,000 had no paid sick leave, while the same was true of only 25 percent of families with annual incomes above $100,000.
Paid sick leave slows the spread of disease. States and cities that require employers to offer paid sick leave — Washington, D.C.; Seattle; New York City; and Philadelphia, as well as Connecticut, California, Massachusetts and Oregon — have fewer cases of seasonal flu than other comparable cities and states. Flu rates would fall 5 percent if paid sick leave were universal. According to one estimate, an additional seven million people contracted the H1N1 flu virus in 2009 because employees came to work while infected. The illnesses led to 1,500 additional deaths.
Paid sick leave has other benefits besides reducing flu deaths. For example, workers may use it for preventive care, forestalling subsequent, more disruptive health problems. Workers lacking paid sick leave are more likely to delay needed medical care, a finding that holds for both insured and uninsured workers. In other words, though health insurance helps people pay for health care, it does nothing to help them afford to take time off to get it.
Sicker workers may be more prone to job-related injuries. One study found that even within industries in which accidents and injuries are relatively more likely — like forestry, mining and construction — workers with paid sick leave experienced fewer of them than workers without it. Another study found that employees who work while sick are more likely to have heart attacks than those who take time off.
Paid sick leave may also enhance productivity and reduce turnover. One studyestimated that the lower productivity of sick workers costs employers as much as their medical care.
Children benefit from their parents’ paid sick leave, too. Most directly, it helps workers afford to care for sick children. Additionally, the children of new mothers who return to work more rapidly, perhaps because they lack paid time off, are less likely to be breast-fed or to receive recommended medical checkups and immunizations.
Though a few cities and states mandate paid sick leave, there is no national requirement. Under the Family and Medical Leave Act, enacted in 1993, employers with more than 50 workers must offer 12 weeks of leave within a 12-month period, but it is unpaid. Because of a new Obama administration rule, an estimated 300,000 private-sector employees working on government contracts will get paid sick leave starting on Jan. 1. New York State recently enacted a law that mandates paid leave to care for a newborn or a sick family member, but it is not applicable to employees who are themselves ill.
Paid sick leave is not the only way to improve access to health care for workers. The ability to see a doctor or a nurse outside of business hours — for example, via telemedicine or at a health clinic at a drugstore or other retail location — can also improve access to care.
We tend to focus on health care coverage as the only way to reduce the cost of care to patients. But there are many other costs we rarely consider, time taken from work among them. Even when they are insured, many workers in the United States — unlike those in every other industrialized country — are exposed to this cost.
DEPPE, SILVERMAN & CATAPANO-FRIEDMAN: ALL-PAYER PLAN IS RISKY AND COUNTERPRODUCTIVE
This commentary is by Susan Leigh Deppe, MD, of Colchester, Alice Hershey Silverman, MD, of Montpelier, and Lisa Catapano-Friedman, MD, of Bennington, who are psychiatrists with many years’ experience in private practice and other settings in Vermont.
Chasing Medicare’s unproven “quality” data and mythical cost savings ignores obvious ways to fix health care. The all-payer model is wrong for Vermont.
First, creating a single accountable care organization (ACO) privatizes enormous power, pushing us toward a single purchaser in the marketplace. Such private monopsonies are extremely dangerous. (In contrast, tightly regulated public health care monopsonies in most developed countries are beneficial to their populations. Whether single- or multi-payer, they care for everyone, spend far less than we do, and get equal or better health outcomes.) In a single ACO, large hospitals would gain even more influence relative to small practices. The Green Mountain Care Board (GMCB) was designed to be free of conflict of interest and to make budgetary and health care allocation decisions for all of Vermont. It should not abdicate this much responsibility and give it to any private entity.
Second, the ACO scheme takes risk from insurance companies — that’s the point of insurance — and dumps it on hospitals and clinicians. This is a bad idea for many reasons. Third, research shows we don’t know how to measure quality, and most ACOs don’t save money. Vermont’s Medicare spending is already relatively low. Fourth, spending millions on bureaucracy to track questionable “quality” measures is unconscionable when other needs are so great.
Fifth, administrative burdens on primary care and mental health clinicians will reduce access to care. These specialties, already drowning in administrative nonsense, will bear the brunt of new “quality” documentation. Private practices are small businesses, and are often the most cost-effective setting for care. Yet, because of low reimbursement, many private practitioners have quit, or have joined hospitals in order to survive. The private practice system is collapsing at the same time many Vermonters are desperate for care. Access to psychiatrists has been horrific for many years. We could reverse all of this by raising reimbursement and minimizing bureaucracy, but the all-payer proposal does the opposite! It will likely cut payment while requiring doctors to obsessively track useless “quality measures.”
Excessive focus on documenting “quality” could force clinicians to neglect other aspects of care. It is analogous to “teaching to the test” in No Child Left Behind. And some metrics punish clinicians financially for things over which they have no control: patients’ behavior, lifestyle or inability to afford medications and treatments. This is unfair and counterproductive. Clinicians might feel financial pressure to avoid providing care to difficult or complex patients.
We recognize that the incentives and penalties are being pushed at the federal level via Medicare, and now by other insurers, whether one joins an ACO or not. But we know of no other country whose health care system has this bizarre obsession with documenting “quality” — and we should use waivers to avoid it if possible. Most advanced countries ensure quality and manage costs by tailoring resources to population needs; strong regulation; having far higher ratios of primary to specialty care clinicians than we do; and price controls (including drugs, medical equipment and information systems.) Unified systems provide data that can drive appropriate care and technology use. They waste little time or money on administration because they lack the byzantine morass of private insurance, “managed care” and drug/device profiteering that devour our clinicians’ time and 30 percent of our health care dollars!
Rather than the all-payer waiver, we should pursue publicly-funded Universal Primary Care (PFUPC), including outpatient psychiatry, using federal waivers to include as many payers as possible. It would cost very little and could be designed so care is not blocked by deductibles and copayments. Relieved of that coverage, insurance companies would lower premiums for families, employers, schools and governments, reducing taxes. It would not cost much and the benefits would be enormous.
The Green Mountain Care Board could incentivize primary care and psychiatry, which save money and improve population health. Payment could be fee-for-service, salary, or time-based, since capitation doesn’t work in small practices. Offering a central, streamlined billing clearinghouse would reduce office overhead cost and allow doctors to spend more time with patients. More practices would survive, clinicians would be happier, and more would probably move to Vermont. Patients would have more access and choice. They and their doctors would be in charge of care.
While chasing “quality” and ACOs, we’ve been ignoring the obvious. Let’s exit the all-payer dead-end and get back on the road to universal primary care and better health.
Colorado to swing — and likely miss — at fixing health care coverage
ByKENNETH T. BELLIAN
The highly contentious and volatile presidential election has kept us too busy to actually discuss what the next president is going to do about the crisis in the American health care system. This $3 trillion line item in the US economy is suffering from runaway cost inflation, collapsing insurance markets, and underwhelming outcomes. As a former executive of a large safety net hospital, I can tell you that this is a big deal.
Several states, pessimistic of a viable federal fix, have tried to craft at least stopgap solutions, mostly around access to care and, to a lesser extent, around cost and quality of care. None have succeeded. It’s likely that Colorado’s effort, on the ballot next week, is headed in the same direction.
The Institute of Health care Improvement’s Triple Aim Initiative has identified an ambitious but logical framework for health care reform. Its three key goals include improved patient experience and quality, improved health of populations, and reduced cost.
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The federal Affordable Care Act (ACA), rolled out in 2010, improves access to care. But that’s just one aspect of quality. Since then, the federal government has reached a stalemate, unable to address the other areas fundamental to comprehensive health care reform which were not a part of the ACA.
Washington, it seems, has completely lost the ability to address complex problems, especially when it requires working across party lines. The lack of cooperation has paralyzed efforts to improve access to health care. Even worse, it thwarts discussion on the other important components of the Triple Aim: quality, cost, and population health.
Several states have tried to fill this void. The idea of state-provided universal single-payer health care coverage has been floated in Illinois, California, Hawaii, New York, Massachusetts, Minnesota, Montana, Pennsylvania, and Oregon. It failed to pass in all of them.
In a bipartisan effort, Vermont passed a universal coverage, single-payer system in 2011. But after three years of exploratory discussions, it abandoned the initiative because of skyrocketing costs and tax requirements.
In Colorado, where I live, voters will pass judgment on Amendment 69 on Nov. 8. Its passage would dismantle the current health care system and create a $38 billion political subdivision called ColoradoCare that would enshrine universal health care coverage system in the state’s constitution.
ColoradoCare should serve as a cautionary tale to other states seeking to fix the health care problem. The massive cost and the breathtaking scale of the bureaucracy it would create have it sucking wind at the polls, with 67 percent of voters opposed to the amendment and just 27 percent supporting it, according to a recent Magellan poll.
Adding to the amendment’s unpopularity is that its largest funding source would be a new 10 percent tax on every Coloradan’s payroll income, as well as on interest from savings and dividends from stocks, capital gains, and some retirement income.
Putting ColoradoCare in place would double state spending overnight and give Colorado the highest income tax in the nation, making us immediately non-competitive in attracting businesses to locate in the state. It would also hurt startup hubs in places like Boulder, which are the state’s growth engines.
If ColoradoCare was a private corporation, it would rank 80th on the Fortune 500 list— bigger than Nike, American Express, Sears, or McDonalds. And yet many details, including the actual leadership, would need to be worked out. Can you imagine asking for funding for a company of that size without knowing the management team?
As a physician, health care executive, and entrepreneur, I’m a proponent of universal health care. But too many attempts to fix health care are poorly conceived and lack the kind of delivery model innovation that will be required to manage the feat of covering all Americans, delivering superior outcomes, and managing costs.
Success is possible. But we need imaginative, bipartisan thinkers to generate a plausible federal solution. This would relieve the states from having to fabricate their own insufficient, piecemeal legislation for health care. Any program put forward should focus on the Triple Aims of health outcomes to improve overall population health and reduce the aggregate cost of health care.
Health care policies can’t be developed in isolation, since 70 percent of health outcomes are dictated by social determinants of health and related health behaviors, such as availability of safe and stable housing and access to quality education.
Ideas for moving forward can be borrowed from other industrialized nations with better health outcomes than ours, such as the United Kingdom, Switzerland, and Sweden. The federal government can create a better, more flexible health care framework around which states could innovate. This means either creating new policies or removing old ones that are barriers for delivering more efficient, cost-effective care. Examples include supporting new ways of delivering care, seamless data sharing, and unique payment models.
The federal government should take the lead on putting forth a comprehensive and coordinated effort to address our current health care crisis. In doing so, it must address quality, cost, and population health. If it doesn’t, we’ll see more wildly misguided simple-solutions-that-aren’t-really-solutions to complex questions like what to do about health care in America.
Kenneth T. Bellian, MD, is a Boulder, Colo.-based physician, health care executive, and digital health entrepreneur, as well as a fellow in the Colorado Governors Fellowship Program, which seeks to train and attract business and nonprofit leaders to public service.
by Regina Herzlinger, barak RICHMOND and richard boxer
If there is a coherent theme to this year’s election, it is the growing economic frustration of working Americans. While trade has been the chief scapegoat, a major culprit has received much less attention: the rising cost of health insurance.
Recent news of large price increases for plans on the Affordable Care Act’s insurance exchanges was the latest example of an unsustainable trend. But those exchanges sell insurance to only about 12 million individuals. Most people with private health insurance, about 150 million individuals, receive coverage through employers. And for those people, prices have been rising for years.
A Kaiser Foundation report released in September explained that since 1999, health care premiums for employer-sponsored insurance programs have risen more than three times faster than wages. Today’s workers are paying an average of $18,000 for health insurance that covers fewer services each year, as employers shift costs to their employees through higher deductibles, co-payments and shares of premiums.
Unlike the plans purchased on insurance exchanges, where individuals pay directly for their policies, employers pay for most private health insurance on their employees’ behalf. Economics research suggests that for each dollar an employer spends on an employee’s health insurance premium, roughly one dollar is removed from that person’s take-home pay. But these costs remain hidden. Workers know their take-home pay has stagnated, but they may not attribute that stagnation to health care costs.
Workers have little control over this enormous expense made on their behalf. Most have few, if any, health insurance options and cannot trade dollars spent on insurance for higher take-home pay. They cannot shop around for or economize on what is probably their most expensive annual purchase. In turn, insurers are not pressured to offer more affordable insurance products.
A minor tweak to our tax code could go a long way to bring more choice, affordability and personal control to how workers purchase health insurance. Current law allows individuals to avoid taxes on money spent on insurance premiums only if their employers purchase insurance on their behalf. What if employers transferred to their employees the amount they now spend on coverage and the law allowed employees to deduct that spending from their taxes?
And what if those laws allowed employees to opt not to spend that entire sum on health insurance, but instead take some home as wages? If an employee in a marginal tax bracket of 25 percent were given an $18,000 budget to purchase insurance, but opted for a plan that costs only $14,000, she could take an additional $3,000, post-tax, home to her family.
This slight change would turn the economic tables for the millions of Americans who get health insurance through their employers. Abundant research has shown that low- and middle-income workers have a strong preference for low-cost plans, much more than what their employers currently offer. If workers know they can increase take-home wages by purchasing less expensive insurance, they will demand more insurance options, and insurers are likely to respond. To avoid the chance that cash-strapped families purchase inadequate plans, insurance plans would have to meet the Affordable Care Act’s minimum standards. The law’s requirement to purchase insurance, with penalties for non-purchase, would lessen the possibility that workers would keep all the money rather than buy insurance.
Freeing workers’ choices for insurance would also bring pressures on insurers to create new products that control costs, such as bundling of homeowners, auto and health insurances, or enabling people between 55 and 64 years old to access Medicare. State legislatures would feel similar pressures to adjust regulations to support competitive insurance marketplaces.
Stiffer competition and cost pressures on insurers, in turn, would force providers to offer more efficient care, such as by replacing outpatient and emergency room visits with telemedicine technology.
Our proposal charts a bipartisan path, bolstering the Democratic mandate for universal care working within the Affordable Care Act, while heeding the Republican call for competition and choice. It also presses further than the main presidential candidates. Hillary Clinton proposes reducing the cost of pharmaceuticals, eliminating taxes on high-end policies, improving cost transparency and allowing people over 55 to buy into Medicare. Donald J. Trump, who wants to repeal the Affordable Care Act, calls for creating tax-free health savings accounts and facilitating cross-state competition. Both recommend assorted tax credits. Each of these approaches aims to soften the effects of rising prices. But neither empowers workers to invigorate the marketplace and make prices more competitive.
America has prospered because it has harnessed the power of competitive markets to enable growth, and it is not hyperbole to say that middle-class disaffection threatens the very compact that generated this prosperity. Competitive markets do not merely force companies to act efficiently and produce valuable offerings. In assuring Americans that they can control their budgets and have a voice in their life decisions, they also serve as a reliable counterforce to the economic discontent that has roiled this election season.
Letter to the editor: Expand Medicare to fix costly health care system
The next president needs to fix our health care system fast. Costs are spiraling out of control. America’s experiment of using private employer-based insurance is off the rails, and we’re the only developed country using it.
But we have a better health care system in place already. It lets people keep their doctors and provides great care at affordable prices – often the price is zero. This system, of course, is Medicare, and for seniors, it’s non-negotiable.The next president should improve the rules of Medicare to cover children and allow adults under 65 the option of paying to enroll. What do the adults pay? Adults should pay for their own coverage and chip in for seniors and kids, too.
We’re essentially already doing this through the Obamacare privatized system. The problem is that we’re also paying insurance company shareholder dividends, profits, CEO salaries, bonuses and guaranteeing insurance companies noncompetitive markets where prices spiral out of control.Americans can take control again by improving the already functional Medicare system. This could be one of the many options that low-income citizens could buy through Obamacare, and it would provide better coverage at a lower price than the competition. This rule change would create dramatic savings and efficiencies for the U.S. economy without raising taxes.
One last thing: My 28 teeth and two eyeballs are as important as the rest of my wonderful organs (except the oddball appendix). They should be covered by the newly expanded Medicare just like any other body part and not require separate insurance policies. Obviously.
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