Editor's Note:
The following link will take you to a talk given by pollster and messaging expert Mac MacWilliams of MacWilliams Sanders communication. In it, he provides advice about what the most effective messaging about health care should look like - at least for Minnesotans.
Highly recommended!
-SPC
The following link will take you to a talk given by pollster and messaging expert Mac MacWilliams of MacWilliams Sanders communication. In it, he provides advice about what the most effective messaging about health care should look like - at least for Minnesotans.
Highly recommended!
-SPC
We’ve finally learned Trump’s grand plan for fixing health care
by Catherine Rampel - Washington Post - August 2, 2018
During his presidential campaign, then-candidate Donald Trump promised to replace Obamacare with “something terrific.”
For a long time, that “something terrific” was left unspecified. Now, more than a year and a half into Trump’s presidency, we have finally learned his grand plan for reducing Americans’ health-care costs.
It is: Don’t get sick. Ever.
That, at least, was the message of the administration’s new rule expanding the availability of junk insurance plans, finalized Wednesday.
The rule deals with “short-term” health plans. Short-term plans were initially designed to do exactly what they sound like: provide stopgap coverage to tide consumers over until, say, school starts in the fall or that new job begins.
Under the Trump administration’s new regulation, however, these plans will soon be allowed to last up to 364 days and to be renewed for up to 36 months. So, not so short after all.
There’s a reason Trump wants short-term plans to last such a long time. That way, they’ll look like an attractive alternative to insurance for sale on the Obamacare exchanges, with one key difference: Unlike Obamacare plans, short-term insurance doesn’t actually have to insure anything.
Seriously. Unless states step in, these not-so-short-term “short-term” plans are not subject to any of the protections required by the Affordable Care Act.
Short-term plans can turn away people with preexisting conditions, including asthma and acne. They can charge older or sicker people prohibitively expensive premiums.
Or they can enroll such people at what looks like a bargain-basement price and then refuse to pay for any care related to preexisting illnesses — including illnesses that enrollees didn’t even know they had when they enrolled, such as cancer or heart disease. Some plans have dropped consumers as soon as they got an expensive diagnosis, sticking them with hundreds of thousands of dollars in unexpected medical bills.
Unlike Obamacare plans, short-term plans also are not required to cover any particular benefits, even for the relatively healthy.
A Kaiser Family Foundation review of short-term plans offered around the country found that most did not cover prescription drugs, and none covered maternity care. Preventive and mental-health care are also frequently excluded.
Even care listed as “covered” is often subject to ridiculously low or otherwise absurd payout limits. Think: a policy term maximum of $3,000. Or no coverage for any hospital stay that begins on a weekend.
The tiny print can be endless. And as former head of the Centers for Medicare and Medicaid Services Andy Slavitt points out, consumers will never, ever be as good at reading the fine print as insurance companies will be at writing it.
Because these plans cover so little, cherry-pick their enrollees and pay out so infrequently, premiums tend to be dirt-cheap. The Trump administration estimates that people who purchase short-term plans will pay about half the average unsubsidized premium on the Obamacare exchanges.
How could the availability of cheaper insurance possibly be a bad thing, you ask?
A few reasons.
This parallel system of insurance will siphon off healthier, younger, less expensive people from the exchanges. That will leave behind a pool of sicker, older, more expensive people, which will drive up premiums on the exchanges.
The combination of expanding short-term plans and repealing the individual mandate will increase Obamacare premiums by an average of 18 percent in the 42 states (and the District) that don’t already prohibit or limit short-term plans, according to an Urban Institute study.
People with incomes low enough to qualify for Obamacare subsidies will be at least partly shielded from these premium hikes, of course. The federal government will instead be on the hook for their higher costs; as a result, the Trump administration estimates that its new short-term insurance rule will increase federal spending $28 billion over the next decade.
However, middle-class people who don’t qualify for Obamacare subsidies — yet still, you know, need real insurance — will be stuck paying the higher rates themselves.
And what about those lucky, healthy people who might celebrate the greater availability of cheap plans?
They won’t be celebrating if their kid breaks a leg, or they try to fill a prescription or (heaven forbid) they face a more serious health scare.
That’s when they’ll discover the insurance that seemed so cheap is cheap only because it’s worthless — and that their “catastrophic coverage” doesn’t even cover catastrophe. If they want to pay their “catastrophic” medical bills, they’d better luck into a job with decent insurance. Or join the hundreds of thousands who are begging strangers online for charity.
Which brings us back to Trump’s real plan for American consumers: Stay healthy, or drop dead.
https://www.washingtonpost.com/opinions/trump-to-american-voters-stay-healthy-or-drop-dead/2018/08/02/e526d9e0-968b-11e8-810c-5fa705927d54_story.html?
Medicare for all projected to cost $32.6 trillion over 10 years, study finds
Ricardo Alonso-Zaldivar - The Associated Press - July 30, 2018
WASHINGTON — Sen. Bernie Sanders’ Medicare for all plan would boost government health spending by $32.6 trillion over 10 years, requiring historic tax hikes, says a study released Monday by a university-based libertarian policy center.
The latest plan from the Vermont independent would deliver significant savings on administration and drug costs, but increased demand for care would drive up spending, according to the analysis by the Mercatus Center at George Mason University in Virginia. Doubling federal individual and corporate income tax receipts would not cover the full cost, the study said.
Sanders’ plan builds on Medicare, the popular insurance program for seniors. All U.S. residents would be covered with no copays and deductibles for medical services. The insurance industry would be relegated to a minor role.
“Enacting something like Medicare for all would be a transformative change in the size of the federal government,” said Charles Blahous, the study’s author. Blahous was a senior economic adviser to former President George W. Bush and a public trustee of Social Security and Medicare during the Obama administration.
Responding to the study, Sanders took aim at the Mercatus Center, which receives funding from the conservative Koch brothers. Koch Industries CEO Charles Koch is on the center’s board.
“If every major country on earth can guarantee health care to all, and achieve better health outcomes, while spending substantially less per capita than we do, it is absurd for anyone to suggest that the United States cannot do the same,” Sanders said in a statement. “This grossly misleading and biased report is the Koch brothers response to the growing support in our country for a ‘Medicare for all’ program.”
Sanders’ office has not done a cost analysis, a spokesman said. His 2016 presidential campaign website cites an estimated price tag of $1.38 trillion a year for an earlier version of the plan, but other studies have projected much higher costs.
Sanders’ staff found an error in an initial version of the Mercatus report, which counted a long-term care program that was in the 2016 proposal but not the current one. Blahous corrected it, reducing his estimate by about $3 trillion over 10 years. Blahous says the report is his own work, not the Koch brothers’.
Also called “single-payer” over the years, Medicare for all reflects a longtime wish among liberals for a government-run system that covers all Americans. With Republicans in charge of Congress and the White House, it has little chance.
But Sanders’ idea has broad rank-and-file support among Democrats, and polls show it also appeals to many independents. Looking ahead to the 2020 election, Democrats are debating whether single-payer should be a “litmus test” for national candidates.
The Mercatus analysis estimated the 10-year cost of Medicare for all from 2022 to 2031, after an initial phase-in. Its findings are similar to those of several independent studies of Sanders’ 2016 plan. Those studies found increases in federal spending over 10 years that ranged from $24.7 trillion to $34.7 trillion.
Kenneth Thorpe, a health policy professor at Emory University in Atlanta, wrote one of the earlier studies and says the Mercatus analysis reinforces them.
“It’s showing that if you are going to go in this direction, it’s going to cost the federal government $2.5 trillion to $3 trillion a year in terms of spending,” Thorpe said. “Even though people don’t pay premiums, the tax increases are going to be enormous. There are going to be a lot of people who’ll pay more in taxes than they save on premiums.” Thorpe was a senior health policy adviser in the Clinton administration.
The study found that the plan would reap substantial savings from lower prescription costs — $846 billion over 10 years — since the government would deal directly with drugmakers. Savings from streamlined administration would be even greater, nearly $1.6 trillion.
But other provisions would tend to drive up spending, including coverage for nearly 30 million uninsured people, no deductibles and copays, and improved benefits, including dental, vision and hearing.
The Mercatus study also takes issue with a key cost-saving feature of the plan — that hospitals and doctors will accept payment based on lower Medicare rates for all their patients. Medicare rates are currently about 40 percent less than private insurance, according to the analysis.
The study found U.S. health care spending under Sanders’ plan would drop over time — about $300 billion lower in 2031.
However, it also found that potential savings would vanish if hospitals and doctors aren’t willing to accept lower fees for patients who are now privately insured. In that case, the U.S. would spend about $400 billion more in 2031.
Costs have been a stumbling block for state efforts to enact a single-payer system, including in Sanders own state of Vermont.
The Mercatus Center's Estimate of the Costs of a National Single-Payer Healthcare System: Ideology Masquerading as Health Economics
by David U. Himmelstein and Steffie Woolhandler - PNHP - August 2, 2018
The Mercatus Center's estimate of the cost of implementing Sen. Bernie Sanders’ Medicare for All Act (M4A) projects outlandish increases in the utilization of medical care, ignores vast savings under single-payer reform, and fails to even mention the extensive and well-documented evidence on single-payer systems in other nations – which all spend far less per person on health care than we do. But despite adopting a raft of faulty assumptions that inflate the estimated cost of implementing single payer, the Mercatus Center's report concludes that universal first dollar coverage under Sen. Sanders' bill would actually decrease the nation's total health expenditures, saving the average American about $6,000 over ten years.
We outline below some of the most glaring errors in the Mercatus Center analysis of Medicare for All, which was led by Charles Blahous.
1. Administrative savings, Part 1: Blahous assumes that insurance overhead would be reduced to 6 percent of total health spending from the current level of 13 percent in private insurance. Although overhead in Canada's single payer system is only 1.8%, Blahous justifies his 6 percent estimate by citing Medicare’s current overhead, which includes the extraordinarily high overhead costs of private Medicare HMOs run by UnitedHealthcare and other insurance firms. However, Sen. Sanders’ proposal would exclude these for-profit insurers, and instead build on the traditional Medicare program, whose overhead is less than 3 percent. Moreover, by simplifying hospital payments by funding them through global budgets (similar to the way fire departments are paid), rather than the current patient-by-patient payments, a well-designed single-payer program could fully reduce overhead to Canada’s level of about 1.8 percent. Cutting insurance overhead to less than 2 percent (rather than the 6 percent that Blahous projects) would save approximately $2.9 trillion more than Blahous estimates over a 10 year period.
2. Administrative savings, Part 2: Blahous seems unaware of the extensive literature documenting the huge administrative burden – and resulting costs – borne by U.S. doctors and hospitals, and the savings that would be realized under a streamlined single-payer system. Every serious analyst of single-payer reform has acknowledged these savings, including the Congressional Budget Office, the Government Accountability Office, the Lewin Group (a consulting firm owned by UnitedHealth Group), and Prof. Kenneth Thorpe.
These provider savings on paperwork would, in fact, be much larger than the savings on insurance overhead. At present, U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single payer systems like Canada’s or Scotland’s. Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing.
Overall, these administrative savings for doctors and hospitals would amount to about $3.4 trillion over 10 years. Additional savings of almost $2.0 trillion from streamlined billing and administration would accrue to nursing homes, home care agencies, ambulance companies, drug stores, and other health care providers.
In total, the Blahous analysis underestimates administrative savings by about $8.3 trillion over 10 years.
3. Drug costs: Blahous projects that the only drug savings achievable through a single-payer plan would come from switching patients from brand name drugs to generics. He assumes that the prices of drugs – both generics and brand name drugs – could not be lowered through the price negotiations called for in Sen. Sander's bill. Blahous claims that the savings achievable through negotiations cannot be estimated, ignoring the price reductions of about 40-50% that have been achieved by the VA and by many other nations that use the methods called for in the Sanders legislation.
Reducing drug prices to the levels currently paid by European nations would save at least $1.7 trillion more than Blahous posits over 10 years.
4. Utilization of care: Blahous projects a massive increase in acute care utilization, but does not provide detailed breakdowns of how big an increase he foresees for specific services like doctor visits or hospital care. However, it is clear that the medical care system does not have the capacity to provide the huge surge in care that he posits.
For instance Blahous' figures for the increase in acute care suggest that Sanders’ plan would result in more than 100 million additional doctor visits and several million more hospitalizations each year. But there just aren’t enough doctors and hospital beds to deliver that much care. Doctors are already working 53 hours per week, and experience from past reforms tells us that they won’t increase their hours, nor will they see many more patients per hour.
Instead of a huge surge in utilization, more realistic projections would assume that doctors and hospitals would reduce the amount of unnecessary care they’re now delivering in order to deliver needed care to those who are currently not getting what they need. That’s what happened in Canada. Doctors and hospitals can adjust care to meet increasing demand, as happens every year during flu season.
Moreover, no surge materialized when Medicare was implemented and millions of previously uninsured seniors got coverage. Between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was absolutely no increase in the total number of doctor visit in the U.S.; Americans averaged 4.3 visits per person in 1964 and 4.3 visits per person in 1966. Instead, the number of visits by poor seniors went up, while the number of visits by healthy and wealthy patients went down slightly. The same thing happened in hospitals. There were no waiting lists, just a reduction in the utilization of unneeded elective care by wealthier patients, and the delivery of more care to sick people who needed it.
Bizarrely, despite projecting a $2.213 trillion increase in total payments to providers over 10 years, Blahous claims that the program would lead to massive financial losses for doctors and hospitals (top of page 19).
5. Long Term Care: The original version of Blahous' report estimated that the Sanders bill would increase expenditures for long term care by $1.849 trillion over 10 years. He was apparently unaware that the Sanders bill would not immediately implement major changes in the long term care financing system. When informed of this error he deleted this section of the report, and recalculated his figures.
In summary, Blahous grossly underestimates the administrative savings under single payer; projects increases in the number of doctor visits and hospitalizations that far exceed the capacity of doctors and hospitals to provide this added care; and posits that our country would continue to pay much more for drugs and medical equipment than people in every other nation with national health insurance. His thus overestimates national health expenditures by about $10 trillion over 10 years.
Blahous also neglects to mention that massive savings would accrue to businesses, households, and state and local governments that would no longer be saddled with health insurance premiums or out-of-pocket costs. These savings would more than compensate for the increased federal government expenditures. The Sanders bill would, in reality, shift spending from private to public sources, and from state and local governments to the federal government. Over 10 years, our nation would surely pay less overall under Sen. Sanders bill than under current arrangements.
Moreover, despite overestimating new costs and underestimating savings Blahous admits that Sanders' program would cover all of the uninsured, and upgrade coverage for the vast majority of Americans who currently have private insurance or Medicare, while decreasing total health expenditures by $2 trillion over ten years.
Blahous' biased, anti-single payer estimate inadvertently bolsters the evidence that a single payer reform would greatly increase the efficiency and fairness of the U.S. health care system.
The Kochs helped fund an attack on 'Medicare for All.' It still concluded the plan would save us trillions
by Richard Eskow - LA Times - August 2, 2108
Years ago, I was asked to advise one of the country’s most powerful CEOs on his corporation’s health and benefits plan. In a meeting with staffers, he raised one confusing and complicated idea after another. When I asked what he was trying to accomplish for his employees, he said: “I want to give them less, and make them think it’s more.”
That’s our healthcare system in a nutshell. This year, according to the Milliman actuarial firm, healthcare will cost nearly $30,000 for an average American family of four with employer-based insurance. The family will shoulder $12,378 of that cost directly through premium payments, copayments and deductibles. It will also lose income, since these rising costs will prevent employers from paying higher wages. The individual health insurance market is even more expensive, with a baffling maze of options and unpredictable costs.
Fortunately, the political tide is turning. Most Americans now support the concept of “Medicare for All,” a comprehensive, government-managed program that builds and expands on the successes of today’s Medicare. Sixteen Democratic senators have signed on to Sen. Bernie Sanders’ Medicare For All Act, known as M4A.
That’s a threat to billionaires like Charles and David Koch, the fossil-fuel tycoons who have already spent hundreds of millions of dollars undermining support for government at all levels. The Kochs have a clear challenge: How do you undermine growing support for an idea that will improve the health and finances of most Americans? They’re trying to invert the formula that CEO gave me years ago: Take a plan that gives us more, and make us think it’s less.
That’s where Charles Blahous comes in. Blahous, a longtime Republican aide, is affiliated with the Koch-funded, right-wing Mercatus Center. His attack on M4A has been widely reported as predicting an “astronomical” cost. Blahous is entitled to his conservative ideology, as discredited as I believe it is. My biggest problem is with his math, not his mindset.
Blahous says that M4A will add $32.6 trillion to government spending over a 10-year period. That number is overstated, and ignores the “invisible taxes” Americans currently pay to private corporations every year.
Proposed funding sources for M4A include a 4% income tax, which means a family of four earning $75,000 per year would pay an additional $2,000 in taxes after taking a standard deduction. But that family would no longer pay an invisible tax of $7,674 — the average premium paid to private insurers — for an immediate savings of $5,674. In addition, it would no longer have to pay an average $4,704 in out-of-pocket costs. That’s a savings of more than $10,000 per year.
Who wouldn’t take that deal? Granted, the $10,000 average includes the costs of expensive care that families don’t need every year. But at a time when two-thirds of American households say they don’t have $1,000 for an emergency, it’s protection well worth having.
Employers win, too. They are currently paying nearly $16,000 on average for the family in our example. If that’s replaced with a proposed premium based on 7.5% of salary, that figure falls to $5,625. (Sanders has identified other potential funding sources.) Economists have concluded that some of that savings will translate into higher wages.
Blahous argues that M4A’s elimination of out-of-pocket costs and inclusion of hearing, vision and dental care will increase the use of these services. That’s true. But by my interpretation of available data, Blahous overstates this increase. Most Americans aren’t pining to spend more time in the doctor’s or dentist’s office. And he fails to accurately weigh the value of improved productivity and well-being for tens of millions of Americans.
Blahous correctly notes that workers’ wages, and therefore tax revenues, will rise, but that’s a major win for the plan.
Blahous understates drug cost savings under M4A. Prescription costs are expected to reach $360 billion this year, with a current inflation rate of 6%. Unchecked, these costs will significantly exceed $4 trillion over a 10-year period. Pharmaceutical prices in the United States are three times higher than they are in Britain. That means we can reduce these costs by significantly more than Blahous proposes.
Blahous also understates the potential for administrative savings. As a former designer and manager of large-scale bill payment systems, I am certain that much greater savings can be achieved through better fraud detection and improved economies of scale.
Nevertheless, Blahous estimates that M4A will save more than $2 trillion by 2031. I believe that figure will be much higher. Either way, it’s clear: Americans can’t afford not to have Medicare for All.
M4A’s opponents routinely use large, intimidating numbers to make it appear unaffordable. These figures must be counterbalanced by the even larger costs of doing nothing.
The human toll is the greatest cost of all. Matt Bruenig of the Public Policy Project estimates that if M4A is not passed, 320,000 people will die over a 10-year period. We cannot let that happen. Nor can we forget the millions of people who needlessly struggle with illness and disability because they lack adequate care.
We can have more, and better, healthcare if we stop settling for less.
http://www.latimes.com/opinion/op-ed/la-oe-eskow-medicare-for-all-blahous-report-20180803-story.html
Bernie Sanders’s $32 trillion Medicare-for-all plan is actually kind of a bargain
The federal government would spend a lot more money on health care, but overall US health spending would be about the same as otherwise projected.
by Dylan Scott - VOX - July 30, 2018
$32 trillion.
That is how much federal spending would increase over 10 years under Bernie Sanders’s Medicare-for-all bill, according to a brand-new estimate from the libertarian-leaning Mercatus Center at George Mason University.
Before you question the source (like Sanders did), you should know the left-leaning Urban Institute came up with the exact same number in 2016.
It sure sounds like a lot of money, and conservatives hopped all over the figure on Monday morning. But there are a lot of ways to think about $32 trillion — and one might be that it’s actually kind of a bargain.
Mercatus is projecting a $32 trillion increase in federal spending, above current projected government expenditures, from 2022 to 2031.
In terms of overall health care spending in the United States over the same period, however, they are actually projecting a slight reduction.
There is the rub. The federal government is going to spend a lot more money on health care, but the country is going to spend about the same.
“Lower spending is driven by lower provider payment rates, drug savings, and administrative cost savings,” Yevgeniy Feyman at the right-leaning Manhattan Institute told me. “It’s not clear to what extent those savings are politically feasible, and socially beneficial.”
(One concern is whether cuts to prescription drug spending would discourage medical innovation. It’s simply hard to know — Mercatus projects a $61 billion drop in drug spending in one year, but there would still be hundreds of billions of dollars spent annually on medications.)
When you consider a universal single-payer program would 1) cover every single American, eliminating uninsurance and 2) provide much more robust benefits, covering more services than get covered right now, then it starts to look like a good deal.
More people covered. More services covered. Same price, more or less.
The Mercatus Center bakes in some assumptions that could vary the actual cost quite a bit. For example, its scholars assume (as the Sanders bill dictates) that hospitals and doctors would be paid at Medicare rates, a cut from private insurance rates but an increase from Medicaid rates. If the real payment rate were different, it could affect the price tag significantly.
Still, this seems like a reasonable estimate from a group that we would expect to be pretty skeptical of single payer — and it still looks like kind of a good deal.
This is where politics enters into the mix. Conservatives are going to recite that large-sounding cost as often as they can. They were already jumping on it Monday morning. Many Americans still hold real reservations about making Big Government any bigger.
Single-payer supporters are going to have to come up with a persuasive case that, yes, the federal government is going to spend more, but overall spending won’t go up. Taxes are going to rise for somebody, but many or even most Americans could end up saving money on their premiums or on out-of-pocket costs.
We still haven’t seen the fine print on financing, and that will be a big part of this debate. We shouldn’t minimize that. There will be winners and losers, as there always are in health care reform.
It could be a winnable case, given evolving attitudes about a person’s right to health care. But polling shows many people’s opinions on this are still malleable. Persuasion is necessary.
But setting the politics aside, a closer look at these new estimates reveals “$32 trillion” isn’t quite as much as you might think.
That study going around on Bernie Sanders' 'Medicare for All' plan comes with a big catch — the US would actually be saving money overall on healthcare
by Bob Bryan - Business Insider - July 30, 2018
- A new report from the libertarian Mercatus Center found that Sen. Bernie Sanders' "Medicare for All" plan would cost the federal government an additional $32.6 trillion over 10 years.
- But the Mercatus report also found that the national health expenditure — the total amount spent on healthcare in the US by the federal government, states, businesses, and individuals — would come in below current projections under Sanders' plan.
- So while the price tag for the federal government would increase, the total cost of healthcare would go down, and more than 30 million uninsured Americans would get access to healthcare, according to Mercatus' model.
A new report on Sen. Bernie Sanders' "Medicare for All" plan outlined a whopping cost for the federal government. But the price tag may not be as overall eye-catching as it initially seems.
The report, from the libertarian Mercatus Center, found that Sanders' plan to extend Medicare to all Americans would increase federal healthcare costs by $32.6 trillion from 2022 to 2031 if implemented as written.
Republicans pounced on the number, arguing that it showed such a plan was not feasible.
House Speaker Paul Ryan tweeted: "$32.6 trillion dollars. That's how much Washington Democrats' single-payer healthcare proposal would cost over 10 years. Even doubling all federal individual and corporate income taxes wouldn't cover this cost. It is just absurd."
But the cost for the federal government tells only part of the story. The government is one piece of the health-system puzzle.
The Department of Health and Human Services also measures the total amount spent on healthcare in the US, including by states, private citizens, the federal government, businesses, and more. This all-encompassing number is known as the national health expenditure, or NHE.
According to the Mercatus model, total health spending would actually come in about $303 billion lower in 2031 than under current projections, with $7.35 trillion going to healthcare that year versus $7.65 trillion expected now. Total national health spending would be $2 trillion lower from 2022 to 2031 under the plan, the report found.
While the price tag for the federal government would increase significantly, decreased spending by other groups would lower total healthcare spending over that 10-year period. Meanwhile, the model also assumes that 30 million more people would get access to healthcare, and many people would get more robust services.
The savings would come from a variety of places, such as the government's ability to leverage its bargaining power into lower prescription-drug costs and mandating all healthcare providers take the lower Medicare payment rate.
The study contains assumptions, and there are numerous political and practical concerns in shifting the burden of healthcare payments to the federal government. But based on the Mercatus model, tens of millions of uninsured Americans would get access to healthcare, and the US as a whole would end up spending less than it is expected to right now.
A Libertarian’s Case Against Free Markets in Health Care
by Roman Zamishka - The Health Care Blog - August 2, 2018
In the final act of Shakespeare’s Richard III, the eponymous villain king arrives on the battlefield to fight against Richmond, who will soon become Henry VII. During the battle, Richard is dismounted as his horse is killed and in a mad frenzy wades through the battlefield screaming “A horse, a horse! My kingdom for a horse!” Richard shows us how market value can change drastically depending on the circumstances, or your mental state, and even the most absurd exchange rate can become reasonable in a moment of crisis.
This presumably arbitrary nature of prices should be the first thing about the US healthcare market that catches the attention of any student of economics. Prices for the same procedure vary greatly between hospitals on opposite sides of the street and even then appear to have no basis in reality. Further investigation reveals many other features of the healthcare market that economics teaches us will increase transaction costs and the misallocation of resources. The prices we discussed are generally not paid by the patient, but by a third party insurer. Often the patient isn’t even able to select the insurer but is assigned one by his or her employer. What the patient thinks of the insurer’s ability as a steward of his or her premiums is irrelevant. Further, contracts between providers or pharmacies and the insurer completely hide the true price from the patient’s view. In addition, anti-competitive certificate of need laws limit competition between providers and expensive regulations compel providers to merge to compete in a nuclear arms race with the insurers, although the real victim is the patient’s wallet over which the providers and insurers fight their proxy wars. The best way to explain the US healthcare system is if you took every economic best practice and then did the opposite. How does one get out of this mess?
Academics and physicians from places like Boston and San Francisco often argue that this situation is proof that free market healthcare has failed in America and that the only solution is to implement a nationalized single-payer model. Writing in Medical Economics, Dr. Anish Koka makes the above point that “labeling this “the free market” is about as pure as labeling the offspring of a Great Dane and a Chihuahua a purebred” and retorts that the way out of this quagmire isn’t towards a centralized single payer, but to normalize a price driven medical market. When presented with this argument the Boston types will usually profess their support of free markets in general, followed by a regretful proclamation that markets can’t work in healthcare because medicine is not a generic commodity and that people simply won’t shop.
But Dr. Koka is ready for this and preempts the argument by presenting the case of the Surgery Center of Oklahoma. Founded by Drs. Keith Smith and Steven Lantier in Oklahoma City in 1997, the Surgery Center does not accept insurance and operates on a cash basis directly with patients, or on a contract basis with businesses self-funding their employees’ healthcare. The prices for their procedures are available online and are binding; you won’t be surprised by unexpected items being added to your bill. Their transparency and quality has earned the Surgery Center high praise from patients domestic and international, and their success is evidenced by their ability to survive for 20 years despite their unique model (unique for healthcare, that is, any fast food restaurant would be quite familiar with it, perhaps that’s why we’re more effective at creating COPD than treating it?) Dr. Koka proposes that making the Surgery Center’s price model the standard will reveal and remove all the bureaucracy, middlemen and inefficient practices that are making the American healthcare system so expensive.
However, despite the success of the Surgery Center of Oklahoma, there really are features inherent to healthcare that make an extension of the price mechanism to the rest of the market impossible or impractical. Every Russian schoolboy knows that one of the first criticisms of the market mechanics in medicine was the recently passed Nobel winner Ken Arrow’s “Uncertainty and the Welfare Economics of Medical Care“. From a libertarian perspective Arrow’s critique is a mixture of truth and opinion, but nonetheless, it is a good starting point. He himself wrote that the short paper is an “exploratory and tentative study”.
Arrow’s analysis is built around the ubiquity of uncertainty in the medical field and proposes that “virtually all the special features” of medicine come from this origin. The first unique characteristic of medicine is that demand for medical care is irregular and unpredictable. Although there are other industries where demand is irregular, there is a truth that relying on insurance financing schema would make a market less competitive as it adds a middleman between the patient and physician. This comment also shows the age of the analysis; written in 1963, when insurance was not as prevalent as it is today (although already a captured market with the employer-sponsored insurance tax benefit firmly in place) and medical care was still oriented around irregular acute cases rather than the reliable chronic diseases that are so common today.
Arrow next remarks that the physician has a responsibility for the patient’s welfare far above that of a typical salesman, such as a barber. While this is true of the profession in theory, in practice there is a robust medical malpractice industry that is a testament to the fact that ultimately physicians are still human and there are good ones, bad ones, and sometimes even evil ones. We have little reason to believe that physicians are more saintly than barbers.
Arrow then makes his best point, which is that medical care is inherently different from commodities because the success of medical care is uncertain. In particular, this point is most relevant to the Surgery Center of Oklahoma’s model. The Surgery Center performs procedures that are most commodity-like among healthcare services in their reliability and quality. Happy hip replacements are all like, every unhappy chemo response is unhappy in its own way.
Finally, Arrow concludes by pointing out that medicine is endemic with licensing restrictions on entry, uncompetitive pricing, and price discrimination based on income levels. This is a tautology that medicine can’t be a competitive free market because it hasn’t been a competitive free market. We’ve seen industries standardize (finance) and deregulate (airlines) as they mature. Healthcare is still a relatively young field (radical mastectomies were common not so long ago), so there’s no reason to believe medicine’s professional culture can’t change.
From Kenneth Arrow’s analysis, we can see that there are some concerns about the uniqueness of medicine that aren’t true, some that are irrelevant, and some that are legitimate. It is these valid impediments to free market function that need to be considered seriously before we propose that the price competition model should be extended to the rest of the market. Arrow’s most relevant point was that the success of medical services is uncertain, but in fact, there are many more.
The first set of problems is cases where patients shopping is either impossible or socially undesirable. This includes shopping for medical services and health insurance, since the unpredictable incidence of disease makes the two inseparable, as Kenneth Arrow pointed out. The most obvious example is emergency medicine, which has already been culturally recognized in America as a universal service with the passage of EMTALA. An unconscious person brought into the ER by definition can’t price shop for services. Similarly, we don’t want insurers to be able to price shop by keeping ERs out of network. When I have an emergency, I need the ambulance to bring me to the closest ER able to take care of me, not the closest one that my insurer decided is a good value. Similarly, physicians are correct to be outraged with insurers trying to not cover care performed in the ER that they deem inappropriate for the ER setting. It’s unreasonable and dangerous to expect patients to self-diagnose when deciding whether to go to the ER. Finally, even the bravest libertarian would be hard pressed to say thatthe woman who recently pleaded not to have the ambulance called should not receive emergency care if she can’t afford it. I certainly can’t say it, and there are some on Twitter who have been impressed with my lack of empathy. If we, as a society, agree that emergency care is a public good and that shopping for it is impossible, shouldn’t coverage of ER services be nationalized?
Emergency Medicine is only 2-5% of healthcare spending, but it does demonstrate that there really are parts of medicine where free market competition is impossible. It’s a cornerstone from which the rest of my critique proceeds. Healthcare decisions that have negative externalities on the public are another example where shopping is undesirable. Mass vaccination of the public was probably the most successful medical developments of the 20th century, accounting for 20-30% of the life expectancy gains made during that era. The public health benefits provide a good reason for not only vaccination but all infectious disease treatment to be nationalized and available to the public at no cost. Coughing patients not going to the hospital because they’re afraid of the cost is how Ebola epidemics and zombie movies start.
We also don’t want shopping to occur when the beneficiary of the medical care can’t shop for themselves. Here I am specifically referring to perinatal and child healthcare. Should infants have their entry into the world endangered because of women not being able to afford their prenatal care? Should children be required to not receive healthcare because their parents are not able to afford, or even worse choose not to purchase child insurance? There are arguments to be made against John Rawls’ theory of justice, but they usually are based on adults abusing their agency to take advantage of such a system, which children by definition of their minor status can’t do. The national insurance coverage rate for children is 95.2%, it should be 100%. It is in the public’s interest that all children can receive appropriate care until they reach adulthood and are allowed to start screwing up their health however they wish.
The next set of problems are related to the nature of disease. Unlike televisions and cars, we don’t choose to buy the bodies that we are born into. As the existentialists argued, we are thrust into existence without our consent. This absurdist nature of our lives comes with many equity and justice problems, the most Rawlsian of which are pre-existing conditions, whether genetic disorders such as cystic fibrosis or more nuanced diseases like Type 1 diabetes. Disease like these, especially so when they are progressive, are a permanent tax on individuals’ ability to operate on a daily basis and impede their physiological, psychological, and financial wellbeing. The part about financial wellbeing is most important in this discussion because these conditions directly decrease the patient’s ability to finance the healthcare that they need. Despite all the injustices and inefficiencies of cross-subsidization in healthcare, if we as a nation really are a unified community, then don’t the healthy among us owe it at the very least to financially support the healthcare of those who are sick since their youth as thanks for taking the bullet during the genetic Russian roulette at birth? We did nothing to deserve to be healthy and they did nothing to deserve to be ill; we can’t deny that we know this to be true.
The next problem is the mental health elephant in the room, which patients don’t talk about because of stigma and policy wonks avoid because there aren’t any clear solutions. In the past, we used to have thick family structures to keep us insulated from life’s shocks and priestly confession to keep us from going crazy of guilt. The world developed, and we became solitary atheists, but the problems of our minds remain. Jordan Peterson often talks about how just about everybody either has or knows somebody with a mental disorder, but we still must get up in the morning and go to work. The result is a society that is increasingly addicted, depressed, and suicidal. Just like with genetic disorders, mental health disorders progressively decrease our ability to finance the healthcare that we would need, but to make matters worse they also inhibit our ability to even recognize that we need healthcare or to negotiate the prices for that healthcare, in a way that cystic fibrosis does not. There’s a perverse libertarian economic argument that an alcoholic with hepatitis who uses his money to buy more alcohol is making a welfare efficient decision because he is buying exactly what he wants. If we want society to remain even moderately functional, we must reject this argument. Mental health is yet another area where price mechanisms are untenable.
Finally, we need to discuss chronic disease management and the problem it poses to the medical field. When Kenneth Arrow was writing in 1963, the majority of healthcare was infectious disease treatment and low-probability surgeries, or conditions amenable to insurance financing mechanisms. Back then obesity affected 10% of the population and childhood overweight was virtually non-existent. Today 75% of the population is overweight and 40% is obese. 50% of the population has at least one chronic disease. The obesity, substance addiction, and e-cigarette trends all indicate that the problem is only going to get bigger. It is increasingly becoming not a question of whether somebody will get a chronic disease, but when they will get it. Conservatives correctly raise the concern that insurance covering a known adverse event is no longer insurance. This problem is further complicated by the fact that although there are behaviors that can significantly improve their outcomes, there are many smokers who won’t develop COPD and there are many exercise junkies who will get diabetes. These diseases have too many causal variables to attribute blame to any specific reason. But we can’t throw up our hands and give up just because insurance isn’t going to be a viable financing mechanism. Is price driven medicine a viable solution? It doesn’t seem to be. The problem is that chronic diseases are developed over decades from the accumulation of strain caused by daily living and normal aging, with most of the costs rapidly (and somewhat reliably) materializing in the last 1-2 decades of a person’s life. People don’t consciously factor in the cost of diabetes 30 years from now when they decide to eat a slice of pie, because they simply can’t forecast effectively over such a long horizon. The correct financing mechanism to solve this asymmetry is not an insurance (the outcome is known) or uninsured shopping (the cumulative cost is too high) but a long maturity bond, with the person paying into the bond over the lifetime and the bond paying out a large lump of cash at maturity. Sound familiar? That’s exactly how pensions work, which is something that has always been nationalized (the known problems with our pension schemes is a legitimate, but separate, discussion).
To conclude, this is not a critique of the Surgery Center of Oklahoma’s model, which I praise and admire, but a call for an honest analysis of its limitations. The broader problem that I see is that much of the health insurance market is already nationalized through Medicaid, Medicare and the VA. The reality is that it is politically impossible to reverse from this position. If we then add to this list emergency medicine, perinatal healthcare, child healthcare, genetic diseases, mental health and chronic disease management, all of which I earnestly believe have a legitimate case to be nationalized, then what are we left with for free market shopping? Surgeries and generic drugs? At that point, you might as well nationalize the rest just to simplify things and remove any regulatory asymmetries. I hate to say it, but it’s not clear to me as a conservative that single payer (or at least universal coverage + optional private supplemental insurance) isn’t the right solution.
http://thehealthcareblog.com/blog/2018/08/02/a-libertarians-case-against-free-markets-in-healthcare/
The Health 202: 'Medicare for all' is the dream. 'Medicaid for more' could be the reality.
by Colby Itkowitz - Washington Post - August 2, 2018
"Medicare for all" is the hottest position on the left these days, but there's a quieter push afoot to create a public option using Medicaid.
Chanting "Medicaid for more" may not sound as bold for progressives seeking to prove their bona fides before the midterm elections. Yet all the most-hyped 2020 Democratic presidential candidates are on board with the idea, including the Medicare expansion's biggest champion, Sen. Bernie Sanders (I-Vt.).
The idea in concept is simple: Allow states to open up their Medicaid programs to anyone regardless of income. Those people could buy in to the social safety net and have access to Medicaid's provider network and benefits. The groundwork for expanding the program for low-income Americans has already been laid to some extent as 34 states have expanded Medicaid under the Affordable Care Act.
Sen. Brian Schatz (D-Hawaii) has introduced the "State Public Option Act" to promote states to expand Medicaid — co-sponsored by some familiar Democratic faces: Sanders, Elizabeth Warren (Mass.), Cory Booker (N.J.), Kamala Harris (Calif.) and Kirsten Gillibrand (N.Y.). But the real efforts are happening at the state level where legislatures all over the country are seriously considering the idea.
Heather Howard, a lecturer at Princeton University who also helps states with their health-care systems, said many plans are in their infancy, but that 14 states across the country have made moves to, at minimum, weigh the benefits and challenges of shifting Medicaid to a publicly available health insurance option.
"There are a lot of policy considerations to think about, but while the federal policy debate is stalled, you have states thinking about what tools do we have. [Medicaid] is the immediate tool you have," she told me.
That's because Medicare is operated at the federal level so any major changes to it have to be decided in Washington. Medicaid, on the other hand, is run by the states, so they have more discretion over how the program is set up.
There are real critiques of Medicaid as it now exists, such as low reimbursement rates for doctors and uniform access to care. To offer it to everyone would require responding to those criticisms as well as new questions such as the cost to states, whether states have to apply for federal waivers to alter the program and whether a public option lives on or off the ACA exchanges.
This week stakeholders across New Mexico met with President Obama's former Centers for Medicare and Medicaid Services Administrator Andy Slavitt to begin some of those conversations. Earlier this year, New Mexico's state legislature passed a bill to create a committee to study a Medicaid buy-in program. Medicaid is popular there; one-third of New Mexicans are enrolled. Yet 230,000 people remain uninsured in the state, according to Kaiser Family Foundation data, and proposed premium rates for 2019 for those who don't qualify for ACA subsidies are increasing anywhere from 9.2 percent to 18.5 percent.
Slavitt is the board chair of a new group, United States of Care, which has an impressive roster of bold-faced names leading it from investor Mark Cuban to former Obama speechwriter Jon Favreau to former congresswoman Gabrielle Giffords (D-Ariz.) and her astronaut husband Mark Kelly. In the absence of Washington leadership, the group is working with states on ways to improve health care.
Allison O'Toole, the group's director of state affairs, was also on the ground in New Mexico this week and told me there's a "real hunger" and "momentum" around the idea of allowing states to expand Medicaid.
"Washington is in gridlock and not addressing people's real concerns around the cost and affordability of health care," O’Toole said. "This has created a greater sense of urgency and necessity by states to pick up that ball and run with it."
With the Republicans' failure to repeal the ACA and the public outcry when they tried, Democrats are feeling emboldened this year to talk ambitiously about their health-care goals.
Health care is a leading issue heading into November, and polls show at least half of Americans are in favor of a "Medicare for all" program. But even if Democrats win the House majority and make gains in the Senate, President Trump has said Obamacare is unsustainable and his administration has worked persistently to chip away at it.
That's why Michael Sparer, a public- health professor at Columbia University, believes "Medicaid for more" is not only good policy, but also good politics. It's the type of proposal, he reasons, that could peel off moderate Republicans in a way that a national Medicare program never could.
It's true that Medicaid is a favorite GOP punching bag. The Trump administration is urging states to add work requirements to their programs and the GOP playbook has long included capping how much the federal government pays each state to administer Medicaid.
Yet 34 states, including many with Republican governors, expanded the ACA under Medicaid to include more low-income residents, and several more red states are on the precipice of following them. It's a program that has endured and grown for 53 years.
"The Medicaid buy-in is more of a compromise program, it’s not viewed as a big national program. People who believe in states' rights can view it as states having more flexibility," Sparer said.
Sparer has written extensively on the topic and told me his support for expanding Medicaid is heavily influenced by the political viability of focusing on the program for low-income Americans versus the one covering seniors -- meaning states don't have to wait for a new president to do something meaningful. But that doesn't mean he thinks national political figures like Sanders should stop talking about "Medicare for all."
"The advantage is [Medicaid buy-in] is incremental, it adds populations here and there. But incremental isn’t a great political slogan. You put 'let’s change the system' on a bumper sticker and I get that," he said. "But the more there’s momentum for 'Medicare for all,' then 'Medicaid for more' could be the back up plan."
"Given the ever-present debate," he added, "a more incremental path is a better path."
Private Insurance Companies Don’t Care About the Elderly
by Joel Dodge - Jacobin Magazine - July 30, 2018
Progressives have increasingly coalesced around a single-payer, Medicare-for-All system as the goal for American health care. And there is one piece of our healthcare system where single-payer is the especially obvious solution: long-term care.
Long-term care encompasses everything from nursing homes to home health aides to rehabilitation for injuries or disabilities. It includes all forms of care that people need when they can no longer care for themselves due to old age, chronic illness, or disability. Thirteen million people in the United States require long-term care. About 60 percent are seniors; the rest are younger people with disabilities.
Long-term care is extremely expensive. The United States spends upward of $330 billion each year on long-term care, accounting for around 14 percent of total national healthcare expenses. The median cost of staying in a nursing home is over $90,000 per year. A home health aide typically costs at least $45,000 each year.
Our current system for paying for long-term care is deeply inadequate. While Medicare funds most other healthcare costs for seniors, it does not cover long-term care (except for short stints following hospitalization). The primary public payer for long-term care services is Medicaid, which covers over 50 percent of all long-term care costs. But like the rest of Medicaid, this benefit is means-tested for people without disabilities and only pays for long-term care for people whose assets and income fall below a certain threshold (the exact dollar amounts vary state by state).
Few people have private long-term care insurance to make up the difference. Private insurance funds only 8 percent of total national spending on long-term care. This means most people who are not poor must pay for long-term care out of pocket until they become poor. Middle-income people are forced to “spend down” their assets and drum up enough medical bills to qualify for Medicaid. Once a person has drained his or her assets on medical bills, Medicaid kicks in as a sort of ultra-catastrophic coverage, going into effect only once people have impoverished themselves by exhausting their savings paying for their care.
Why Single-Payer Long-Term Care Is a No-Brainer
There is a better, more humane way to fund long-term care. The federal government should assume the other half of long-term care spending that is not currently covered by Medicaid. This could be administered through modified versions of Medicaid, Medicare, or through a new standalone social insurance program, funded by increased payroll or income taxes.
Most recent progressive health reform proposals haven’t adequately addressed long-term care. Senator Bernie Sanders’s Medicare for All Act of 2017 would have the states administer guaranteed long-term care only for low-income individuals. And the Center for American Progress’s Medicare Extra for All plan includes only a placeholder for a forthcoming separate long-term care agenda.
There are four good reasons why single-payer is the clear solution for our long-term care system.
1. The private market for long-term care insurance is dysfunctional.
Unlike health care generally, private insurance plays a negligible role in funding long-term care. That’s because the market for this type of insurance is highly dysfunctional.
Long-term care policies can be exorbitantly expensive. The average individual premium costs over $2,400 per year — and significantly more for older people with a greater chance of needing care soon. Policies have also proven hard to accurately price. Many insurers initially underestimated the costs of long-term care, and have spent years playing catch-up by raising premiums. This forces beneficiaries to choose between stomaching perpetually rising premiums or else dropping coverage.
Because it’s a small unstable market, long-term care insurance has started to look like a bad risk to insurers. The market is shrinking among both sellers and buyers, according to a 2016 report by the National Association of Insurance Commissioners: “After more than two decades of rapid growth, the LTCI industry has undergone significant contraction, both in terms of sales as well as insurers participating in the market.”
Those insurers that remain have been charging higher premiums for worse coverage, making long-term care coverage less attractive to potential enrollees. Only about 89,000 people purchased long-term care coverage in 2016 — a fraction of the 750,000 people who purchased policies at the market’s peak in 2002.
Government should step in to correct this market failure. Few people carry private long-term care insurance, and fewer still have any attachment to their policy or its (often still prospective) benefits. In short, there are few obstacles within the status quo private market for long-term care insurance standing in the way of a universal government-run plan.
2. It’s extremely difficult for people to plan ahead for their long-term care needs.
Even when people do have long-term care insurance, the benefits are typically time-limited. This mean that enrollees must attempt to estimate exactly how long they will need long-term care years in advance when purchasing coverage, a nearly impossible task.
Social insurance is the obvious fix. It is also hard for people to estimate how much money and medical care they will need during old age. That’s why the US enacted Medicare and Social Security, which each guard against people outliving their savings. In fact, polling suggests that most Americans wrongly assume that Medicare will cover their long-term care.
The absence of general long-term care coverage within Medicare’s benefits package is a glaring gap in our old-age income and health security programs. Universal government coverage for long-term care would close this gap. A whopping 70 percent of Americans over age forty want a government-run program to provide long-term care coverage. This would spare people the impossible task of attempting to calculate how much of their income they need to set aside in case they someday require long-term care.
3. Most other developed countries guarantee universal coverage for long-term care.
The United States is an outlier on the international stage. Many other wealthy countries have created government programs for providing long-term care to everyone. Some countries — such as Norway, Sweden, Denmark, and Finland — finance long-term care out of general revenues collected through taxation. In Sweden, for example, elder care is financed out of national and local taxes, providing coverage for both nursing homes and around-the-clock home-based assistance.
Other countries — such as Germany, Japan, and the Netherlands — use a dedicated payroll tax to fund a separate social insurance program for long-term care. For many years, Germany’s long-term care system resembled that of the United States: a means-tested public program primarily for the poor, and out-of-pocket financing for everyone else. But in 1994, Germany enacted reforms that brought long-term care in line with its system for universal healthcare coverage, creating a new social insurance program to cover all long-term care. The program is funded by a payroll tax set at 1.7 percent of salary, split between each employee and employer.
Either way, citizens in peer countries around the world have the security of knowing that their governments will provide them with comprehensive long-term care coverage in old age or disability, with minimal out-of-pocket costs. Adopting a similar system would bring the United States in line with the rest of the developed world.
4. Attempts at incremental reform in the US have failed.
The United States has tried incremental reform to fix our long-term care system. That effort proved too unworkable to even get off the ground.
The Affordable Care Act, passed into law in 2010, included the Community Living Assistance Services and Supports Act (“CLASS Act”). The CLASS Act would have created a public option for long-term care insurance. Individuals could buy into this government-run insurance plan to pay out benefits in case they needed long-term care in the future.
But signing up was voluntary — there was no individual mandate requiring everyone to purchase coverage. For a type of care that few people think about until it’s imminent in their lives, it seemed highly likely that CLASS would wind up insuring a small group of unhealthy people that expected to use a lot of long-term care services in the near future. This would have made the program too financially unstable to maintain.
The Obama White House ultimately determined that there was no way around this problem, and that CLASS’s design would forever be financially unstable. The administration therefore decided not to even attempt to implement CLASS.
There is one obvious fix here: automatically enroll everyone in a public option for long-term care, and fund it through increased taxes. A universal program would achieve what CLASS lacked: the broadest possible risk pool to keep the program financially solvent. The nature of long-term care makes incrementalism impracticable. Only a universal program can work.
https://jacobinmag.com/2018/07/long-term-care-single-payer-healthcare
What to Know Before You Buy Short-Term Health Insurance
The plans cover less and follow fewer rules than most insurance that you can buy now. They are also less costly and will be marketed extensively.
by Margot Sanger-Katz - NYT - August 1, 2018
The Trump administration has just completed rules that will allow people to shop for a new kind of health insurance. So-called short-term plans will be offered for relatively long periods — just under a year at a time, with renewals for up to 36 months — and they will be marketed extensively in most states.
They will tend to have substantially lower prices than the insurance people can buy in Obamacare markets, and for some people they may look like a better option. But the plans are cheaper for a reason: They tend to cover fewer medical services than comprehensive insurance, and they will charge higher prices to people with pre-existing health problems, if they’ll cover them at all.
That means that it’s really important to shop carefully. Such plans frequently contain a lot of fine print and tend to have a lot more holes in coverage than the Obamacare plans that most people who buy their own insurance currently have.
Currently, short-term plans are allowed in most states but can be sold for only three months at a time. The new, longer-term short-term plans will become available 60 days from now.
The plans don’t cover some types of care
Here are some examples of elements they tend not to cover: prenatal and maternity care; mental health and drug treatment; prescription drugs. In a recent survey of short-term plans, the Kaiser Family Foundation found that only a small fraction covered those broad categories of care.
Some states, including New Jersey and Massachusetts, regulate short-term plans to make them follow nearly all the same insurance rules that the Obamacare plans have. In some of those states, carriers have decided against offering any such plans at all. But in the rest of the states, it will be hard to find coverage for big benefit categories.
Some also skip sports injuries and other common medical problems
There are also smaller categories of care that may be left off these plans. Research from Kaiser and the consumer advocacy group Families USA found that limitations on specific treatments were common. Details differ by plan, but examples include:
- Joint replacement surgery
- Cataract treatment
- Hernia repair surgery
- Treatment for any injury incurred while the patient was intoxicated
- Injuries resulting from organized sports
- Treatment for acne or moles
- Treatment for chronic fatigue or pain
- Immunizations
Limits on the amount of care covered
The plans tend to limit how much care they will pay for in a given year. That means that if you develop an expensive illness, your insurance could get cut off when you hit the limit. A typical short-term plan covers a maximum of $250,000 to $2 million in medical care, according to the Kaiser study. Major medical plans, which follow rules set by the Affordable Care Act, can’t impose any such limits.
Some short-term plans also limit how much they will pay per day of care, like a Lifeshield plan sold in several states, which advertises its “freedom to choose any doctor or hospital,” but pays a maximum of $1,000 of hospital bills per day, or $250 for an ambulance ride.
A pre-existing condition may disqualify you
A history of health problems, even relatively minor ones like allergies or acne, could mean trouble buying one of these plans. Some plans won’t cover any care related to such a condition, even one not previously diagnosed. Other plans charge people with prior health problems a higher price or just deny them outright.
Some other weird things
There may be other strange rules. A review of some plan documents from Families USA found an Illinois plan that would cover only hospitalizations beginning during the week — inpatient stays that began on the weekend would not be allowed except in rare circumstances.
Some plans had waiting periods for care. Cancer treatment, for example, is not covered in certain plans during the first month a person is enrolled in a plan, and no treatment for illness is covered in the first five days. That’s the kind of detail that might be easy to overlook when signing up for a plan if you aren’t expecting a cancer diagnosis.
“I would encourage someone who is looking for coverage just for a catastrophic need to really read the fine print,” said Claire McAndrew, the director of campaigns and partnerships at Families USA. “They often contain complicated exclusions that your average consumer could never predict.”
Insurers and brokers have an incentive to market these plans
If you buy insurance from a broker, it may not be obvious whether a given plan will be a short-term plan or a more comprehensive Obamacare-compliant plan, unless you ask. Both insurers and brokers who help connect people with the plans will have an incentive to sell them.
Plans that follow the Obamacare rules are required to spend at least 80 percent of all premium dollars on medical care, keeping only 20 percent for overhead and profits. There are no such rules for short-term plans.
According to research from the National Association of Insurance Commissioners, the average short-term plan in 2017 spent less than 65 percent of premium dollars on medical care. Some of the short-term plans in the association’s analysis keep more than half of all premiums as overhead and profit.
Brokers also tend to make higher commissions on the short-term plans, since the companies share a cut of their larger profits to get referrals. According to eHealth, a national online brokerage, a typical Obamacare-compliant plan pays a commission of around 5 percent, while short-term plans pay out commissions closer to 20 percent. Because short-term plans are currently limited to 90 days, brokers now make more money selling comprehensive plans that cover more benefits.
However, that math may shift as short-term plans expand their duration under the new rule, giving brokers a stronger financial incentive to sell short-term plans instead.
But they will be far cheaper than more comprehensive plans
In some markets, insurance that complies with all the Obamacare rules has gotten very expensive. For some individuals and families earning too much to qualify for subsidies to help them buy a plan, affording a comprehensive policy can be a struggle. That’s why Trump administration officials say they moved to expand options, like short-term plans, that are more lightly regulated.
Alex Azar, the secretary of health and human services, described the short-term plans as a solution to rising premiums in the Obamacare markets. “These plans aren’t for everyone,” he said in a statement released Wednesday. “But they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
The Kaiser study looked at the prices of plans in a handful of American cities and found plans that cost only a fraction of the cost of Obamacare insurance. In Atlanta, for example, the least expensive Obamacare plan for a 40-year-old single man was $371 a month. The cheapest short-term plan cost only $47.
In a recent customer survey, eHealth found that more than half its current short-term plan customers said they would have been uninsured had the option not existed. Scott Flanders, the company’s C.E.O., says the plans will provide a good option for healthier customers who simply can’t afford a more comprehensive plan. “You can sit there and say major medical is better than short-term,” he said. “But people don’t have the budget for it.”
The Illness Is Bad Enough. The Hospital May Be Even Worse.
by Paula Span - NYT - August 3, 2018
When she moved from Michigan to be near her daughter in Cary, N.C., Bernadine Lewandowski insisted on renting an apartment five minutes away.
Her daughter, Dona Jones, would have welcomed her mother into her own home, but “she’s always been very independent,” Ms. Jones said.
Like most people in their 80s, Ms. Lewandowski contended with several chronic illnesses and took medication for osteoporosis, heart failure and pulmonary disease. Increasingly forgetful, she had been diagnosed with mild cognitive impairment. She used a cane for support as she walked around her apartment complex.
Still, “she was trucking along just fine,” said her geriatrician, Dr. Maureen Dale. “Minor health issues here and there, but she was taking good care of herself.”
But last September, Ms. Lewandowski entered a hospital after a compression fracture of her vertebra caused pain too intense to be managed at home. Over four days, she used nasal oxygen to help her breathe and received intravenous morphine for pain relief, later graduating to oxycodone tablets.
Even after her discharge, the stress and disruptions of hospitalization — interrupted sleep, weight loss, mild delirium, deconditioning caused by days in bed — left her disoriented and weakened, a vulnerable state some researchers call “post-hospital syndrome.”
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They believe it underlies the stubbornly high rate of hospital readmissions among older patients. In 2016, about 18 percent of discharged Medicare beneficiaries returned to the hospital within 30 days, according to the federal Centers for Medicare and Medicaid Services.
Ms. Lewandowski, for example, was back within three weeks. She had developed a pulmonary embolism, a blood clot in her lungs, probably resulting from inactivity. The clot exacerbated her heart failure, causing fluid buildup in her lungs and increased swelling in her legs. She also suffered another compression fracture.
“These hospitalizations can lead to big life changes,” Dr. Dale said. Having grown too frail to live alone, Ms. Lewandowski, now 84, moved in with her daughter.
Dr. Harlan Krumholz, a cardiologist at Yale University, coined the phrase “post-hospital syndrome” in a New England Journal of Medicine article in 2013.
As Medicare began penalizing hospitals for 30-day readmissions under the Affordable Care Act, he looked at the national data and noticed that most readmissions involved conditions seemingly unrelated to the initial diagnoses.
Patients came in with heart failure or pneumonia, were treated and discharged, then returned with internal bleeding or injuries from a fall.
“Our general approach in a hospital is, all hands on deck to deal with the problem people come in with,” Dr. Krumholz said. “All the other discomforts are seen as a minor inconvenience.”
He has argued instead that discharge marks the start of a 60- to 90-day period of increased vulnerability to a range of other health problems, stemming from the stress of hospitalization itself.
“This is more than inconvenience,” he said. “This is toxic. It’s detrimental to people’s recovery.”
Any hospital patient, or hovering family member, knows those stresses: Disrupted sleep, as staff draw blood and take vital signs at 4 a.m. A distorted sense of day and night. Unappetizing meals often served at inopportune times.
Reduced muscle mass and poor balance following even a few days in bed. New prescriptions with unpredictable consequences. Shared rooms. Delirium. Pain.
“It affects your hormones, your metabolism, your immune system,” Dr. Krumholz said. “All these things have widespread effects,” leaving people depleted and less able to stave off other health threats.
The ripple effects vary considerably.
Researchers at Yale followed discharged Medicare patients after hospitalizations for heart failure, heart attacks and pneumonia.
Readmissions for gastrointestinal bleeding and anemia, they found, peaked four to 10 days after discharge. The risk of trauma from falls or other accidents, on the other hand, remained elevated for three to five weeks.
While post-hospital syndrome remains a hypothesis for now, research on several fronts may help establish its validity.
Donald Edmondson, a behavioral medicine researcher at Columbia University Medical Center, has pointed out links between the stress levels that heart attack victims report and their likelihood of readmission.
In a meta-analysis, he and his colleagues found that 12 to 16 percent of heart attack patients, most of them older adults, actually develop post-traumatic stress syndrome.
As Dr. Edmondson acknowledged, people experiencing heart attacks have multiple sources of stress, from fear of death to financial worries. But he and his colleagues also have measured the impact of the hospital environment itself. They compared patients (average age: 63) who came to the NewYork-Presbyterian Hospital emergency room when it was crowded and chaotic (median time in a crowded ER: 11 hours) to those who arrived when it was calmer.
“The more crowded it is when you come in, the more PTSD symptoms you’ll have a month later,” he concluded.
Now the Columbia researchers are following 1,000 E.R. patients with heart attacks, tracking their weight and stress levels and giving each a wearable device to measure physical activity and sleep. The results may help substantiate the effects of post-hospital syndrome.
“We’ve gotten better and better at treating disorders, but we haven’t gotten to the point where we avoid some of the collateral damage to the patient,” Dr. Edmondson said.
Making hospitals less destabilizing, more conducive to healing, seems an achievable goal. Hospitals do it for children, Dr. Krumholz has pointed out.
They could enable older patients, too, to wear their own clothes, get out of bed for walks (even with IV poles), eat enough to maintain their weight. They could assess how many lab tests patients actually need, and whether blood needs to be drawn before dawn.
“We should never wake a sleeping patient unless there’s a compelling reason, and that reason shouldn’t be our own convenience,” Dr. Krumholz said.
But while we’re waiting for hospitals to adopt such policies, we could try a D.I.Y. approach.
Families can bring in favorite foods and help their relatives eat. They can ensure that patients have their hearing aids, dentures, eyeglasses, and walkers or canes to help them stay oriented and mobile.
With a physician’s O.K., they can accompany relatives on short strolls down the corridor to ward off deconditioning, and ask about curtailing wee-hour tests and readings.
“It’s unfair to put families in this position,” Dr. Krumholz said. “It should come from the institution.” But cultural change takes time.
Some hospitals already offer less stressful environments for older patients, including specialized geriatric emergency rooms.
Among those moving in that direction is the University of North Carolina Hospitals Hillsborough Campus, where Bernadine Lewandowski had a private room, as all its geriatrics patients do. She was helped into a chair every day and encouraged to use a walker to reach her bathroom.
The aftereffects proved profound, nonetheless. Already thin, she lost 15 pounds over two months. After her second hospitalization, she began wandering at night, apparently because of a new pain medication, and fell twice in two days. In April, she developed pneumonia, necessitating a third hospital stay.
She’s doing better now, her daughter said. After physical therapy, Ms. Lewandowski can climb the stairs, with someone at her elbow, to her second-floor room. Her weight has stabilized. She enjoys spending time with her family and visiting the hair salon every other week.
But, Ms. Jones said, “we were hoping she’d be with us for a short period and then return to her apartment.” And that never happened.
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