It Saves Lives. It Can Save Money. So Why Aren’t We Spending More on Public Health?
by Aaron Carroll - NYT - May 28, 2018
Not only have many public health interventions in the United States been hugely successful, but they’ve also saved more money than they’ve cost.
And yet Americans spend relatively little money in that domain and far more on medical care that returns less value for its costs. Instead of continually complaining about how much is being spent on health care with little to show for it, maybe we should direct more of that money to public health.
What Do We Mean by Public Health?
It encompasses efforts made to improve the health of a broad population with investments not ordinarily considered “health care.” For example, ad campaigns that encourage better health behaviors — like exercising or quitting smoking. Or efforts to improve housing and nutrition for low-income populations or the quality of air or drinking water for everyone.
An obvious success is vaccines. In the 1900s, polio and smallpox were eliminated in the United States. Other diseases — such as measles, rubella, diphtheria — became very, very rare.
In 1900, the largest cause of death, by far, was infectious disease. Now it’s heart disease and cancer.
Other public health gains in the 20th century included advances in motor vehicle safety (still the largest cause of injury and death in children); safety improvements in the workplace (mostly in mines and construction); and cleaner water and better sanitation.
Fluoridation of our water supply (still surprisingly controversial in some circles) has greatly improved the condition of our teeth.
Family planning options and contraceptive services helped reduce infant and maternal mortality, sexually transmitted infections and unwanted pregnancy. Finally, Americans recognized the hazards of tobacco use and began to make strides in its reduction in the latter half of the 20th century.
This century, Americans continue to attack the same problems, achieving some additional improvements. We introduced new vaccines, like those for HPV, and improved others, like those for influenza. We made strides in preventing and treating infectious diseases like H.I.V./AIDS and tuberculosis. Tobacco use has declined further. Maternal and infant mortality rates have continued to drop, although we’re well behind many other advanced nations.
We screen more for cancer and heart disease, though we could do better here and in the provision of other preventive services. Studies find that half of recommended preventive services are not delivered, and public health programs can increase awareness of the value of those services. We continue to focus on reducing lead exposure in children, with significant success.
Why Is Funding So Low?
For all its benefits, spending on public health is surprisingly low. The private sector can’t make money on it. That leaves the public sector, which is subject to political forces on spending and taxes, and is more focused on projects that might have more obvious and immediate benefits like, say, job creation through building a highway.
Also, some public health investments effectively tell people what to do (avoid sugar, for example). That’s often viewed as paternalistic or bossy.
Of course, it’s hard to pin down total public health spending. In 2017, the budget for the Centers for Disease Control and Prevention — which almost all agree is public health spending — was about $12 billion.
The budget for the Health Resources and Services Administration — some of which is devoted to public health — was $10.7 billion. (The agency helps people who are uninsured or medically vulnerable gain access to health care.)
The Agriculture Department spends more than $100 billion on nutrition assistanceand about $1 billion on food safety, both of which arguably contribute to public health.
But even if we’re generous, and call all of that public health spending, it’s dwarfed by what Americans spend on health care directly.
This is made more surprising by the fact that public health investments are often so valuable that they pay for themselves. There’s no reason not to make them. In contrast, very few medical interventions pay for themselves; we typically hope that they are at least cost-effective, not that they save more than they cost.
Returns on Investment
A 2017 systematic review published in the Journal of Epidemiology and Community Health looked at studies that calculated the return on investment for public health interventions. The researchers identified 52 studies that looked at interventions at a local or national level.
Health protection interventions, which would include vaccinations, have saved $34 for every $1 spent on them, according to the review. But not every vaccine has a positive return. For example, in years for which the flu vaccine is a poor match for the actual influenza types that are circulating, the return on investment can be as low as -21, meaning that it costs $21 to save $1.
In years for which the vaccine matches the disease well, the return on investment can be as high as 174. Such a high return occurs because of all the disease and death prevented.
Even legislative interventions can make big differences, with a median rate of return of 47. That’s because they are relatively cheap and can target behavior at a national level. An example would be a tax on sugar-sweetened beverages (with a possible rate of return of 55).
An Example of a Public Health Campaign
Soda Taxes
Health promotion interventions, including programs to prevent falls among older people or campaigns to get people to quit smoking, have a typical return on investment of only 2. Returns can be higher if programs perform better at targeting high-risk people. Doing so conserves resources (those not wasted on people who are not likely to respond or be in need of help).
Childhood programs, improvements in the built environment (such as building sidewalks to encourage walking) and traffic safety have a typical return on investment of 5.
A paper published in the Journal of Public Health in 2017 examined the cost effectiveness of all public health guidance issued in Britain through June 2010. Thirty of the 200 recommendations were cost-saving, meaning they yielded more in returns than they cost. Almost 150 were cost-effective, meaning they provided adequate improvements in health and well-being for their cost, though they didn’t save money over all.
This analysis was updated last year to include new economic evaluations carried out between 2011 and 2016. The conclusion of the new analyses is that more recent investments have not yielded returns as high as earlier ones, or have not been as cost-effective. This signals that the “easy” interventions have already been covered, and that there are diminishing returns to new investments.
But even with less advantageous returns, the more recent public health investments still have been worth the value they provide.
Think of it this way: Americans can expect to live into their late 70s, on average, in large part because of public health investments. From 1900 to 1999, life expectancy at birth increased from 47 years to 77 years. Although much of that was because of significant improvement in the care of babies and children, experts believe that 25 of the 30 years gained can be attributed to public health advances.
Editor's Note:
The preceding article is a specific example of a more general principle: In the US, we have a a surplus of profitable services, such a invasive cardiology and secondary prevention such as colonoscopies and mammograms, and a deficit of unprofitable services, including primary prevention, such as public health measures, and primary care that, when done properly, is time consuming and for which payment is relatively low .
This would make medical sense if the prices of services were more closely related to their clinical value, but they aren't. They are determined arbitrarily, through a process heavily influenced by specialists, who tend to perform highly targeted and highly priced services that do not consume much time, and can therefore be done in high volume.
-SPC
Why Your Health Insurer Doesn't Care About Your Big Bills
by Marshall Allen - Maine Public - May 25, 2018
Michael Frank ran his finger down his medical bill, studying the charges and pausing in disbelief. The numbers didn't make sense.
His recovery from a partial hip replacement had been difficult. He'd iced and elevated his leg for weeks. He'd pushed his 49-year-old body, limping and wincing, through more than a dozen physical therapy sessions.
The last thing he needed was a botched bill.
His December 2015 surgery to replace the ball in his left hip joint at NYU Langone Medical Center in New York City had been routine. One night in the hospital and no complications.
He was even supposed to get a deal on the cost. His insurance company, Aetna, had negotiated an in-network "member rate" for him. That's the discounted price insured patients get in return for paying their premiums every month.
But Frank was startled to see that Aetna had agreed to pay NYU Langone $70,000. That's more than three times the Medicare rate for the surgery and more than double the estimate of what other insurance companies would pay for such a procedure, according to a nonprofit that tracks prices.
Fuming, Frank reached for the phone. He couldn't see how NYU Langone could justify these fees. And what was Aetna doing? As his insurer, wasn't its duty to represent him, its "member"? So why had it agreed to pay a grossly inflated rate, one that stuck him with a $7,088 bill for his portion?
Frank wouldn't be the first to wonder. The United States spends more per person on health care than any other country. A lot more. As a country, by many measures, we are not getting our money's worth. Tens of millions remain uninsured. And millions are in financial peril: About 1 in 5 is currently being pursued by a collection agency over medical debt. Health care costs repeatedly top the list of consumers' financial concerns.
Experts frequently blame this on the high prices charged by doctors and hospitals. But less scrutinized is the role insurance companies — the middlemen between patients and those providers – play in boosting our health care tab. Widely perceived as fierce guardians of health care dollars, insurers, in many cases, aren't. In fact, they often agree to pay high prices, then, one way or another, pass those high prices on to patients — all while raking in healthy profits.
ProPublica is examining the bewildering, sometimes enraging ways the health insurance industry works, by taking an inside look at the games, deals and incentives that often result in higher costs, delays in care or denials of treatment. The misunderstood relationship between insurers and hospitals is a good place to start.
Today, about half of Americans get their health care benefits through their employers, who rely on insurance companies to manage the plans, restrain costs and get them fair deals.
But as Frank eventually discovered, once he'd signed on for surgery, a secretive system of pre-cut deals came into play that had little to do with charging him a reasonable fee.
After Aetna approved the in-network payment of $70,882, (not including the fees of the surgeon and anesthesiologist), Frank's coinsurance required him to pay the hospital 10 percent of the total.
When Frank called NYU Langone to question the charges, the hospital punted him to Aetna, which told him it paid the bill according to its negotiated rates. Neither Aetna nor the hospital would answer questions about the charges.
Frank found himself in a standoff familiar to many patients. The hospital and insurance company had agreed on a price, and he was required to help pay it. It's a three-party transaction in which only two of the parties know how the totals are tallied.
Frank could have paid the bill and gotten on with his life. But he was outraged by what his insurance company agreed to pay. "As bad as NYU is," Frank said, "Aetna is equally culpable because Aetna's job was to be the checks and balances and to be my advocate."
And he also knew that Aetna and NYU Langone hadn't double-teamed an ordinary patient. In fact, if you imagined the perfect person to take on insurance companies and hospitals, it might be Frank.
For three decades, Frank has worked for insurance companies like Aetna, helping to assess how much people should pay in monthly premiums. He is a former president of the Actuarial Society of Greater New York and has taught actuarial science at Columbia University. He teaches courses for insurance regulators and has even served as an expert witness for insurance companies.
The hospital and insurance company may have expected him to shut up and pay. But Frank wasn't going away.
Seeking Answers
Patients fund the entire health care industry through taxes, insurance premiums and cash payments. Even the portion paid by employers comes out of an employee's compensation. Yet when the health care industry refers to "payers," it means insurance companies or government programs like Medicare.
Patients who want to know what they'll be paying—let alone shop around for the best deal—usually don't have a chance. Before Frank's hip operation he asked NYU Langone for an estimate. It told him to call Aetna, which referred him back to the hospital. He never did get a price.
Imagine if other industries treated customers this way. The price of a flight from New York to Los Angeles would be a mystery until after the trip. Or, while digesting a burger, you'd learn it cost 50 bucks.
A decade ago, the opacity of prices was perhaps less pressing because medical expenses were more manageable. But now patients pay more and more for monthly premiums, and then, when they use services, they pay higher copays, deductibles and coinsurance rates.
Employers are equally captive to the rising prices. They fund benefits for more than 150 million Americans and see health care expenses eating up more and more of their budgets.
Richard Master, the founder and CEO of MCS Industries Inc. in Easton, Pa., offered to share his numbers. By most measures MCS is doing well. Its picture frames and decorative mirrors are sold at Walmart, Target and other stores and, Master said, the company brings in more than $200 million a year.
But the cost of health care is a growing burden for MCS and its 170 employees. A decade ago, Master said, an MCS family policy cost $1,000 a month with no deductible. Now it's more than $2,000 a month with a $6,000 deductible. MCS covers 75 percent of the premium and the entire deductible. Those rising costs eat into every employee's take-home pay.
Economist Priyanka Anand of George Mason University said employers nationwide are passing rising health care costs on to their workers by asking them to absorb a larger share of higher premiums. Anand studied Bureau of Labor Statistics data and found that every time health care costs rose by a dollar, an employee's overall compensation got cut by 52 cents.
Master said his company hops between insurance providers every few years to find the best benefits at the lowest cost. But he still can't get a breakdown to understand what he's actually paying for.
"You pay for everything, but you can't see what you pay for," he said.
Master is a CEO. If he can't get answers from the insurance industry, what chance did Frank have?
Costly Implant
Frank's hospital bill and Aetna's "explanation of benefits" arrived at his home in Port Chester, New York, about a month after his operation. Loaded with an off-putting array of jargon and numbers, the documents were a natural playing field for an actuary like Frank.
Under the words, "DETAIL BILL," Frank saw that NYU Langone's total charges were more than $117,000, but that was the sticker price, and those are notoriously inflated. Insurance companies negotiate an in-network rate for their members. But in Frank's case at least, the "deal" still cost $70,882.
With a practiced eye, Frank scanned the billing codes hospitals use to get paid and immediately saw red flags: There were charges for physical therapy sessions that never took place, and drugs he never received.
One line stood out— the cost of the implant and related supplies. Aetna said NYU Langone paid a "member rate" of $26,068 for "supply/implants." But Frank didn't see how that could be accurate. He called and emailed Smith & Nephew, the maker of his implant, until a representative told him the hospital would have paid about $1,500. His NYU Langone surgeon confirmed the amount, Frank said. The device company and surgeon did not respond to ProPublica's requests for comment.
Frank then called and wrote Aetna multiple times, sure it would want to know about the problems. "I believe that I am a victim of excessive billing," he wrote. He asked Aetna for copies of what NYU Langone submitted so he could review it for accuracy, stressing he wanted "to understand all costs."
Aetna reviewed the charges and payments twice—both times standing by its decision to pay the bills. The payment was appropriate based on the details of the insurance plan, Aetna wrote.
Frank also repeatedly called and wrote NYU Langone to contest the bill. In its written reply, the hospital didn't explain the charges. It simply noted that they "are consistent with the hospital's pricing methodology."
Increasingly frustrated, Frank drew on his decades of experience to essentially serve as an expert witness on his own case. He gathered every piece of relevant information to understand what happened, documenting what Medicare, the government's insurance program for the disabled and people over age 65, would have paid for a partial hip replacement at NYU Langone—about $20,491— and what FAIR Health, a New York nonprofit that publishes pricing benchmarks, estimated as the in-network price of the entire surgery, including the surgeon fees—$29,162.
He guesses he spent about 300 hours meticulously detailing his battle plan in 2-inches-thick binders with bills, medical records and correspondence.
ProPublica sent the Medicare and FAIR Health estimates to Aetna and asked why they had paid so much more. The insurance company declined an interview and said in an emailed statement that it works with hospitals, including NYU Langone, to negotiate the "best rates" for members. Frank's claims were correct given his coverage, the billed services and the Aetna contract with NYU Langone, the insurer wrote.
NYU Langone also declined ProPublica's interview request. The hospital said in an emailed statement it billed Frank according to the contract Aetna had negotiated on his behalf. Aetna, it wrote, confirmed the bills were correct.
After seven months, NYU Langone turned Frank's $7,088 bill over to a debt collector, putting his credit rating at risk. "They upped the ante," he said.
Frank sent a new flurry of letters to Aetna and to the debt collector and complained to the New York State Department of Financial Services, the insurance regulator, and to the New York State Office of the Attorney General. He even posted his story on LinkedIn.
But no one came to the rescue. A year after he got the first bills, NYU Langone sued him for the unpaid sum. He would have to argue his case before a judge.
Higher Prices Can Boost Profits
You'd think that health insurers would make money, in part, by reducing how much they spend.
Turns out, insurers don't have to decrease spending to make money. They just have to accurately predict how much the people they insure will cost. That way they can set premiums to cover those costs—adding about 20 percent to for their administration and profit. If they're right, they make money. If they're wrong, they lose money. But, they aren't too worried if they guess wrong. They can usually cover losses by raising rates the following year.
Frank suspects he got dinged for costing Aetna too much with his surgery. The company raised the rates on his small group policy – the plan just includes him and his partner – by 18.75 percent the following year.
The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That's good in theory but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here's how: Let's say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more.
It's like if a mom said told her son he could have 3 percent of a bowl of ice cream. A clever child would say, "Make it a bigger bowl."
Wonks call this a "perverse incentive."
"These insurers and providers have a symbiotic relationship," said Wendell Potter, who left a career as a public relations executive in the insurance industry to become an author and patient advocate. "There's not a great deal of incentive on the part of any players to bring the costs down."
Insurance companies may also accept high prices because often they aren't always the ones footing the bill. Nowadays about 60 percent of the employer benefits are "self-funded." That means the employer pays the bills. The insurers simply manage the benefits, processing claims and giving employers access to their provider networks. These management deals are often a large, and lucrative, part of a company's business. Aetna, for example, insured 8 million people in 2017, but provided administrative services only to considerably more — 14 million.
To woo the self-funded plans, insurers need a strong network of medical providers. A brand-name system like NYU Langone can demand — and get — the highest payments, said Manuel Jimenez, a longtime negotiator for insurers including Aetna. "They tend to be very aggressive in their negotiations."
On the flip side, insurers can dictate the terms to the smaller hospitals, Jimenez said. The little guys, "get the short end of the stick," he said. That's why they often merge with the bigger hospital chains, he said, so they can also increase their rates.
Other types of horse-trading can also come into play, experts say. Insurance companies may agree to pay higher prices for some services in exchange for lower rates on others.
Patients, of course, don't know how the behind-the-scenes haggling affects what they pay. By keeping costs and deals secret, hospitals and insurers dodge questions about their profits, said Dr. John Freedman, a Massachusetts health care consultant. Cases like Frank's "happen every day in every town across America. Only a few of them come up for scrutiny."
In response, a Tennessee company is trying to expose the prices and steer patients to the best deals. Healthcare Bluebook aims to save money for both employers who self-pay, and their workers. Bluebook used payment information from self-funded employers to build a searchable online pricing database that shows the low-, medium- and high-priced facilities for certain common procedures, like MRIs. The company, which launched in 2008, now has more than 4,500 companies paying for its services. Patients can get a $50 bonus for choosing the best deal.
Bluebook doesn't have price information for Frank's operation - a partial hip replacement. But its price range in the New York City area for a full hip replacement is from $28,000 to $77,000, including doctor fees. Its "fair price" for these services tops out at about two-thirds of what Aetna agreed to pay on Frank's behalf.
Frank, who worked with mainstream insurers, didn't know about Bluebook. If he had used its data, he would have seen that there were facilities that were both high quality and offered a fair price near his home, including Holy Name Medical Center in Teaneck, N.J., and Greenwich Hospital in Connecticut. NYU Langone is one of Bluebook's highest-priced, high-quality hospitals in the area for hip replacements. Others on Bluebook's pricey list include Montefiore New Rochelle Hospital in New Rochelle, N.Y., and Hospital for Special Surgery in Manhattan.
ProPublica contacted Hospital for Special Surgery to see if it would provide a price for a partial hip replacement for a patient with an Aetna small-group plan like Frank's. The hospital declined, citing its confidentiality agreements with insurance companies.
Day In Court
Frank arrived at the Manhattan courthouse on April 2 wearing a suit and fidgeted in his seat while he waited for his hearing to begin. He had never been sued for anything, he said. He and his attorney, Gabriel Nugent, made quiet conversation while they waited for the judge.
In the back of the courtroom, NYU Langone's attorney, Anton Mikofsky, agreed to talk about the lawsuit. The case is simple, he said. "The guy doesn't understand how to read a bill."
The high price of the operation made sense because NYU Langone has to pay its staff, Mikofsky said. It also must battle with insurance companies who are trying to keep costs down, he said. "Hospitals all over the country are struggling," he said.
"Aetna reviewed it twice," Mikofsky added. "Didn't the operation go well? He should feel blessed."
When the hearing started, the judge gave each side about a minute to make its case, then pushed them to settle.
Mikofsky told the judge Aetna found nothing wrong with the billing and had already taken care of most of the charges. The hospital's position was clear. Frank owed $7,088.
Nugent argued that the charges had not been justified and Frank felt he owed about $1,500.
The lawyers eventually agreed that Frank would pay $4,000 to settle the case.
Frank said later that he felt compelled to settle because going to trial and losing carried too many risks. He could have been hit with legal fees and interest. It would have also hurt his credit at a time he needs to take out college loans for his kids.
After the hearing, Nugent said a technicality might have doomed their case. New York defendants routinely lose in court if they have not contested a bill in writing within 30 days, he said. Frank had contested the bill over the phone with NYU Langone, and in writing within 30 days with Aetna. But he did not dispute it in writing to the hospital within 30 days.
Frank paid the $4,000, but held on to his outrage. "The system," he said, "is stacked against the consumer."
Single-Payer Health Care in California: Here’s What It Would Take
by Patricia Cohen and Reed Abelson - NYT - May 25, 2018
Start with who’s in charge.
Any state trying a go-it-alone strategy will face challenges possibly more vexing than the ones Congress would confront in passing a nationwide law.
California cannot simply decide to divert health care money spent in the state to a single-payer insurance plan of its own. Federal rules govern nearly all health-insurance coverage.
Medi-Cal — the state’s version of Medicaid, the health insurance program for low-income Americans — covers about a third of the population. Here, the state has lots of leeway to experiment, and the federal government has tended to let that happen.
But almost everyone else gets coverage through an employer, Medicare or the individual marketplace. And in these arenas, the state has less authority.
To redirect Medicare funds, California would require a federal waiver — something unlikely to be granted by any administration.
Medicare is popular, and federal officials are unlikely to allow a state to engineer a wholesale Medicare takeover. Californians might not be too happy, either. Once California — and not the federal government — were to be the single payer, then the current Medicare program would no longer be an option. If would be replaced by a new California version.
A bigger stumbling block comes from employer plans, which cover roughly 43 percent of Californians. Federal law, in effect, prohibits states and localities from dictating how private employers that self-insure should structure their plans. So employers unwilling to take part in a California-run insurance system wouldn’t have to.
Officials could try to persuade them by offering cheaper coverage and fewer administrative headaches. But if, say, Google and Disney want to stick with the coverage they have, they can. Changing that law would require an act of Congress.
The phrase ‘higher taxes’ is less popular than ‘single payer.’
Let’s, for the moment, magically eliminate the legal and regulatory roadblocks: Poof! California transfers its share of Medicaid and Medicare money to its own single-payer system, and it convinces every private employer to drop its existing coverage and join.
Where is the rest of the money to cover the uninsured going to come from? The state could look to cut costs: eliminate intermediaries, including insurance companies; reduce administrative costs; negotiate lower prices for drugs; and pay hospitals and doctors Medicare rates rather than higher private-plan prices.
Broader health coverage could also help reduce pricey emergency-room visits and improve preventive care, which could head off more serious illnesses and higher costs down the road.
Still, expanding coverage costs more for a reason: When people have it, they use it. The total price tag would depend on what’s covered, but eliminating deductibles and co-payments, as a recent California bill proposed, further raises costs. A legislative analysis of that bill, which offered free medical care for every resident including undocumented immigrants, estimated the final tally would be about $400 billion a year — more than double the state’s budget.
About half that sum could come from existing Medicare and Medicaid dollars, according to the analysis. What employees and employers currently spend would cover another $100 billion to $150 billion. But the remaining $50 billion to $100 billion would require new taxes — such as a 15 percent payroll tax on earned income.
A separate analysis put the bill’s cost at $331 million, accounting for savings achieved through efficiencies and preventive care, among other things. Whatever the figure, even supporters concede that it would require a higher sales tax and increased taxes on large businesses.
Ardent proponents, like the California Nurses Association, are undeterred. “It really is about the political will,” said Catherine Kennedy, a longtime nurse who lives in Carmichael, outside of Sacramento. “We can find the money.”
‘Single payer’ has no single definition.
Democrats overwhelmingly favor single-payer plans in polls, but the phrase means different things to different people. To some, “single payer” is just a way of saying coverage for everyone. To others, it means eliminating the profit motive from health care. Or it represents simplicity — an end to paperwork, deductibles, co-payments and preapprovals.
“I do support a single-payer system,” said Steven Cohen, a retired engineer, who lives with his wife, Terri, a retired schoolteacher, in Valencia. Even though he is on Medicare, Mr. Cohen, 71, said a recent switch in his medication for rheumatoid arthritis caused his out-of-pocket drug costs to rise sharply. The insurance and pharmaceutical industries now have too much clout, he said.
When asked if he would still support single-payer if it meant higher taxes, however, Mr. Cohen said no: “Raising taxes to offset the cost of health insurance is not the best approach.” And he is unwilling to trade his Medicare coverage for a state-based version, “unless it changes for the better.”
A nationwide Kaiser Permanente survey last September found similar sentiments. A majority favored the idea of a single-payer national health plan. But when those surveyed were told that the role of employers in health care would be ended, that governmental control would grow, or that people would have to trade in their existing coverage, support fell below 40 percent.
Consider what happened in Colorado. In 2016, surveys showed wide support for a single-payer plan, but when an initiative was put on the ballot, it got just 21 percent of the vote.
Of course, changing the message — and the details — can similarly drum up support, or flop those who previously flipped, but the variability shows how quickly voters can turn.
Health is a hot topic in the race for California insurance commissioner, but power is limited
by Pauline Bartolone - LA Times - May 28, 2018
The person who wins the four-way race to become California's next insurance commissioner will inherit a job with broad authority over policies that cover homes, businesses, cars and even airplanes.
But medical insurance? Not so much. The commissioner's direct control over health insurers is limited, because the California Department of Insurance — headed by the commissioner —regulates only a small slice of the market.
Still, the job carries the power of the bully pulpit, amplifying the commissioner's voice on matters of regional, statewide and national importance.
The incumbent, Dave Jones, has used that bullhorn frequently to chastise health insurers, blast the Trump administration's efforts to roll back the Affordable Care Act and interject his voice on subjects ranging from prescription drug prices to climate change to women's reproductive rights.
The four candidates vying in the June 5 primary to replace Jones – who is running for attorney general — will no doubt follow his lead in making use of the soap box the commissioner's office provides. Three of the four are ardent supporters of a statewide single-payer healthcare system, which would replace the current patchwork of private and public funding with a system in which care is paid for and overseen by the state government. And they would use the office to promote it.
One of them, Democratic state Sen. Ricardo Lara (D-Bell Gardens), said one of his biggest priorities is "to ensure that everyone gets healthcare." He is a strong proponent of government-run healthcare for all Californians and author of the now-dormant legislation, Senate Bill 562, which would create such a system.
Nathalie Hrizi, a San Francisco teacher-librarian who is the Peace and Freedom Party's candidate, said she's running because the commissioner's office is "part of the political movement…for single-payer healthcare and socialism." She added: "Insurance doesn't serve a productive role in society."
Asif Mahmood, a Los Angeles pulmonologist and a Democrat, said that as a medical practitioner, he regularly sees the financial challenges people face with the high cost of care. As a result, he said, he is best placed to find a "real solution which includes healthcare for all, not healthcare for most."
Steve Poizner, a Silicon Valley businessman, strongly opposes the idea of government-run healthcare and said the candidates who are advocating it "probably should be running for a different post." He said he would push to eliminate fraud and wasteful health spending and create a system that rewards doctors and hospitals for the quality of their care rather than the volume of their services.
Poizner, who served as insurance commissioner from 2007 to 2011 as a Republican and is running now under no party banner, leads the field with 20.7% of voter preferences, according to a recent poll by Probolsky Research.
Lara is in second place with 13.7%, followed by Mahmood, with 6.3% and Hrizi with 5.9%. However, more than half of the respondents were undecided or declined to state their preference. The candidates who finish first and second in the primary will face off in the general election Nov. 6.
The commissioner's authority over the health insurance industry has been eroded significantly in recent years, largely because of California's bifurcated system of regulation. Regulatory discretion has increasingly shifted to the Department of Managed Health Care, which oversees not only HMOs but also some PPOs, which were previously the domain of the commissioner.
This dual system often has allowed insurers to drive a wedge between the two agencies and essentially choose their regulators. Blue Shield of California, for example, one of the state's biggest insurers, voted with its feet and is now mostly regulated by the DMHC.
The insurance commissioner has primary regulatory authority over health plans that cover just under 10% of Californians enrolled in commercial health plans, according to the California Health Care Foundation. Throw in the state's nearly 13 million managed care Medi-Cal plans, and the commissioner's share drops to about 5%.
Despite this limitation, the Department of Insurance has statutory powers it can — and does — exercise. It pursues fraud, fines insurers that break the law and investigates consumer complaints about coverage. It also oversees the state's 360,000 licensed insurance agents, with the power to investigate them, arrest them and turn them over for prosecution.
The department can also require health plans to comply with certain coverage requirements. Jones, for example, has issued rules to ensure plans have a robust network of providers, cover autism treatment and provide equal access to care for transgender people.
The commissioner also plays a role in examining merger proposals.
One power the insurance commissioner does not have, which Jones has often lamented, is the authority to prevent insurers from imposing large premium increases — a matter of significant public concern as rates have soared in recent years. The DMHC doesn't have that power either.
The commissioner does examine proposed rate increases, and on occasion Jones has persuaded insurers to reduce the size of them.
Lara proposes rolling the two regulators into one, under the insurance commissioner, and granting the newly combined agency the power to reject what it deems to be unreasonable rate hikes by insurers. That would help "bring prices down on behalf of consumers," Lara said.
A ballot measure to allow the insurance commissioner to reject health insurance rate increases failed in 2014, as did a state bill in 2012.
In previous years, candidates talked a lot more about keeping premiums down, but this year much of the campaign rhetoric has focused on the idea of universal healthcare, said Stephen Shivinsky, a former Blue Shield executive who is now consulting for health insurers.
"Trump's election changed everything," Shivinsky said. Federal attempts to repeal the Affordable Care Act reignited questions about how healthcare is delivered, and "that really brought about the debate on single payer," he said.
Gary South, a longtime California campaign strategist, said he's not surprised the Democratic candidates are talking up their support for universal healthcare, especially single payer.
"If you're going to run as a Democrat, you have to be for single payer," South said. Not doing so "would be like running for governor of California and opposing gun control."
Poizner, the apparent front-runner, not only opposes government-run healthcare but also thinks it is way beyond the purview of the job he's seeking. His goals for healthcare are relatively modest, including a study of how the money in California's $400-billion healthcare system is spent, with an eye toward trimming the fat.
"As insurance commissioner, I want to focus on what I can get done," he said.
Bartolone is a correspondent for Kaiser Health News, an editorially independent publication of the Kaiser Family Foundation.
The Cost of Emergency Room Care
Letters to the Editor - NYT - May 27, 2018
To the Editor:
Re “Is That E.R. Trip Necessary? An Insurer May Not Think So” (front page, May 20):
Penalizing patients for using hospital emergency services is another insult to health care consumers. It’s time to take a bold step and keep insurance companies out of the emergency room, and empower Medicare to negotiate contracts with hospitals to cover all Americans.
Why does this plan make sense? According to federal law, hospitals are required to provide emergency care and to stabilize all patients regardless of a patient’s ability to pay. A result is that hospitals provide billions of dollars in uncompensated care to uninsured patients every year.
But when patients don’t pay for their hospital care, those costs are shifted to government and private health insurers, who are charged higher rates by hospitals to make up for the losses they incur from nonpaying patients. In essence, this dysfunctional system is a camouflaged tax.
A far better approach would be to eliminate the costly bureaucracy and replace it with a single-payer, “Hospital for All” plan.
THOMAS M. CASSIDY, SETAUKET, N.Y.
The writer, an economist, is a former senior investigator with the New York State attorney general’s Medicaid Fraud Control Unit.
To the Editor:
Insurers have too much control over health care and should not be denying lifesaving treatment to patients; that’s a given. But the rush to the E.R. in the first place is a symptom of a “silent epidemic,” according to an article in The Lancet: an epidemic of health illiteracy. It is an American epidemic.
Health illiteracy is the “inability to comprehend and use medical information that can affect access to and use of the health-care system.”
At least half (and probably more) of all Americans “have trouble interpreting medical information,” so it’s no surprise that too many end up in the E.R. in unnecessary panic over, for instance, the consequences of failing to take needed medications, not understanding that their child’s fever of 101 degrees isn’t life-threatening, or the fact that Grandma just isn’t going to get better.
There are many causes for health illiteracy, among them limited access to primary care, but the epidemic is real, growing and extremely costly at every level.
LINDA LOGDBERG, SEA CLIFF, N.Y.
The writer is working on a book about health illiteracy.
To the Editor:
Treating non-emergency patients in the E.R. not only adds costs to an already bloated health care economy, but it also affects patient flow, reduces capacity and, because of the triage process, is a major reason for patient dissatisfaction.
The more progressive hospital executives have already taken steps to remedy the community’s penchant to run to the E.R. for every pain and sniffle by performing required medical screening before the patient crosses the threshold into the E.R. clinical area and by referring patients to provider partners like hospital-owned primary practices, affiliated urgent care centers, and clinics run by nurse practitioners and medical residents.
Emergency room care, just like hospital level of care, should be reserved to those whose care cannot be safely provided in a clinically and financially less risky setting.
STEFANI DANIELS, CLARENDON, VT.
The writer is a case management consultant for hospitals.
To the Editor:
Anthem’s tactic of refusing to pay emergency room bills in certain cases is portrayed as an effort to influence patient behavior and avoid the most costly medical setting for minor ailments. Asking frightened patients to diagnose their illnesses without the benefit of training is absurd on its face.
Anthem, like most health insurers, is obligated to maximize the wealth of its shareholders. The company has been very successful in this regard, generating profits of $3.8 billion in 2017, and paying an effective tax rate of 3.1 percent, according to Healthcare Finance.
The practice of threatening not to cover an E.R. visit is consistent with this goal. What does it matter if a few patients die or are injured because they are afraid of getting hit with a large medical bill? Profits jumped by 55 percent in 2017!
When third-party payers are driven to be profitable, these types of incentives result. This ridiculous, immoral situation is yet another reason the United States must adopt a single-payer health system.
JOHN PERRYMAN, ST. CHARLES, ILL.
The writer is a pediatrician.
Judge to decide whether Maine must submit Medicaid expansion plan
By Eric Russell - Portland Press Herald - May 24, 2018
A low-income advocacy group has sued the state to force it to file its plan to the federal government to start the process of expansion. The state says it cannot because no money has been specifically appropriated
Superior Court Justice Michaela Murphy said Thursday she will issue a ruling as soon as possible in a lawsuit against the state over implementation of Medicaid expansion, which Maine voters approved by referendum last year.
At issue is whether the state Department of Health and Human Services must file paperwork with the federal government as outlined in the law.
James Kilbreth, an attorney representing Maine Equal Justice Partners, the low-income advocacy organization that filed the suit, argued that the state missed its April 3 deadline to file what’s known as a state plan amendment that would start the process of expanding the government-funded health care program. He urged Murphy to force the state to file that plan and also to begin creating rules ahead of another deadline – July 2 – when newly eligible people can apply for Medicaid benefits.
“We are well past whatever date you pick,” he said. “This is critically important to 70,000 people. We need to get this moving.”
Patrick Strawbridge, an attorney representing DHHS and the LePage administration – which has opposed Medicaid expansion for years – argued that the state cannot submit a plan without an appropriation of funding. That hasn’t happened, and the Legislature has adjourned.
“Committing to that plan is committing to spending money,” he said.
Murphy didn’t hint which way she was leaning, but she seemed uninterested in wading into the political staredown between the executive branch and the Legislature. This lawsuit is just the latest in a string of examples where the failure of LePage and lawmakers to find consensus has ended up in court.
Murphy was unequivocal about one thing, though.
“The law is in effect. It’s not a suggestion,” she said. “The executive branch has a duty to enforce that.”
LePage and his allies have acknowledged, begrudgingly, that Medicaid expansion is law but have said their hands are tied until funds are specifically appropriated. Medicaid is funded mostly at the federal level but the state of Maine is required contribute matching funds.
The fight over how to fund the expanded program hung over the final days of the most recent legislative session, which ended without a supplemental budget passed that would specifically direct funds.
Kilbreth said Thursday in court that there already are enough funds in the state’s Medicaid account to get through the current budget biennium, which ends in June 2019. He also said there is more than $140 million in unallocated funds that the state could draw from at any time.
But Murphy’s decision likely won’t hinge on whether funds are available, only whether the state has violated the law by failing to submit its state plan amendment.
Murphy said she would rule soon but didn’t specify when.
This story will be updated
Affordable Care Act individual insurance rates expected to jump in Maine
by J. Craig Anderson - Portland Press Herald - May 28, 2018
As Maine’s providers of Affordable Care Act-compliant health insurance prepare to file their rate requests for 2019, analysts say they are expecting ACA individual insurance rates in Maine to increase by double digits as they have done in previous years.
Both of Maine’s existing providers of Affordable Care Act individual health insurance say they plan to offer coverage again in 2019. Health insurance providers have until June 4 to submit their 2019 rate requests to the Maine Bureau of Insurance.
Only Lewiston-based Community Health Options and Massachusetts-based Harvard Pilgrim Health Care continue to offer ACA-compliant individual health insurance in Maine. Community Health, Anthem, Harvard Pilgrim, Aetna, United Health Care and others also offer a variety of ACA-compliant small group insurance plans in the state.
Nearly 76,700 Mainers had individual ACA coverage in the first quarter of this year, down 10 percent from 85,300 a year earlier, according to the bureau. Another 60,000 Mainers had ACA-compliant small group coverage through their employers, down about 8 percent from 65,500 the previous year.
Mainers who purchase individual insurance through the ACA marketplace have seen their premiums soar by as much as 110 percent since 2014. While those cost increases have been largely offset by increased federal subsidies for the majority of policyholders, an estimated 10,000 Maine policyholders who earn more than 400 percent of the federal poverty limit are not eligible for subsidies and must bear the entire brunt of the increases.
The surging costs already have priced some Mainers out of the market, and that trend is expected to continue in 2019.
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A report issued Wednesday by the Congressional Budget Office estimates that Congress’ recent repeal of the ACA individual mandate penalty as part of the Republican-led tax reform will cause individual policy premiums to increase in 2019 by an average of about 10 percent nationwide.
Another report issued May 18 by the progressive think tank Center for American Progress estimates that in Maine, the Trump administration’s plan to allow short-term, limited-coverage health insurance policies to be used as a replacement for ACA insurance in 2019 will cause individual premiums to increase by another 6 percent for the average 40-year-old.
Those two factors combined would cause the average 40-year-old’s 2019 premium in Maine to increase from $7,550 to an estimated $8,750 – a jump of $1,200, or 16 percent, the report says.
The center’s report notes that nearby Massachusetts has its own state version of the ACA, passed under former Republican Gov. Mitt Romney’s administration, which includes its own rules and mandates and is largely immune to ongoing Republican efforts to “sabotage” the market. The center predicts that the average ACA individual premium for a 40-year-old in Massachusetts will be $4,057 in 2019, less than half the expected cost in Maine.
Mainers earning up to about $27,000 can qualify for zero-premium bronze plans through the ACA, while typical premiums for people who earn $40,000 to $45,000 are roughly $200 to $300 per month, depending on the policyholder’s age and place of residence. Insurers can charge up to three times more based on age, and can charge more based on address.
People who earn more than 400 percent of the federal poverty limit – about $81,000 for a family of three, $65,000 for a two-person family or $48,000 for a single person – are not eligible for subsidies in the ACA marketplace and must pay the full cost of their premiums.
Mitchell Stein, an independent health policy consultant based in Cumberland, said other factors also will determine the degree to which Maine’s ACA individual premiums increase in 2019, such as the finances of its two major ACA insurance providers.
“The wild card is always the 2018 experience for the insurers who are in the market,” Stein said. “Depending on how good or bad their risk was, that impacts their rates for the coming year.”
Harvard Pilgrim’s finances are not publicly available, but because of past financial difficulties, Community Health is required to file monthly financial reports with the state Bureau of Insurance.
GOOD QUARTER IN CONTEXT
The most recent report, issued May 7, says that as of March 27, the nonprofit insurance cooperative was experiencing lower-than-expected costs and revenues, and that it reported a net income of $1.1 million in March.
Community Health’s total reported cash surplus was $46 million, a $12.2 million increase from its reported surplus of $33.8 million in December 2017.
However, the bureau’s report notes that those results need to be viewed in the proper context.
“Health insurers generally have better experience earlier in the calendar year before members satisfy deductibles and other cost-sharing thresholds,” it says. “Results in the first several months of the year, therefore, are not necessarily predictive of results in subsequent months.”
The report also says Community Health’s transition to a new claim administration platform in January reduced its cash outflow in January, February and March, since claim payments to health care providers were significantly delayed and a backlog was created.
“A substantial portion of the increase in assets during 2018 is due to this development,” it says.
Community Health Options President and CEO Kevin Lewis said the bureau’s report is indicative of where the company is financially.
“We’ve had a good first quarter and continue to maintain our focus on an excellent service model and providing great value to our members,” he said.
Lewis said Community Health is in the process of preparing its rate request to submit to the bureau in June, and that he could not specify what type of rate increase, if any, the insurer would seek. Lewis also said he could not estimate whether Community Health would gain or lose customers in 2019.
“It is too early to provide indications on these submissions, and it’s premature to provide any forecasts on expected membership,” he said.
ANTHEM EFFECT
Both Community Health and Harvard Pilgrim gained customers in 2018 as a result of Anthem pulling out of the ACA individual insurance market. Currently, Community Health has about 55,500 ACA individual and group policyholders in Maine, and Harvard Pilgrim has about 28,800.
Harvard Pilgrim Vice President for Maine Ed Kane said the insurer’s ACA claims so far this year are about the same as in 2017, and that the company is anticipating lower premium increases in 2019 compared with the current year’s increases. For 2018, Community Health raised its premiums by a range of 17.5 to 25.5 percent, depending on the plan, and Harvard Pilgrim raised its rates by 21.1 to 27.1 percent, according to the Bureau of Insurance.
Kane said the biggest threat to the stability of Maine’s ACA market in 2019 actually pertains to small group health plans. He has repeatedly expressed concerns about the introduction of “self-insured” plans that he says are structured to skirt ACA requirements and undercut the market.
“One development which threatens the stability of the small group market that the ACA is intended to protect and enhance is the advent of so-called self-insured products in the small group market, the success of which is ultimately at the expense of ACA participants,” Kane said.
Insurers’ rate requests must be defended before the state’s seven-member Bureau of Insurance panel, led by Maine Insurance Superintendent Eric Cioppa, in a series of rate hearings. The panel can make changes to the requested rates based on public feedback and its own analysis of the market. The hearings are expected to commence in July.
Letter to the editor: Medicaid inaction shows Mainers’ need for moral revival
What kind of people are we?
Twenty-two Mainers recently sat down in the driveway of the Blaine House to call out the immorality of public policy in Maine today. As the Rev. Dr. William Barber II likes to say, the political question of our time is “not about left or right, Democrat or Republican, but about right and wrong.”
Our governor’s stopping the expansion of Medicaid under the Affordable Care Act – even after the people of Maine specifically voted to expand it – is both anti-democratic and painfully wrong. What kind of people are we? To deny mothers and children access to health care may be standard operating procedure in our country today, but that does not make it moral.
The sit-in at the governor’s mansion was the first action in Maine of the Poor People’s Campaign: A National Call for Moral Revival.
When our own government is intentionally cruel to our own children, we are in need of a moral revival. The indigenous peoples upon whose land we live long have known the measure of our mean-heartedness.
Now that we are turning on our own children, perhaps we will wake up to what is being done in our name. We can do much better.
Rabbi Joshua Chasan
Portland
