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Do You Really Like Your (Sub-Par) Policy? Keep it Another Year

For about 5% of the population, President Obama’s promise “if you like your insurance, you can keep it” was clearly off the mark. They like it and they can’t keep it—or they will have to pay more for it. Their anger and sense of betrayal are being used by opponents of the Affordable Care Act to discredit the President and highlight the law’s alleged shortcomings. But let’s be honest; how great was that insurance in the first place? Sure it might have been cheap, but many policyholders were one illness or accident away from crushing bills and even bankruptcy. And is it worth it to allow insurers to keep selling these policies to cherry-picked healthy people, even if it threatens to raise premiums for many of the 40 million uninsured people who have been priced out of the individual market because of their health status, age or gender?

The answer, for at least another year, is “yes.” Under pressure from anxious Democrats in Congress—including some like Sen. Mary Landrieu (LA) who are facing tough reelection battles—Obama today proposed an administrative fix to the ACA that would let insurance companies renew plans through 2014 that do not meet the benefit standards of the health care law. State insurance commissioners and insurance companies will now make the final decision on whether they will renew cancelled policies on the individual market. Insurers would have to notify plan subscribers of alternative plans they could purchase through the exchanges, as well any benefits they would miss out on by staying with their existing policy. As the President put it: “the Affordable Care Act is not going to be the reason why these companies are canceling your plan.” Read more…

Same Drug, Wildly Different Price: Generic in Name Alone

It was a huge relief to Carol Thompson in 2011 when her breast cancer drug Femara (letrozole) went off patent and became available in a generic version. With a high deductible in her private insurance plan, Thompson was forking over $450 for a month’s supply of the life-saving drug. After the generic hit the market she was thrilled to find letrozole available for just $11 a month at Costco. But curious to find out if she could save even more at another pharmacy, Thompson made a few calls to local chains and mail-order services to compare prices.

What she found was astonishing: prices for letrozole ranged wildly, from $450 for a month’s supply at CVS to just $14 at a local, independent drug store. Pity the person who assumes that big national chains like CVS and Target that buy generics wholesale in large quantities will naturally provide the best value.

Thompson’s story is told in a recent PBS NewsHour segment that takes a wider look at the wildly different prices pharmacies charge for medications that include some of the most common prescriptions drugs.

What 66-year-old Carol Thompson encountered in Edina, Minnesota should be an eye-opener for any of us who assume the price we pay for generic drugs is more or less the same from pharmacy to pharmacy. The explanations from chains like CVS for why some of their generic drugs cost so much is that the price reflects the added cost of having 24 hour prescriptions services, drive-through pharmacies and so many local brick and mortar stores. But this explanation rings false: For prescription drug buyers it is just the latest case of haggling for health care. Read more…

The Nine Lives (and counting) of Obamacare

It is hardly an understatement to characterize the health insurance exchange rollout as a big disappointment. A botched website poses a serious problem and threatens to dampen enthusiasm for the new law—especially among the coveted “young invulnerables” who need to sign up for coverage to keep premiums affordable for all. In the short term, the website troubles put the Obama administration firmly back on the defensive, scrambling to explain to Congress and the public how officials missed such serious problems.

Testimony from vendors involved in designing various parts of the network broke down into a predictable blame-fest, while Health and Human Services Secretary Kathleen Sebelius singled out certain vendors as the main source of the website flaws. Yesterday, CMS head Marilyn Tavenner used her testimony  in front of the House Ways and Means Committee to offer the first true apology from the Obama administration for the botched site.

It seems that the worst consequence of this website debacle is the resurgence of the fanatical foes of the Affordable Care Act who briefly lost momentum when they forced an unpopular government shutdown in an attempt to defund “Obamacare.” Despite lingering calls for Sebelius’ head, the bluster over the website’s problems is now giving way to a new source of outrage: the unrealistic promise behind President Obama’s tag phrase; “if you like your insurance, you can keep it.” According to the Washington Post, “The president’s promise apparently came with a very large caveat: ‘If you like your health care plan, you’ll be able to keep your health care plan — if we deem it to be adequate.’” 

More on this later, but in her testimony yesterday, Marilyn Tavenner cited new projections from a government report that nearly half of uninsured young adults — 46 percent of those ages 18 to 34 — should be able to purchase a plan through HealthCare.gov for a monthly premium of $50 or less. In her own testimony before the same committee today, Sebelius noted:

“The weighted average premium for the second-lowest-cost silver plan, looking across 47 states and DC, is 16 percent below the premium level implied by earlier Congressional Budget Office estimates.” The Secretary also points out that a recent Kaiser Family Foundation report found that while premiums will vary around the country “fifteen of the eighteen states examined would have premiums below the CBO-projected national average of $320 per month for a 40-year-old in a silver plan.”

So as the forces regroup for yet another sustained attack on the ACA via billboards, sound bites, Congressional hearings where those called to testify are rudely interrupted by political screeds, and a conservative media blitz, it’s important to remember that the health law has weathered relentless attacks over the last three years. Frankly, the opposition is beginning to look desperate. As Ezra Klein writes, “The classic definition of chutzpah is the child who kills his parents and then asks for leniency because he’s an orphan. But in recent weeks, we’ve begun to see the Washington definition: A party that does everything possible to sabotage a law and then professes fury when the law’s launch is rocky.”  Read more…

It’s October 1: Health Exchanges Open, World Doesn’t End

Well, the day has finally come. The Affordable Care Act’s health insurance marketplaces are up and running, ready to sign up millions of Americans shopping for coverage. And as has been the case since the law first began wending its way through Congress, over-heated rhetoric and plain old obstructionism have turned the first day of what will be a long, gradual process, into a highly-charged circus.

With House Republicans refusing to approve financing for government operations unless “Obamacare” is delayed or defunded, the federal government is closed for business; 800,000 workers are on furlough, national parks are closed, the National Zoo’s panda project has stopped providing live feed, tax audits grind to a halt and a range of other non-essential services will cease. And for what? The nation is being held hostage by hardline conservatives who refuse to accept a law that was enacted by Congress, backed by the Supreme Court and promises to offer affordable health coverage for millions of uninsured, low and moderate-income Americans.

The truth is, the health law will move forward despite the theater unfolding right now. Granted, the ACA is complicated, balky and yes, imperfect legislation that will need tweaking as the major provisions are implemented. But guess what doomsayers? The world did not come to an end when “Obamacare” opened for business today. In fact, for the 88% or so of Americans who already have health coverage from their employers, Medicare or Medicaid, there is zero impact. For those of us who hope to buy insurance through the exchanges or will now be covered by an expanded Medicaid program, we have until the end of March 2014 to sign up for individual or family coverage.

That’s not to say that the roll-out will go smoothly. The ACA marks the first new national social insurance program since Medicare and Medicaid were signed into law in 1965. The federal government is running insurance exchanges in 34 states while 16 others have set up their own marketplaces using federal money from the health law. It’s a massive undertaking and a vast public-private venture without precedent. Read more…

Haggling for Health Care

I’m not a big fan of bargaining and my half-hearted attempts to get a better price for a used car, garage sale find or contractor’s service have been mostly unsuccessful. There’s always that nagging feeling that the seller is laughing with delight once I’m gone, thinking, “I really pulled one over on that rube!”

And so it has come as somewhat of a shock to me that medical care has become the new garage sale, as far as haggling goes.

First we found out that hospitals have “chargemasters” that hold the list prices for everything from knee replacements to aspirin tablets, and that these prices differ wildly between hospitals; even those in the same city. We also know that insurers, both private and Medicaid and Medicare, never pay these list prices but instead bargain with hospitals to pay substantially discounted prices. The only ones not getting in on the discounts are the uninsured or under-insured people who get hit with the full list price of hospital care.

The same thing happens with doctor bills. If you’ve ever compared what your doctor bills your insurer with what your insurer actually agrees to pay, it’s clear that there is a lot of bargaining going on. If the list price of an office visit is $125, the insurer pays $60; for a $200 lab test, the insurer reimburses $70, and so on.

A recent New York Times article, “The $2.7 Trillion Medical Bill,” focuses on the cost of colonoscopy to help explain how health care spending can be so much higher in the U.S. than other developed countries. In the article, patient bills for their colonoscopies ranged from a hefty $6, 385 to a whopping $19,438. Meanwhile, their insurers all negotiated the price down to about $3,500. As Elizabeth Rosenthal of the Times notes, this is still far more than the “few hundred dollars” that a routine colonoscopy costs in Austria or Italy.

Why do we have such price inflation here in the U.S.? Our for-profit health care industry has a lot to do with it, as does the maddeningly unregulated nature of the business. Rosenthal writes; “A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor.”

David Blumenthal, president of the Commonwealth Fund tells the Times; “In the U.S., we like to consider health care a free market.” He adds, “But it is a very weird market, riddled with market failures.” Read more…

Is the “Private Option” A Realistic Plan For Medicaid?

Arkansas is one step closer to being the first state to use Medicaid expansion dollars to buy private coverage for many of its 250,000 newly eligible residents rather than enroll them in the existing Medicaid program. This week the Arkansas House of Representatives approved the plan, leaving only the Senate to decide whether the state will be implementing this “market-based approach” to expanding Medicaid.

The idea of buying private insurance for Medicaid recipients is emerging as a “conservative compromise” for some of the 24 states (home to more than 25 million uninsured residents) leaning toward rejecting federal funding the Affordable Care Act provides for the expansion. In the original legislation, the ACA required states to expand Medicaid to adults earning up to 138 percent of the federal poverty level, $15,870 for an individual or $32,499 for a family of four. The federal government would fully cover the costs of this expansion for two years, with states gradually having to contribute 10% by 2020. Last summer, the Supreme Court struck down the Medicaid expansion requirement, allowing states to refuse federal funding and opt out of the expansion.

But most of these states, including Florida, Texas and Indiana, are leaving a lot of money on the table—from hundreds of millions to $1 billion or more in federal funding.  Under pressure from healthcare providers and other interested parties, some governors view premium assistance programs that move the poor, disabled and frail elderly to the state insurance exchanges to buy private insurance as a way to capture this windfall without appearing to embrace ObamaCare. Read more…

The Perils of Selling Sickness to Consumers

By James Burdick

(A version of this post appeared April 8 in the Baltimore Sun)

There are a plenty of reasons why health care in the U.S. is so expensive and uneven in quality. But the direct marketing of expensive drugs, tests and even medical conditions to consumers is something we actually can—and should—do something about.

One ubiquitous advertiser in my neck of the woods promotes walk-in ultrasound testing of blood vessels and whatever other asymptomatic part you may choose to pay for. Worried older folks can feel lucky that Medicare will often reimburse for these tests. But in fact, the whole course of tests and treatments encouraged by these ads will not improve their life expectancy — and could even have some chance of decreasing it.

Shouldn’t we read these solicitations as symptoms of a very readily eliminated illness that plagues our health care system? An asymptomatic 65-year-old found to have an arterial abnormality in this profit-driven testing facility is almost certain to succumb, eventually, to something else. That is, of course, unless he is told of the findings, goes to his doctor scared, and the doctor injudiciously arranges an angiogram or other invasive procedure. And so this harmful and lucrative practice of persuasion keeps our country’s medical wheels turning.

It is worth wondering: If this test is medically indicated, why has the patient’s regular doctor not already ordered it? And if the testing is done and produces a normal result, how often should the patient get rechecked? Read more…

Health Care Prices “Are Too Damn High”

If you haven’t had a chance to read Steve Brill’s excellent investigation “Bitter Pill: Why Medical Bills Are Killing Us” in Time magazine, it’s a great example of why long-form journalism is still relevant and indispensable. It gives a personal face to the perverse economic forces that have created what Brill calls “the ultimate sellers market” in the healthcare industry. Much of what he exposes is what we in the health policy field have been railing about for several years now. But the graphic way in which Brill lays out the issues leaves no question that before we talk about making wholesale cuts to government programs or rationing care to lower costs, we must fundamentally reform provider payment, confront prices and provide incentives that promote far more accountable care.

Brill’s article is very comprehensive, but there are some key points that I want to expand on. They include: 

1)    Prices for goods and services are often wildly out of line with what is actually delivered–$15 for three gauze pads, $108 for bacitracin, $9,400 for a 6-hour visit to the emergency room for a woman with a broken nose, and a $49,000 charge for a device to treat back pain. As hospital spokespeople told Brill, patients with insurance do not pay these prices because their carrier, whether private, Medicare or Medicaid, negotiates deep discounts. But as Brill points out, perversely those who are uninsured and can afford it the least are charged the highest prices. These inflated prices, which vary from hospital to hospital, are recorded in so-called “chargemasters,” proprietary price lists whose origin remains mysterious.

As Brill writes; “I quickly found that although every hospital has a chargemaster, officials treat it as if it were an eccentric uncle living in the attic. Whenever I asked, they deflected all conversation away from it. They even argued that it is irrelevant. I soon found that they have good reason to hope that outsiders pay no attention to the chargemaster or the process that produces it. For there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills.” Read more…

There Is A Plan to “Save” Medicare…But It’s Complicated

In his response to President Obama’s State of the Union speech, Florida’s Senator Marco Rubio warned; “anyone who is in favor of leaving Medicare exactly the way it is right now, is in favor of bankrupting it.”

Implying that the current administration is in danger of doing exactly that, Rubio asked us, “Instead of playing politics with Medicare, when is the President going to offer his plan to save it?”

First of all, as Sarah Kliff points out in the Washington Post’s Wonkblog, Obama did mention three specific initiatives for achieving Medicare savings in his speech:

1)    Restoring the Medicaid drug rebates for so-called dual-eligibles (the mostly poor, sick or disabled people who qualify for both Medicaid and Medicare) that were rescinded once their medications were covered under Medicare Part D. The administration estimates this would save $156 billion over 10 years.

2)    Means-testing the Medicare program for higher-income seniors. This boils down to raising premiums by another 15% for the 5% of well-to-do seniors who already pay more for their Medicare premiums. According to the Congressional Budget Office, this would generate $30 billion in savings over the course of a decade.

3)    Paying doctors and hospitals for the quality of care they provide, not quantity. Cost savings: Well, that’s complicated—but this could be the game-changer.

It’s true that the President didn’t spend much time on health care in his speech. That’s probably because he knew that studding his State of the Union address with health policy-speak and detailed models would have caused even more of the audience to fiddle with their cell phones or perhaps indulge in a catnap. It’s also because “saving Medicare” and bending the “cost curve” of health care spending in general is a whole lot more complex than is portrayed by politicians and much of the media. Read more…

Politics Be Damned: “5 Trends That Will Shape U.S. Health Care”

With election day upon us at last, we are all being deluged with projections as to who will be sitting in the White House come January. I have been watching this process from an emotional distance for at least the last month or so as the media reports the daily ups and downs of approval ratings, possible electoral vote scenarios and political reactions to the monster hurricane that just devastated parts of my city.

For a campaign in which candidates spent a total of $3 billion, the stakes are high for more than just individual issues like Medicare, unemployment, taxes, abortion and all the other hot button items that divide our country. If elected, Mitt Romney and the conservative base of the Republican party stand to fundamentally change the nature of this nation; sacrificing social programs, tolerance and federal responsibility to create a pro-big business, free-market country that cedes important federal powers to self-interested state authorities.

Of course we know how Gov. Romney and his erstwhile supporters in Congress feel about the health reform law. A long-time promise of the campaign has been to immediately repeal Obamacare, legislation Romney calls a “bad law.” He’s said that he plans to immediately grant waivers to all states, allowing them to ignore the law and stop work on setting up mandated health insurance exchanges. The next step is to use Congress’s  budget reconciliation process to repeal nearly all elements of the health law over the next several months.

There are  serious doubts, even among detractors of the ACA, that a Romney administration could successfully grant the state waivers and cut off funding for the health law. Federal courts are sure to get involved and block these widespread actions. Don’t forget that some popular aspects of the ACA–allowing young adults to stay on their parent’s health plans and requiring insurers to accept people with pre-existing conditions, for example–are already in place. It will be very difficult or impossible to use budget reconciliation to repeal these provisions, especially without an alternative plan in place.

That said, I believe there are key aspects of health reform that will continue to advance whatever the outcome of the election. These are the fundamental changes in how care is payed for and delivered that are already transforming our health care system. Several months ago, I was asked by Columbia University’s Mailman School of Public Health to write an article for a new magazine they were publishing. There have been many changes in Columbia’s  public health program and the resulting magazine conveys the breadth of  work done by researchers associated with the school and emphasizes a new “life course” approach to education that considers the influence of public health on every age and stage of life.

My assignment was to predict which aspects of health reform would prevail  if 1) the Supreme Court ruled that the ACA was unconstitutional, or the individual mandate was unconstitutional (it didn’t) or 2) Obama lost the election (as of today, still don’t know.). After many months and changing predictions, I agree with Michael S. Sparer, chair of Mailman School’s Department of Health Policy and Management who told me;

“There are important trends reshaping the healthcare system that will continue regardless of who wins the presidential election, who controls the next Congress, and whether the ACA survives or is repealed.” He continues in the article, “Indeed, while the ACA supports and encourages many of these trends, there simply is no going back. A healthcare revolution is under way.”

The five trends I chose to highlight include:

1) “Farewell Fee For Service, Hello Accountable Care”

2) “Playing Up Prevention”

3) “Rewarding Quality, Punishing Carelessness”

4) “Evidence Is the Best Medicine”

5) “Expanding the Reach of Medicaid”

I do point out that despite widespread adoption of innovative payment and delivery models  by Medicare and also by commercial insurers, there are serious barriers to reaching universal coverage without the ACA. It is vital that Medicare not be turned into a stingy voucher system, Medicaid be expanded and not made into a block grant program, and that all Americans be offered the chance to have affordable, high quality health coverage. It would be heartbreaking to come this far for naught.

Fingers crossed for tonight’s results; we still have a long way to go.

You can read “5 Trends That Will Shape U.S. Health Care (No Matter How the Politics Play Out” here in Columbia Public Health, and perhaps come up with your own predictions for the future of health care.

 

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