People hate shopping for health insurance

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Illustration of a plastic bag with "NO THANK YOU" printed multiple times on it alongside a health plus.

Americans rarely switch to new health plans when the annual insurance-shopping season comes around, even if they could have gotten a better deal, Axios’ Bob Herman reports.

The bottom line: People loathe shopping for health plans, and many are bad at it, for one major reason: “It’s just too hard,” Tricia Neuman, a Medicare expert at the Kaiser Family Foundation, told Bob last year.

Reality check: During any insurance program’s annual enrollment period, most people end up staying with the status quo, if it’s an option, instead of picking a new plan.

  • Fewer than one out of 10 seniors voluntarily switch from one private Medicare Advantage plan to another, according to new research from the Kaiser Family Foundation.
  • The same holds true for Medicare’s private prescription drug plans.
  • Most employers don’t usually change insurance carriers, often out of fear of angering workers, and keep plan options limited.
  • Employees, after several reminders from HR, usually default to what they had.
  • Fewer than half of people in the Affordable Care Act’s marketplaces actively re-enroll in new plans, even though the market was designed for comparison shopping.
  • Medicaid enrollees in some states have no say in the private plans they get.

Between the lines: Buying health insurance — $20,000 decision for the average family — is more complicated than buying furniture.

  • With consumer products, you pretty much know what you’re getting. With health insurance, you’re making an educated guess of how much health care you’ll use, hoping you’ll need none of it.
  • Health insurance terms and policies also are confusing, which turns people off from the shopping process.

The big picture: Shopping for insurance is difficult enough for most people. Shopping for actual doctors, tests and services is even more difficult and less widespread, and likely won’t change if prices are unlocked.

 

 

 

Democrats double down on health care prices

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Illustration of price tag stickers in the shape of a health plus.

Many 2020 Democrats’ health care proposals feature aggressive price regulations, either as a feature or a byproduct — a sign the party has largely given up on the idea that competition alone can keep costs in check.

Between the lines: It’s not just Democrats. As public outrage has grown over prescription drug prices and surprise medical bills, there’s been bipartisan congressional interest in regulating prices.

The two big trends are increasing out-of-pocket costs to consumers and increasing disparity between public and commercial rates — and therefore consumer and employer pushback on those dynamics — and policymakers are now attempting to respond.”

— Chris Jennings, a Democratic health care consultant

The big picture: “Medicare for All” brings all provider and drug reimbursements under the federal government’s control.

  • Sen. Bernie Sanders has been elusive about what those rates would be, but Sen. Elizabeth Warren has proposed massive rate cuts to doctors and hospitals as a way to reduce her plan’s cost.

Even the more moderate candidates’ public-option plans would enroll more Americans in government health care plans that set rates. And some have pitched ideas like limiting how much providers can charge for out-of-network care.

  • But supporters of a public option argue that it also enhances competition in the private insurance market, driving prices down across the board without completely abandoning the use of market forces.

All of the leading 2020 candidates have proposed drug policies, ranging from limiting how much drug companies can increase their prices to allowing the federal government to strip the patent from drugs that are deemed too expensive.

  • Even President Trump has proposed limiting how much Medicare pays for certain drugs by tying the price to what other countries pay.

The other side: The industry hates all of these ideas.

 

 

 

The Health 202: Here’s what doctors, drugmakers and politicians are thankful for

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/11/27/the-health-202-here-s-what-doctors-drugmakers-and-politicians-are-thankful-for/5ddd69ec88e0fa652bbbda64/

A turkey pardoned by President Trump yesterday. REUTERS/Tom Brenner

It’s Thanksgiving Eve. Which for Health 202 begs this question: What is everyone thankful for this year when it comes to health policy?

We suspect that maybe – just maybe –you’d get vastly different answers from doctors versus insurers versus drugmakers versus consumers versus any other stakeholder in the $3.6 trillion U.S. health-care industry complex. Everyone has competing interests, which is a prime reason why the country’s besetting problems of ever-rising costs and subpar medical outcomes never quite seem to get solved.

So before you tune out the news cycle for Turkey Day, here’s our best guess at what’s giving each health-care stakeholder an attitude of gratitude.

—The White House and Republicans: Democrats are fixated on Medicare-for-all.

The GOP could hardly be more eager to focus on Medicare-for-all proposals from the Democratic presidential candidates. They view it as a way to veer the political conversation away from their own, unpopular actions on health-care policy and to depict Democrats as out-of-touch with voters.

President Trump and his top health officials have repeatedly decried Medicare-for-all, including during an October speech where the president announced an executive order boosting the role of private plans in the Medicare program.

“Every major Democrat in Washington has backed a massive government health care takeover that would totally obliterate Medicare,” the president said during that address. “These Democratic policy proposals … may go by different names, whether it’s single payer or the so-called public option, but they’re all based on the totally same terrible idea: They want to raid Medicare to fund a thing called socialism.”

—Democrats: The Trump administration is refusing to defend the Affordable Care Act.

Democrats are well aware that the refusal by Trump’s Justice Department to defend the Affordable Care Act from a challenge by GOP-led states is a political gift. They spent the 2018 election castigating the administration for not standing by the health-care law’s protections for patients with preexisting conditions – and it helped them win the House majority.

They plan to hammer that message again in 2020, as they seek the White House.

—The Department of Health and Human Services: Obamacare hasn’t been struck down (yet).

A federal appeals court is expected to rule any time now on the challenge to the ACA, which was upheld by a lower court last year. As The Health 202 has written, the decision against defending the law was a deeply controversial one inside the administration.

HHS Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, tried to persuade the White House to defend the law. If the courts ultimately strike down the ACA, the administration will be on the hook to propose a replacement that would preserve health coverage for millions of Americans who gained it under the health-care law.

—Health-care advocates: Marketplace premiums are somewhat more affordable.

After several rough years for the ACA’s individual marketplaces, they got some good news this year. Average premiums for mid-level “silver” plans fell four percent for 2020 – a marked shift from the double-digit increases shoppers have typically seen.

That doesn’t mean plans are suddenly affordable for consumers ineligible for government subsidies. But it does mean insurers have found a sustainable way to keep participating in the marketplaces – and the marketplaces are here to stay for people without access to employer-sponsored coverage.

—Drugmakers: Chances for a major, bipartisan drug pricing deal this year are fading.

One of the pharmaceutical industry’s biggest fears is that Congress passes legislation allowing the federal government to directly negotiate lower prices in the Medicare program – a move the industry describes as government “price-fixing.”

Trump used to support allowing direct negotiations, and his staff was even in discussions with House Speaker Nancy Pelosi’s (D-Calif.) office earlier this fall over the potential for a bipartisan effort along these lines.

But the president and his aides have increasingly distanced themselves from Pelosi’s bill to allow direct negotiations. Now it looks like House Democrats will pass that measure as a messaging tactic, only to see it blocked in the GOP-led Senate. A bipartisan Senate bill capping how much drugmakers can annually raise prices has somewhat better prospects, but even that measure has made many Republicans suspicious.

In the end, only minor and less-controversial drug pricing measures may end up being attached to a longer-term spending bill.

—Doctors and hospitals: Any legislation protecting patients from “surprise” medical bills will almost certainly include arbitration – an approach that means higher payments for them.

Virtually every member of Congress agrees American patients should be protected from the surprise bills that can result when they visit an emergency department outside their health plan’s provider network or get care from an out-of-network provider at an in-network hospital.

But how to solve that has turned into an insurers-versus-doctors food fight.

Insurers and the Trump administration want to use a benchmarking approach to resolve out-of-network bills, in which the payments are tied to average prices in the same geographic area. That approach would save the government money, the Congressional Budget Office has said.

But doctors – and some dark-money groups that represent their interests – have been spending millions of dollars to push Congress toward adopting an approach called arbitration. In arbitration, which CBO has said would cost the government more money, the medical provider and the insurer each submit a bid to a third party arbiter, who then make a final decision.

Doctors believe arbitration would translate to beefier payments for them – and outcomes from New York’s arbitration system supports that notion. So if Congress passes surprise billing legislation, it will likely include some element of arbitration given the heavy influence by the doctor lobby.

—Regular Americans: Not much.

We hate to say it, readers, but there’s little for you to be thankful for this year when it comes to health-care policy. Costs for employer-sponsored coverage are going up and coverage plans are getting less generous. Congress appears unable to pass major reforms on the biggest consumer concerns. And the next election is likely to result in a government severely split over how to improve health-care – making it likely the status quo will prevail for some time.

But Happy Thanksgiving, anyway!

 

 

 

Nonprofit bad debt climbs again amid steeper deductibles, Moody’s says

https://www.healthcaredive.com/news/nonprofit-bad-debt-climbs-again-amid-steeper-deductibles-moodys-says/567981/

Dive Brief:

  • Bad debt, a proxy for unpaid bills, rose in 2018 for nonprofit hospitals after falling for several years since 2014, when some states decided to expand Medicaid, Moody’s Investors Services said in a recent report.
  • Rising deductibles are fueling the trend, as patients are on the hook for an increasing share of care costs. The growth of bad debt may at times outpace net patient revenue, the ratings agency said.
  • At the same time, deductibles and premiums are increasing faster than wage growth, another ominous signal for hospitals.

Dive Insight:

More Americans have high deductible plans than ever before, according to the Kaiser Family Foundation.

“More than a quarter (28%) of all covered workers, including nearly half (45%) of those at small employers with fewer than 200 employees, are now in plans with a deductible of at least $2,000, almost four times the share who faced such deductibles in 2009,” KFF said in a recent report.

But when patients with high deductibles seek care, hospitals typically have to collect from the patient first. And as more Americans struggle to afford treatment, it’s harder to collect from patients right away.

“The longer the delay between providing service and collecting payment, the less likely a hospital is to collect payment,” Moody’s said.

Many patients don’t have enough saved to cover the cost of their deductible, according to a survey from accounting firm PwC. At least a third of those with employer-based coverage and HDHPs don’t have enough on hand to pay for their deductible, the company reported.

It will be difficult for hospitals to reduce bad debt, according to Moody’s, which characterized it as an “uphill battle.” Collecting on unpaid bills requires “constant vigilance,” the ratings agency said.

In 2014, bad debt clocked in at roughly 5.6% of net patient revenue for nonprofit health systems, and then fell below 4.5% in 2016 and 2017. But in 2018, bad debt climbed again above 4.5%, Moody’s said.

 

 

 

Opinion: ‘Medicare for all’ won’t fix soaring healthcare costs

https://www.latimes.com/opinion/story/2019-11-15/medicare-for-all-health-care-costs?fbclid=IwAR0uMTlEMcPuefoVjeuSvyIa69AIRk8v4N0d4ux6f1HMg1k4wMbM_SRElh8

Medical bill

The idea of “Medicare for all” advanced another step with the recent release of Sen. Elizabeth Warren’s more detailed health proposal. It is expansive and bold, and has brought some excitement to the progressive core of the Democratic Party. While policy mavens can delight in the details, the enormity of the proposal is a sign that this debate has clearly gone off the rails.

There is no question that healthcare cost is a pocketbook challenge for all of us. Employer and employee premiums for private health insurance for a household now average $20,576, before deductibles and copayments, and before payroll and state and local taxes to pay for healthcare for the elderly and the poor.

National health expenditures increased 179% between 2000 and 2019 to $3.8 trillion, and 50% of this increase was directly due to increases in unit prices and service intensity by hospital systems and physicians. In the U.S., healthcare is 28% more expensive than the next highest cost system, Switzerland, and 78% more expensive than in Germany. For a primary care doctor in the U.S., submitting invoices to insurers and collecting payments costs almost $100,000 per year.

What we should be debating — instead of the politics around Medicare for all — is how this market evolved in such a malignant direction, and whether anything can be done to change these trends.

Hospital consolidation has been shown to drive up healthcare costs, and yet 90% of U.S. hospital markets are highly consolidated. Physician employment by hospitals and health systems has increased from 26% to 44% of the market from 2012 to 2018, increasing the pricing leverage of consolidated systems even further.

These changes directly result in higher prices for commercial health insurance as hospitals use their exaggerated hospital “charges,” often many multiples of their costs or of the market price, to drive up their reimbursement rates for in-network care and especially for out-of-network care, where there is no price negotiation. Further, even at most not-for-profit healthcare systems, hospital leaders are compensated based on the profits they generate, not premiums they reduce, as is the case with leaders of for-profit hospital systems.

The pharmaceutical market has also come under scrutiny for the enormous prices of newly approved medications, and for price increases of existing medicines such as insulin. Behind the scenes are layers of businesses that further exploit this market. For example, one pharmaceutical benefit manager (a company hired by a health plan or employer to oversee prescription drug benefits) reported profits of $1.8 billion in 2013 that rose to $4.5 billion in 2017 despite a 4% reduction in revenue reported over this period.

It’s easy to see that consumers need relief from this market. One might imagine that politicians from both political parties would band together in a search for actionable solutions. Yet the debate has migrated from a discussion of why costs are spiraling out of control to a simple and unrealistic answer — Medicare for all. Here are some ideas on how to frame a meaningful discussion about costs.

Reducing administrative costs has been a stated policy goal of the federal government since the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1996, yet these costs continue to increase. To reduce these costs, we have to simplify the complexity of the billing process for hospitals and physicians across the multiple different health plans in the market, and we need to transform the expensive set of public data reporting mandates into a model in which we are assured these data are used by providers internally to improve the quality of care they provide.

We need to rebalance negotiating power between hospitals and physicians and insurers. Hospitals and other providers have been allowed to set their list prices without any relationship to the cost of care they provide. These inflated prices are then imposed on out-of-network patients, most egregiously in the practice of surprise medical billing in which patients encounter deliberately out-of-network air ambulances and independent anesthesiologists. In billing disputes, state law should offer these patients a default of a market price closer to Medicare payments than to hospital charges.

Finally, it’s time to stop the practices that are driving up prescription drug costs for all of us. Secret payments between pharmaceutical manufacturers and pharmaceutical benefit managers and distributors totaled over $100 billion in 2016. This business model needlessly inflates drug prices for the benefit of intermediaries in the market. We need laws requiring price transparency at the pharmacy for brand and generic drugs, and price competition for medications at the retail level.

The problem with focusing on Medicare for all is that rather than developing practical approaches, the debate is heading down a path likely to leave us without any tenable solutions to address healthcare costs — the issue that ignited the public’s interest in the first place.

 

 

 

Health insurers eat higher medical costs

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Image result for 2. Health insurers eat higher medical costs

Almost all of the major health insurance companies are spending more on medical care this year than they have in the past, Axios’ Bob Herman reports.

The big picture: Rising prices and more services for some sicker patients are among the many reasons why this is happening. That uptick in spending has freaked out Wall Street, even though insurers are still quite profitable.

Driving the news: Almost all of the eight major publicly traded insurers have shown their medical loss ratio — the percentage of premium revenues they’re spending on medical claims — is rising this year.

  • UnitedHealth Group, the largest insurer in the country, said its loss ratio was 82.4% in the third quarter this year compared with 81% in the same period a year ago.
  • But these companies are handling billions of premium dollars, so any increase in medical claims equates to hundreds of millions of dollars in additional spending, which they don’t want.

Between the lines: Medical loss ratios are often higher for health plans that cover more older adults, the disabled and the poor, because those groups typically need more care or are in the hospital more frequently.

But costs have been climbing in some commercial markets, too.

  • Anthem executives admitted on their earnings call that the company is dumping some employers with workers who had medical needs and costs that were too high.
  • CVS Health, which now owns Aetna, previously said some middle-market clients had employees that it thought were getting too many services and drugs.
  • CVS “intensified our medical management in those geographies,” an executive said on the earnings call.

The bottom line: Health insurance companies closely track their medical loss ratios and aim to hit those targets most often by charging higher premiums, denying care, forcing people to use lower-priced providers or declining to cover people they deem to be too expensive.

 

 

 

 

 

 

The Huge Waste in the U.S. Health System

A study finds evidence for how to reduce some of it, but also a large blind spot on how to remove the rest.

Even a divided America can agree on this goal: a health system that is cheaper but doesn’t sacrifice quality. In other words, just get rid of the waste.

A new study, published Monday in JAMA, finds that roughly 20 percent to 25 percent of American health care spending is wasteful. It’s a startling number but not a new finding. What is surprising is how little we know about how to prevent it.

William Shrank, a physician who is chief medical officer of the health insurer Humana and the lead author of the study, said, “One contribution of our study is that we show that we have good evidence on how to eliminate some kinds of waste, but not all of it.”

Following the best available evidence, as reviewed in the study, would eliminate only one-quarter of the waste — reducing health spending by about 5 percent.

Teresa Rogstad of Humana and Natasha Parekh, a physician with the University of Pittsburgh, were co-authors of the study, which combed through 54 studies and reports published since 2012 that estimated the waste or savings from changes in practice and policy.

Because American health spending is so high — almost 18 percent of the economy and over $10,000 per person per year — even small percentages in savings translate into huge dollars.

The estimated waste is at least $760 billion per year. That’s comparable to government spending on Medicare and exceeds national military spending, as well as total primary and secondary education spending.

If we followed the evidence available, we would save about $200 billion per year, about what is spent on the medical care for veterans, the Department of Education and the Department of Energy, combined. That amount could provide health insurance for at least 20 million Americans, or three-quarters of the currently uninsured population.

The largest source of waste, according to the study, is administrative costs, totaling $266 billion a year. This includes time and resources devoted to billing and reporting to insurers and public programs. Despite this high cost, the authors found no studies that evaluate approaches to reducing it.

“That doesn’t mean we have no ideas about how to reduce administrative costs,” said Don Berwick, a physician and senior fellow at the Institute for Healthcare Improvement and author of an editorial on the JAMA study.

Moving to a single-payer system, he suggested, would largely eliminate the vast administrative complexity required by attending to the payment and reporting requirements of various private payers and public programs. But doing so would run up against powerful stakeholders whose incomes derive from the status quo. “What stands in the way of reducing waste — especially administrative waste and out-of-control prices — is much more a lack of political will than a lack of ideas about how to do it.”

While the lead author works for Humana, he also has experience in government and academia, and this is being seen as a major attempt to refine previous studies of health care waste. Reflecting the study’s importance, JAMA published several accompanying editorials. A co-author of one editorial, Ashish Jha of the Harvard Global Health Institute and the Harvard T.H. Chan School of Public Health, said: “It’s perfectly possible to reduce administrative waste in a system with private insurance. In fact, Switzerland, the Netherlands and other countries with private payers have much lower administrative costs than we do. We should focus our energies on administrative simplification, not whether it’s in a single-payer system or not.”

After administrative costs, prices are the next largest area that the JAMA study identified as waste. The authors’ estimate for this is $231 billion to $241 billion per year, on prices that are higher than what would be expected in more competitive health care markets or if we imposed price controls common in many other countries. The study points to high brand drug prices as the major contributor. Although not explicitly raised in the study, consolidated hospital markets also contribute to higher prices.

variety of approaches could push prices downward, but something might be lost in doing so. “High drug prices do motivate investment and innovation,” said Rachel Sachs, an associate professor of law at Washington University in St. Louis.

That doesn’t mean all innovation is good or worth the price. “It means we should be aware of how we reduce prices, taking into consideration which kinds of products and which populations it might affect,” she said.

Likewise, studies show that when hospitals are paid less, quality can degrade, even leading to higher mortality rates.

Other categories of waste examined by the JAMA study encompass inefficient, low-value and uncoordinated care. Together, these total at least $205 billion.

With more than half of medical treatments lacking solid evidence of effectiveness, it’s not surprising that these areas add up to a large total. They include things like hospital-acquired infections; use of high-cost services when lower-cost ones would suffice; low rates of preventive care; avoidable complications and avoidable hospital admissions and readmissions; and services that provide little to no benefit.

In addition to wasting money, these problems can have direct adverse health effects; lead to unwarranted patient anxiety and stress; and lower patient satisfaction and trust in the health system.

Here the study’s findings are relatively more optimistic. It found evidence on approaches that could eliminate up to half of waste in these categories. The current movement toward value-based payment, promoted by the Affordable Care Act, is intended to address these issues while removing their associated waste. The idea is to pay hospitals and doctors in ways that incentivize efficiency and good outcomes, rather than paying for every service regardless of need or results.

Putting this theory into practice has proved difficult. “Value-based payment hasn’t been as effective as people had hoped,” said Karen Joynt Maddox, a physician and co-director of the Center for Health Economics and Policy at Washington University in St. Louis and a co-author of another editorial of the JAMA study.

So far, only a few value-based payment approaches seem to produce savings, and not a lot. Some of the more promising approaches are those that give hospitals and doctors a single payment “as opposed to paying for individual services,” said Zirui Song, a physician and a health economist with Harvard Medical School.

“Savings tend to come from physicians referring patients to lower-priced facilities or cutting back on potentially lower-value care in areas such as procedures, tests or post-acute service,” he said.

There is evidence of savings from some bundled payment programs. These provide a fixed overall budget for care related to a procedure over a specific period, like 90 days of hip replacement care. Accountable care organizations also seem to drive out a little waste. These give health groups the chance to earn bonuses for accepting financial risk and if they reach some targets on quality of care.

The final area of waste illuminated by the JAMA study is fraud and abuse, accounting for $59 billion to $84 billion a year. As much as politicians love to say they’ll tackle this, it’s a relatively small fraction of overall health care waste, around 10 percent. More could be spent on reducing it, but there’s an obvious drawback if it costs more than a dollar to save a dollar in fraud.

Because health care waste comes from many sources, no single policy will address it. Most important, we have evidence on how to reduce only a small fraction of the waste — we need to do a better job of amassing evidence about what works.