Every American family basically pays an $8,000 ‘poll tax’ under the U.S. health system, top economists say

https://www.washingtonpost.com/business/2020/01/07/every-american-family-basically-pays-an-poll-tax-under-us-health-system-top-economists-say/?utm_campaign=post_most&utm_medium=Email&utm_source=Newsletter&wpisrc=nl_most&wpmm=1

Princeton economist Anne Case speaks about “deaths of despair” in the United States at the American Economic Association's annual meeting in San Diego this past weekend. (Heather Long/The Washington Post)

America’s sky-high health-care costs are so far above what people pay in other countries that they are the equivalent of a hefty tax, Princeton University economists Anne Case and Angus Deaton say. They are surprised Americans aren’t revolting against these taxes.

“A few people are getting very rich at the expense of the rest of us,” Case said at conference in San Diego on Saturday. The U.S. health-care system is “like a tribute to a foreign power, but we’re doing it to ourselves.”

The U.S. health-care system is the most expensive in the world, costing about $1 trillion more per year than the next-most-expensive system — Switzerland’s. That means U.S. households pay an extra $8,000 per year, compared with what Swiss families pay. Case and Deaton view this extra cost as a “poll tax,” meaning it is levied on every individual regardless of their ability to pay. (Most Americans think of a poll tax as money people once had to pay to register to vote, but “polle” was an archaic German word for “head.” The idea behind a poll tax is that it falls on every head.)

Despite paying $8,000 more a year than anyone else, American families do not have better health outcomes, the economists argue. Life expectancy in the United States is lower than in Europe.

“We can brag we have the most expensive health care. We can also now brag that it delivers the worst health of any rich country,” Case said.

Case and Deaton, a Nobel Prize winner in economics, made the critical remarks about U.S. health care during a talk at the American Economic Association’s annual meeting, where thousands of economists gather to discuss the health of the U.S. economy and their latest research on what’s working and what’s not.

The two economists have risen to prominence in recent years for their work on America’s “deaths of despair.” They discovered Americans between the ages of 25 and 64 have been committing suicide, overdosing on opioids or dying from alcohol-related problems like liver disease at skyrocketing rates since 2000. These “deaths of despair” have been especially large among white Americans without college degrees as job options have rapidly declined for them.

Their forthcoming book, Deaths of Despair and the Future of Capitalism,” includes a scathing chapter examining how the U.S. health-care system has played a key role in these deaths. The authors call out pharmaceutical companies, hospitals, device manufacturers and doctors for their roles in driving up costs and creating the opioid epidemic.

In the research looking at the taxing nature of the U.S. health-care system compared with others, Deaton is especially critical of U.S. doctors, pointing out that 16 percent of people in the top 1 percent of income earners are physicians, according to research by Williams College professor Jon Bakija and others.

“We have half as many physicians per head as most European countries, yet they get paid two times as much, on average,” Deaton said in an interview on the sidelines of the AEA conference. “Physicians are a giant rent-seeking conspiracy that’s taking money away from the rest of us, and yet everybody loves physicians. You can’t touch them.”

As calls grow among the 2020 presidential candidates to overhaul America’s health-care system, Case and Deaton have been careful not to endorse a particular policy.

“It’s the waste that we would really like to see disappear,” Deaton said.

After looking at other health systems around the world that deliver better health outcomes, the academics say it’s clear that two things need to happen in the United States: Everyone needs to be in the health system (via insurance or a government-run system like Medicare-for-all), and there must be cost controls, including price caps on drugs and government decisions not to cover some procedures.

The economists say they understand it will be difficult to alter the health-care system, with so many powerful interests lobbying to keep it intact. They pointed to the practice of “surprise billing,” where someone is taken to a hospital — even an “in network” hospital covered by their insurance — but they end up getting a large bill because a doctor or specialist who sees them at the hospital might be considered out of network.

Surprise billing has been widely criticized by people across the political spectrum, yet a bipartisan push in Congress to curb it was killed at the end of last year after lobbying pressure.

“We believe in capitalism, and we think it needs to be put back on the rails,” Case said.

 

 

 

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!

 

 

 

Health care’s fraud and abuse laws are getting overhauled

https://www.axios.com/health-care-fraud-abuse-stark-law-antikickback-changes-fd354212-9583-44c7-85e4-86e4690cc56e.html

Doctors dressed in blue operate on a patient in a surgical suite.

The Trump administration is proposing to loosen regulations that prohibit doctors from steering patients insured by federal programs to facilities where they have a financial interest and that outlaw health care companies from offering bribes and kickbacks in exchange for patient referrals.

Why it matters: The industry has long clamored for an overhaul to these laws, which companies say obstruct their goals of providing “value-based care.” But critics worry the broad and vague changes could engender more fraud and abuse than there already is.

Driving the news: The Department of Health and Human Services would create new exemptions for the physician self-referral law and the federal anti-kickback statute — decades-old, complex laws that forbid payments that encourage unnecessary care and increase taxpayer costs.

  • Hospitals, doctors, nursing homes and other entities would be able to create “value-based arrangements,” and those deals could include exchanging bonuses or other types of “remuneration” without running afoul of referral laws.
  • For example, under these exemptions, a hospital could provide a nursing home with a behavioral health nurse for certain discharged patients, or a hospital could donate cybersecurity technology to a physician’s office.
  • Many exemptions already exist, including for organizations called “accountable care organizations” that try to keep a patient’s care within a narrow set of hospitals and doctors, but these changes would go much further.

Between the lines: The overarching concern is everyone’s definition of “value” is different. How will regulators know whether providers are acting in good faith to coordinate care, or if they are using “value-based care” as a cover to control patient referrals and enrich themselves?

A major exclusion: Pharmaceutical companies, medical device firms, labs and medical equipment makers are cut out from the changes because the federal government is afraid those companies would “misuse the proposed safe harbors.”

  • Pharma lobbyists, in particular, have pushed hard to change the law so drug companies could directly subsidize drug copays for Medicare and Medicaid patients, even though federal officials have said that practice “masks the high prices those companies charge for their drugs.”
  • HHS Secretary Alex Azar told reporters the government may consider separate regulations for value-based drug contracts, even though the evidence of those deals’ effectiveness is limited at best.

The bottom line: These changes come at the same time that hospitals, physicians, pharmaceutical companies and others are paying out billions of dollars every year in fraud settlements.

  • Public comments are due Dec. 31, and if this comment process is anything like the initial requests that asked for guidance, the industry will be heavily involved.

 

 

 

Trump Shift, Backed by States, Fuels Fear of Too Few Medicaid Docs

https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2019/08/07/trump-shift-backed-by-states-fuels-fear-of-too-few-medicaid-docs?omnicid=CFC1662263&mid=henrykotula@yahoo.com

Stateline Aug7

Dr. Barbara Ricks is a pediatrician in Greenville, Mississippi, whose patients are nearly all on Medicaid. The Trump administration proposed eliminating an Obama-era rule that aims to ensure that patients can find a doctor who accepts Medicaid.
Rogelio V. Solis/The Associated Press

The Trump administration wants to drop an Obama-era rule designed to ensure that there are enough doctors to care for Medicaid patients.

State health officials say the rule, which requires states to monitor whether Medicaid reimbursement rates are high enough to keep doctors in the program, forces them to spend a lot of time collecting and analyzing data with little benefit. Health care advocates, though, fear that dropping the regulation would enable states to set those payments at a level that would cause some of the 72 million Americans who rely on Medicaid to scramble for health care. Research shows that when reimbursement rates drop, fewer providers agree to accept low-income Medicaid patients.

Although the Medicaid Access Rule, adopted in 2016, pertains to Medicaid fee-for-service plans, the Trump administration also is seeking to relax requirements on how states determine whether Medicaid managed care organizations have enough providers.

If reimbursement rates are too low, there’s a risk that health care providers would see fewer Medicaid patients or even refuse to treat Medicaid enrollees altogether. That, in turn, could lead to longer wait times to see providers still participating in Medicaid or force patients to travel longer distances to reach providers remaining in the program.

Medicaid, the government health plan for low-income U.S. residents, covers 1 in 5 citizens. It is jointly administered and financed by the federal government and the states.

The rule, the Centers for Medicare and Medicaid Services (CMS) said, “excessively constrains state freedom to administer the program in the manner that is best for the state and Medicaid beneficiaries in the state.”

According to Matt Salo, executive director of the National Association of Medicaid Directors, scrapping it would eliminate a bureaucratic headache for states that, in the end, hasn’t improved patients’ access to providers.

“Nobody is moving the goal of improved access,” Salo said.

Some health care advocates disagree, pointing out that the rule hasn’t been in place very long and that getting rid of it fits the Trump administration’s overall mission of giving states more freedom in operating Medicaid.

“The Trump administration’s approach to Medicaid has been state flexibility, giving states a lot more discretion to do what they want without a lot of attention to what beneficiaries need,” said Abbi Coursolle, a senior attorney with the National Health Law Program, a group based in Washington, D.C., that works to protect access to health care for low-income populations.

CMS last year called for a significant watering down of the Obama rule. Last month, the agency proposed to scrap it altogether. The comment period on elimination of the rule runs through next month, after which CMS will announce its decision.

The initial proposal to weaken the rule generated plenty of opposition. Among those objecting were hospital and physician organizations, groups that advocate for health care access for all, and organizations created to support those living with certain diseases and to raise funds for research into those conditions.

Among the latter was the Epilepsy Foundation, which warned in its public comment that weakening the rule would deprive CMS of information it needed to monitor and enforce Medicaid beneficiaries’ access to care. State reimbursement rates, the foundation said, are crucial to ensuring enough willing providers are available to treat Medicaid beneficiaries.

Shawn Martin, senior vice president of the Academy of Family Physicians, said scrapping the rule would make states more likely to set reimbursement rates too low, prompting practitioners to stop taking Medicaid patients or cut back. “A low reimbursement would affect how many beneficiaries providers are willing to see.”

Just as adamant on the other side, however, are many states that complain that the Obama rule is cumbersome and ineffective at ensuring access for Medicaid beneficiaries.

At the Maryland Department of Health, Tricia Roddy, a research director, said the rule doesn’t do much to help gauge the fees’ effects on access to care.

Similarly, at the Colorado Department of Health Care Policy and Financing, Marc Williams, a spokesman, said his state uses other strategies to ensure Medicaid beneficiaries’ access to the health services they need.

According to Salo of the Medicaid directors group, states of both political stripes, red and blue, are delighted that the Trump administration is moving to abolish the rule.

“It was creating many bureaucratic burdens without accomplishing anything concrete,” Salo said. The rule, he said, “is insanely micro-managed and overly bureaucratic.”

The 1965 law establishing Medicaid has been amended through the years to ensure that enough doctors, nurses and other providers are available to serve beneficiaries. Congress in 1989 passed an amendment making clear states’ obligation to pay providers enough to ensure Medicaid enrollees have access to care.

Medicaid pays doctors about three-fourths as much as Medicare, the government program for senior citizens, according to a 2017 analysis by the Urban Institute, a nonpartisan think tank in Washington, D.C. And Medicare pays much less than private insurers.

When Medicaid and Medicare payments, or reimbursement rates, go down, research shows that patients make fewer doctor’s visits and more trips to the emergency room.

According to a 2017 Kaiser Family Foundation report, only about 70% of office-based physicians accept new Medicaid patients. The results vary from 39% in New Jersey to 97% in Nebraska. By comparison, the study found, 85% of doctors accept new patients with private insurance.

The 2016 rule required states to tell the agency every three years how providers from various geographic regions and specialties were participating in Medicaid, and how reimbursement rates were affecting that participation.

 

 

 

 

The Lessons of Washington State’s Watered Down ‘Public Option’

Jay Inslee, the governor of Washington, signing a measure in May that puts the state on track to create the nation’s first “public option” health insurance.

Jay Inslee, the governor of Washington, signing a measure in May that puts the state on track to create the nation’s first “public option” health insurance.

A big health care experiment for Democrats shows how fiercely doctors and hospitals will fight.

For those who dream of universal health care, Washington State looks like a pioneer. As Gov. Jay Inslee pointed out in the first Democratic presidential debate on Wednesday, his state has created the country’s first “public option” — a government-run health plan that would compete with private insurance.

Ten years ago, the idea of a public option was so contentious that Obamacare became law only after the concept was discarded. Now it’s gaining support again, particularly among Democratic candidates like Joe Biden who see it as a more moderate alternative to a Bernie Sanders-style “Medicare for all.”

New Mexico and Colorado are exploring whether they can move faster than Congress and also introduce state-level, public health coverage open to all residents.

But a closer look at the Washington public option signed into law last month, and how it was watered down for passage, is a reminder of why the idea ultimately failed to make it into the Affordable Care Act and gives a preview of the tricky politics of extending the government’s reach into health care.

On one level, the law is a big milestone. It allows the state to regulate some health care prices, a crucial feature of congressional public option and single-payer plans.

But the law also made big compromises that experts say will make it less powerful. To gain enough political support to pass, health care prices were set significantly higher than drafters originally hoped.

“It started out as a very aggressive effort to push down prices to Medicare levels, and ended up something quite a bit more modest,” said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation.

So while Washington is on track to have a public option soon, it may not deliver the steep premium cuts that supporters want. The state estimates that individual market premiums will fall 5 percent to 10 percent when the new public plan begins.

“This bill is important, but it’s also relatively modest,” said David Frockt, the state senator who sponsored the bill. “When I see candidates talking about the public option, I don’t think they’re really grasping the level of opposition they’re going to face.”

During the Affordable Care Act debate, more liberal Democrats hoped a public option would reduce the uninsured rate by offering lower premiums and putting competitive pressure on private plans to do the same. President Obama backed it, saying in 2009 that such a policy would “keep the private sector honest.”

The public option came under fierce attack from the health care industry. Private health plans in particular did not look forward to competing against a new public insurer that offered lower rates, and fought against a government-run plan that they said “would significantly disrupt the coverage that people currently rely on.” The policy narrowly fell out of the health care law but never left the policy debate.

Congressional Democrats have started to revisit the idea in the past year, with health care as a top policy issue in the 2018 midterm elections.

“During the midterm elections, Medicare for all was gaining a lot of traction,” said Eileen Cody, the Washington state legislator who introduced the first version of the public option bill. “After the election, we had to decide, what do we want to do about it?”

Ms. Cody introduced a bill in January to create a public option that would pay hospitals and doctors the same prices as Medicare does, which is also how many congressional public option proposals would set fees. The Washington State Health Benefit Exchange, the marketplace that manages individual Affordable Care Act plans, estimates that private plans currently pay 174 percent of Medicare fees, making the proposed rates a steep payment cut.

“I felt that capping the rates was very important,” Ms. Cody said.“If we didn’t start somewhere, then the rates were going to keep going up.”

Doctors and hospitals in Washington lobbied against the rate regulation, arguing that they rely on private insurers’ higher payment rates to keep their doors open while still accepting patients from Medicaid, the public plan that covers lower-income Americans and generally pays lower rates.

“Politically, we were trying to be in every conversation,” says Jennifer Hanscom, executive director of the Washington State Medical Association, which lobbies on behalf of doctors. “We were trying to be in the room, saying rate setting doesn’t work for us — let’s consider some other options. As soon as it was put in the bill, that’s where our opposition started to solidify.”

Legislators were in a policy bind. The whole point of the public option was to reduce premiums by cutting health care prices. But if they cut the prices too much, they risked a revolt. Doctors and hospitals could snub the new plan, declining to participate in the network.

“The whole debate was about the rate mechanism,” said Mr. Frockt, the state senator. “With the original bill, with Medicare rates, there was strong opposition from all quarters. The insurers, the hospitals, the doctors, everybody.”

Mr. Frockt and his colleagues ultimately raised the fees for the public option up to 160 percent of Medicare rates.

“I don’t think the bill would have passed at Medicare rates,” Mr. Frockt said. “I think having the Medicare-plus rates was crucial to getting the final few votes.”

Other elements of the Washington State plan could further weaken the public option. Instead of starting an insurance company from scratch, the state decided to contract with private insurers to run the day-to-day operations of the new plan.

“It would have cost the state hundreds of millions of dollars just to operate the plan,” said Jason McGill, who recently served as a senior health policy adviser to Mr. Inslee. He noted that insurers were required to maintain large financial reserves, to ensure they don’t go bankrupt if a few patients have especially costly medical bills.

“Why would we do that when there are already insurers that do that? It just didn’t make financial sense. It may one day, and we’ll stay on top of this, but we’re not willing to totally mothball the health care system quite yet.”

Hospitals and doctors will also get to decide whether to participate in the new plan, which pays lower prices than private competitors. The state decided to make participation voluntary, although state officials say they will consider revisiting that if they’re unable to build a strong network of health care providers.

Most federal versions of the public option would give patients access to Medicare’s expansive network of doctors and hospitals.

Although Mr. Frockt is proud of the new bill, he’s also measured in describing how it will affect his state’s residents. After going through the process of passing the country’s first public option, he’s cautious in his expectations for what a future president and Democratic Congress might be able to achieve. But he does have a clearer sense of what the debate will be like, and where it will focus.

“This is a core debate in the Democratic Party: Do we build on the current system, or do we move to a universal system and how do we get there?” he said. “I think the rate-setting issue is going to be vital. It’s what this is all about.”