Democrats Have No Safe Options On Health Care

Democrats Have No Safe Options On Health Care

Even though most of the candidates have committed to some form of universal health care, the Democratic primary is turning into a debate about the future of the country’s health care system. Presidential hopefuls have proposed policies ranging from an ambitious four-year plan to transform Medicare into a universal single-payer system, in which the government pays for everyone’s health care and private insurance plans are effectively eliminated, to a more modest scheme that would leave the existing health care system intact but create a government-administered public insurance plan people could choose to purchase. But some of the candidates have been light on policy specifics, so it’s likely that health care will be a big topic at the debates and beyond.

In the abstract, focusing on health care makes a lot of political sense for Democrats. It was a top issue among Democratic voters in the 2018 midterms, and the Trump administration recently renewed its efforts to strike down the Affordable Care Act in the courts, which means the law could be hanging in the balance throughout the primaries and into the general election. A recent ABC News/Washington Post poll also found that Americans, by a 17-point margin, say that President Trump’s handling of health care makes them more likely to oppose him than to support him in 2020. By a similar margin, an Associated Press/NORC poll found that Americans trust Democrats more than Republicans on health care.

All of this means that Democrats are heading into the 2020 election cycle with a serious edge on an issue that has the potential to mobilize their base. But if the candidates pitch big, sweeping changes to the health care system without addressing voters’ concerns about cost and access, that advantage won’t necessarily hold up. And trying to sell Americans on a completely new system carries risks, even in the primaries.

Why do people care about health care so much?

First, it’s important to understand how health care has morphed over the past decade from just another issue to one of the issues voters care most about. In the 2018 exit polls, 41 percent of voters said health care was the most important issue facing the country, up from 25 percent in 2014 and 18 percent in 2012. (It wasn’t asked about in 2016.) And although Democrats are more likely to prioritize health care than Republicans, a Pew Research Center poll from January found that a majority of Republicans say health care costs should be a top priority for Congress and the president.

The reason? Health care is becoming more of a financial burden, according to Mollyann Brodie, executive director for public opinion and survey research at the Kaiser Family Foundation. Specifically, Americans’ out-of-pocket health care costs have risen significantly over the past decade, even for workers who get insurance through their jobs. In an economy that by many measures is doing well, health care — rather than something like taxes — is becoming one of voters’ most important pocketbook issues, she said. “If you’re worried about whether you or your loved ones can afford your next health care bill, that’s really a matter of life or death, so you can understand why this issue is moving to center stage politically.”

And Americans are increasingly likely to say that the government has an important role to play in ensuring access to health care. In November, Gallup found that 57 percent of Americans said they think it’s the federal government’s responsibility to ensure that everyone has health care coverage, up from a low of 42 percent in 2013. Support for the Affordable Care Act rose over the same period, too. But, notably, support for government intervention in the health care system was even higher before President Obama was elected and the ACA passed — in 2006, 69 percent of Americans thought the government should guarantee health care coverage.

While support for government involvement in health care is rebounding, it’s not clear how much change voters are really asking for. “The average American is first and foremost concerned about the financial problems facing their family,” said Robert Blendon, a professor of health policy and political analysis at Harvard. “They’re less worried about system-level concerns like health care spending and inequality. They want their existing coverage to be better and more affordable.”

What do voters want politicians to do?

Americans aren’t opposed to the idea of government-run health care, but there’s not a lot of consensus on what that would mean. For example, a recent Kaiser Family Foundation poll found that a majority (56 percent) of Americans favor a national “Medicare for All” plan. But according to a March Morning Consult poll, Americans are more likely to favor a plan that offers some kind of public option — a government-sponsored health insurance plan available in addition to existing private plans — over a system where everyone is enrolled in the same plan.

But this apparent contradiction makes sense, according to Brodie, because Americans are risk-averse when it comes to health care, and the switch to single-payer would affect far more people than the ACA did. Tens of millions of previously uninsured people received coverage under the ACA, but that number would be dwarfed by the 156 million people who get their insurance through their employers and could see their coverage change if the country switched to a single-payer plan. “Even if the current system isn’t working, transitions are scary,” Brodie said. “And people aren’t necessarily aware of what a national plan really means. When you start telling people that there might not be any more private insurance companies, that’s actually not a popular position.” For example, a January Kaiser Family Foundation poll found that support for a national Medicare for All plan dropped significantly when respondents were told it would mean eliminating private insurance companies.

And when asked what health care policies they want Congress to prioritize, Americans don’t list Medicare for All first. Instead, according to a recent Kaiser Family Foundation poll, they want Congress to pass targeted measures that would lower prescription drug costs, continue the ACA’s protections for preexisting conditions and protect people from surprise medical bills. Only 31 percent of Americans say that implementing Medicare for All should be a top priority for Congress, compared to 68 percent who want lowering drug prices to be a top priority. Moreover, prioritizing Medicare for All is politically polarizing: Only 14 percent of Republicans support putting that kind of plan at the top of the to-do list, compared to 47 percent of Democrats.

Some health care issues get only one-sided support

Share of Republicans and Democrats who say each issue should be a top priority for Congress, and the difference between the parties

Dem. Rep. Diff.
Making sure the ACA’s preexisting condition protections continue 82% 47% D+35
Implementing a national Medicare for All plan 47 14 D+33
Expanding government financial help for those who buy their own insurance coverage on the ACA marketplace to include more people 36 18 D+18
Lowering prescription drug costs for as many Americans as possible 77 66 D+11
Protecting people from surprise high out-of-network medical bills 55 45 D+10
Repealing and replacing the ACA 16 52 R+36

Source: Kaiser Family Foundation

However, smaller policy steps like lowering prescription drug costs and protecting people from surprise medical bills get more bipartisan support. Overall, Americans seem to be more concerned with fixing the current health care system than creating a sweeping new replacement — even if that replacement could address the issues they most want fixed in the current system.

What does this mean for the Democrats?

The complexity of Americans’ views on health care doesn’t change the fact that Democrats have a big advantage over Republicans on this issue, but it does mean that the individual candidates are in a tough spot because there’s no obvious unifying message they can adopt for the primary. And embracing a single-payer plan now could hand the GOP a weapon for the general election, allowing Republicans to frame the health care discussion around the Democrats’ controversial plan while glossing over Trump’s efforts to dismantle the ACA.

“The safest bet for a Democrat in the general election is to emphasize Trump’s track record on health care and say you’re going to make the ACA work,” Blendon said. The problem is that while that kind of argument might appeal to moderates, it’s likely to fall flat among a significant sector of the Democratic base that supports prioritizing a national Medicare for All plan over improving and protecting the ACA.

Democrats arguably still have an opening to make a case for a more ambitious health care overhaul, since voters still have relatively little information about what something like Medicare for All means. “It’s fine to support single-payer if you think that’s where the country needs to go, but you can’t just lean on principles like fairness or equality when you’re selling it,” said David Cutler, an economist at Harvard who advised Obama’s campaign on health care strategy. “You also have to tell voters, very specifically, what you are going to do to lower their costs and improve their coverage next year — not in 10 years.”

Even though Americans mostly prefer Democrats’ health care positions to the GOP’s, Democrats still risk alienating voters if they emphasize bumper-sticker slogans over concrete strategies for reducing the financial burden of health care. This is particularly important because their base of support for a single-payer system may be shallower than it appears, even within the party — especially when it comes to getting rid of private insurance. Big changes to the status quo are always politically challenging, but they may be especially risky when many Americans are concerned about losing the protections they already have.

 

 

 

Democrats Draw up their Healthcare Battle Lines

Image result for battle lines

Now that former Vice President Joe Biden has thrown his hat in the ring for the 2020 Presidential race, the healthcare policy differences between moderate and progressive factions of the Democratic party are becoming clearer. On Monday, Biden revealed the broad outlines of his healthcare platform, coming out in favor of a “public option” that would allow Americans to buy into the Medicare program, but would leave the existing employer-sponsored insurance framework largely intact. “If the insurance company isn’t doing right by you, you should have another choice,” Biden said in a campaign rally in Pittsburgh. Although his campaign did not announce details of the proposal, Biden seems to support the idea of offering a Medicare plan to employers and individuals through the Affordable Care Act (ACA) marketplaces.

As the frontrunner in the primary race, Biden’s support for this more moderate approach to coverage expansion will surely make him the favored candidate of healthcare industry interests, who have come out swinging hard against “Medicare for All” (M4A) proposals.

But his position earned him a swipe from progressive candidate Sen. Bernie Sanders (I-VT), who’s running second among Democrats in early polling. “It doesn’t go anywhere near far enough,” said Sanders of Biden’s proposal, “it will be expensive, [and] it will not cover a whole lot of people.” Sanders instead favors eliminating private insurance altogether and moving quickly toward a single-payer system built around universal Medicare coverage.

As the Presidential race takes shape, expect candidates to orient around one of these two poles: Biden’s moderate approach (O’Rourke, Buttigieg, Klobuchar); and Sanders’s more aggressive position (Warren, Harris, Booker).

Either position will present a stark contrast in the general election, as the Trump administration looks to reinvigorate the effort to strike down the ACA entirely. The 2020 elections are shaping up to be a pivotal moment for healthcare.

The Financial Impact of Medicare for All on Hospitals

 

 

With all of the focus on M4A recently, in its many permutations, we’re hearing a growing concern among hospital executives and physician leaders that their economics could be in serious peril. (For more on this, see the below anecdote from “on the road”.) That concern is justified, as you can see from the graphic below.

On the left, we show data on payment-to-cost ratio for hospitals since the start of the 2000s. As you can see, hospitals rely heavily on a cross-subsidy model—Medicare and Medicaid reimbursement covers only 86 to 88 percent of the total cost of inpatient care delivery. Hospitals make up this difference, and generate a positive margin, by negotiating rates for commercially-insured patients that cover almost 145 percent of costs. As health systems have consolidated and built negotiating leverage, that percentage has steadily risen over the past several years, more than offsetting losses on publicly-insured patients.

The problem? Those lucrative commercial patients only account for a third of admissions, as shown at the bottom right. And across the past decade and a half, commercial admissions have dropped by more than 20 percent. In other words, hospitals have been consolidating and raising commercial rates on a declining book of business in order to compensate for underpayment on a growing volume of government-paid cases.

Now imagine that the commercial business disappeared entirely, and you can see what would happen—hospital finances would crater. Under M4A, Medicare rates would have to go up substantially to make up for the lost margin on commercial cases. Even if M4A turned out to be “Medicare Advantage for More”, trading commercial admissions (say, for the 55-65 population) for MA admissions (which are generally paid at Medicare FFS rates), this would create a difficult situation for hospitals.

In our view, this economic reality is not getting discussed enough in the current debate over M4A

 

The CBO analyzed what it would take to shift to a single-payer system. Here are 5 takeaways

https://www.fiercehealthcare.com/payer/5-takeaways-from-cbo-s-analysis-a-single-payer-system?mkt_tok=eyJpIjoiTURRNU5HTmpZbU5tT1RFeiIsInQiOiJLcVdxN0dKUU5iaEdMTGtaMG9xbFdtdEgxdXJBbndhTUNyMWN6UTZzbGJhTHFkS3Z4eTRBZkFGNUxcLzlyZUxvMHpOUDRDbmptdGE4aHVoMk4wS1NTYUlWMFVPMmFxNEEzTkJcL1RDODhYa3psN0VkNFhFdTVqYjlDSHltaTdPMUFxIn0%3D&mrkid=959610

Image result for congressional budget office

As chatter about “Medicare-for-All” ideas heats up—at least among the field of Democratic presidential hopefuls—the Congressional Budget Office decided to offer its own take.

Well, sort of.

Wednesday, the CBO issued a report that dove into the key considerations policymakers might want to think about before they overhaul the U.S. healthcare into a single-payer system. Putting it mildly, they said, the endeavor would be a “major undertaking.”

They don’t actually offer up specific cost estimates on any of the Medicare-for-All bills floating around, though other researchers put Bernie Sanders’ Medicare-for-All plan at between $32.6 trillion and $38.8 trillion over the first decade.

But the CBO analysts did weigh in on a slew of different approaches to financing, coverage, enrollment and reimbursement that could be built into a single-payer plan.

“Establishing a single-payer system would be a major undertaking that would involve substantial changes in the sources and extent of coverage, provider payment rates and financing methods of healthcare in the United States,” the CBO said.

So what exactly did the CBO have to say about what it would take to create a single-payer system? Here are some key takeaways:

1. There could be a role for private insurance—or not

There has been plenty of heated debate around Medicare for All focused on the role that existing private coverage could—or could not—play in that system. Most insured Americans are enrolled in a private plan today, including about one-third of Medicare beneficiaries.

If they’re allowed, commercial plans could play one of three roles in a single-payer system, according to the report: as supplemental coverage, as an alternative plan or to offer “enhanced” services to members in the government plan. 

Allowing private insurers to offer substitutive plans is unlikely, because they could potentially offer broader provider networks or more generous benefits, which would draw people into them. A solution to this issue could be mandating that providers treat a minimum number of patients who are enrolled in a single-payer plan.

Private payers could also offer coverage for care that is traditionally outside of the purview of government programs, such as dental care, vision care and hearing care.

Supplemental plans like these are offered in the existing Medicare program, and several countries with single-payer systems allow this additional coverage.

For example, in England, private plans offer “enhancements” to members of the government plan, including shorter wait times and access to alternative therapies, But members of these plans must pay for it in addition to tax contributions to the country’s National Health Service. 

2. Other government programs could stick around

In addition to Medicare and Medicaid, the federal government operates several health programs targeting individual populations: the Veterans Affairs health system, TRICARE and Indian Health Services.

A single-payer system could be designed in a way that also maintains these individualized programs, the CBO said. Canada does this today, where its provinces operate the national system while it offers specific programs outside that for indigenous people, veterans, federal police officers and others.

There could also be a continuing role for Medicaid, according to the report. 

“Those public programs were created to serve populations with special needs,” the CBO said. “Under a single-payer system, some components of those programs could continue to operate separately and provide benefits for services not covered by the single-payer health plan.”

On the flip side, though, a single-payer plan could choose to fold members of those programs into the broader, national program as well, the office said. 

3. A simplified system could also mean simplified tech

Taiwan’s government-run health system has a robust technology system that can monitor patients’ use of services and healthcare costs in near real-time, according to the report.  

Residents are issued a National Health Insurance card that can store key information about them, including personal identifiers, recent visits for care, what prescriptions they use and any chronic conditions they may have.  Providers also submit daily data updates to a government databank on service use, which is used to closely monitor utilization and cost. Other technology platforms in Taiwan can track prescription drug use and patients’ medical histories.

However, getting to a streamlined system like this in the U.S. would be bumpy, the CBO said. It would face many of the same challenges the health system is already up against today, such as straddling many federal and state agencies and addressing the needs of both rural and urban providers.

But the payoffs could be significant, according to the report. 

“A standardized IT system could help a single-payer system coordinate patient care by implementing portable electronic medical records and reducing duplicated services,” the agency wrote. 

4. How to structure payments to providers? Likely global budgets

Most existing single-payer systems use a global budget to pay providers, and may also apply in tandem other payment approaches such as capitation or bundled payments according to the report.

How these global budgets operate varies between countries. Canada’s hospitals operate under such a model, while Taiwan sets a national healthcare budget and then issues fee-for-service payments to individual providers. England also uses a national global budget.

Global budgets are rare in the U.S., though Maryland hospitals operate under an all-payer system. These models put more of the financial risk on providers to keep costs within the budget constraints. 

Many international single-payer systems pay based on volume, but the CBO said value-based contracting could be built into any of these payment arrangements.

5. Premiums and cost-sharing are still in play, especially depending on tax structures

A government-run health system would, by its nature, need to be funded by tax dollars, but some countries with a single-payer system do charge premiums or other cost-sharing to offset some of those expenditures.

Canada and England operate on general tax revenues, while Taiwan and Denmark include other types of financing. Danes pay a dedicated, income tax to back the health system, while the Taiwanese have a payroll-based premium. 

The type of tax considered would have different implications on financing, according to the CBO. A progressive tax rate, for instance, would impose higher levies on people with higher incomes, while a consumption tax, such as one added to cigarettes, would affect people more evenly.

Policymakers will also have to weigh when to impose new taxes, shifting the economic burden between generations. 

The CBO did not offer any cost estimates in terms of the amount the federal government would need to raise in taxes to fund a single-payer program.

 

 

 

Truth #5 – Costs To Operate Medicare Are Not Lower Than Private Insurance Plans

https://www.linkedin.com/pulse/truth-5-costs-operate-medicare-lower-than-private-plans-weinberg/

By Denny Weinberg

Another favorite topic at the heart of the US healthcare debate is whether governments can run health insurance programs at lower operating costs than private insurance companies.

Two Sides Square Off

Private Industry Supporters: Some argue that governments regularly prove incompetent running large complex operations at a low costs. Regularly cited is the US mail system and the VA; more locally, public schools and DMV’s. And in the case of Medicare and Medicaid, something about these programs appears to set up a breeding ground for costly fraud and theft, they might argue. Finally, this group argues that competition inherently creates innovation, productivity and lower unit operating costs, something that does not naturally occur with government programs.

Government Supporters: On the other side, many argue that the sheer scale of a single program like Medicare creates consistency and low unit costs, the result of economies of scale. Further, that by extending that program to even more Americans, those scale economies will improve more. This group argues that the profit motive of private companies can only result in higher costs, not lower, enriching investors and executives.

What Do The Numbers Say?

As I researched this point, I found that cost effectiveness arguments between Medicare and Private Insurance is an old one, with each side pretty dug in. But there are some important themes associated with the underlying math.

Comparing Costs vs Percentages:

Government program supporters like to compare operating costs using percentages. The common percentage used is “operating cost as a percent of medical services”. They Argue that Medicare costs only about 2%-3% of the costs of medical services paid. They will further argue that private health plan costs are, by comparison anywhere from 10% to 25% of the costs of medical services they pay. Their conclusion is, “Medicare has far lower operating costs, and is therefore the much more efficient program.”

Private market supporters dispute this “percentage comparison”, and instead look at “operating costs $’s per capita” and compare those. They argue that when compared in this $ per capita measure, monthly Medicare operational costs are well over $100 per capita, while monthly private insurance cost of operations are well less than $100 per capita. Their conclusion is, “Private market providers have far lower operating costs, and are therefore much more efficient than Medicare”.

Why Is This Comparison Of Operating Costs of Medicare and the Private Market So Difficult?

1) As much as 50% of all US healthcare occurs in the last few months of a person’s life. This dynamic is a major driver of Medicare Coverage and its operating costs. It is far less of a driver of private healthcare coverage for younger and mostly working Americans and the related operating costs, confusing the comparisons.

2) Many diseases of aging are much more common in Medicare than in private health coverages. The most expensive is Kidney Care, and ultimately transplant or Dialysis, (which has its own category in Medicare). Beyond that, Cancers, Heart Disease, Dementia/Alzheimer’s and others are far more significant drivers of continuing costs for those covered by Medicare than those on private insurance coverages at younger ages, confusing the comparisons.

3) Workplace related coverages more often coordinate coverage with workers compensation, or even car and homeowners insurance coverages than those with Medicare Coverages. This produces different operating costs and medical coverages under the private health coverages, confusing the comparisons.

4) Private Insurance coverages are or have been subject to significant state Premium Taxes and other health care related state and federal taxes. These are often categorized as “Operating Costs” in comparisons, confusing the comparisons.

5) Some comparisons don’t capture all government expenses that support the Medicare program, perhaps to advantage this argument. Examples of services performed for Medicare by other parts of the government that aren’t accounted for: The Social Security Administration collects premiums, the Internal Revenue Service collects taxes for the program, the F.B.I. provides fraud prevention services, and at least seven other federal agencies and departments also do work that benefits Medicare, confusing the comparisons.

6) As pointed out in previous installments, a large and rapidly increasing portion of the Medicare eligible population opts out of traditional Medicare and purchases a Private Plan alternative from private companies. This is now approximately 40%. Operating costs are imbedded in the coverage price and not easily separated for purposes of comparison any longer, confusing the comparisons.

Conclusion?

As some of this discussion indicates, it is nearly impossible to formulate a clear comparison between Medicare operating costs and “the private market”. However, it also appears unlikely that the original Medicare Program administration, when properly compared, is more efficient than the highly competitive private market. That market now provides many low price, high value alternatives for rapidly growing number of Medicare eligibles. It is those same private market players who provide specialized solutions for younger and more often working American families at lower per capita costs than the Medicare Program, the measure that this writer is moved to support.

 

 

Truth #4; Medicare-For-All; Elected Officials and Government Employees Will Lead?

https://www.linkedin.com/pulse/truth-4-medicare-for-all-elected-officials-government-denny-weinberg/

To our elected officials and government workers re: Medicare-For-All. “If it’s so great, why aren’t YOU part of the Medicare program today?”

Lets take a quick look at who these government workers are and to what extent they have been the leaders in single payer programs so far.

Federal Government Workers

There are roughly 2 million federal workers in the US today. They and their families participate in a health benefits program created in 1960 just for them (the FEHBP). Interestingly, the FEHBP is not a government run single payer system, but arguably, the opposite. It’s a mostly open marketplace to over 200 private market HMO, PPO and other options from nearly every Blue Cross/Blue Shield plan and many other local and major managed care companies such as Aetna, Humana and United HealthCare.

When federal workers reach age 65, most choose continuing their FEHBP alternative, because it offers great local and national private options that are just a better deal than the single payer Medicare option. Once they actually do retire, workers can continue to choose to apply their Medicare subsidies to alternatives to Medicare that I have talked about in previous posts from the same private insurance company vendors they currently have, with little disruption.

State and Local Government Workers

There are roughly 4.5 Mil workers of each of the states, with coverage structures as varied as the number of states. Beyond that, another 14 Mil workers are associated with local governments, cities and counties and their health coverages even more varied.

Virtually all have unique programs providing multiple PPO and HMO and other coverages from a variety of private health insurance vendors. Those workers over ages 65, typically remain with those private health plans just as they did when they were younger. For retirees, today often older than age 65, the options are too varied for this article. But suffice it to say, they too have many private market alternatives or wraparound options to the Traditional Medicare program, and many opt for those.

Medicare-For-All; Will Federal, State and Local Government Workers Lead The Way?

So government workers and retirees participate in private insurance programs in much the same way way as the rest of us. As such, it would appear that if Medicare were “switched on” as the sole solution for health care coverage, all these government workers would be as impacted as everyone else, and might have similar responses, both positive and negative.

It seems that time and political realities will indicate whether government workers themselves would support a single source for their health care options, defined by the government, without the benefit of private market wrap-arounds or alternatives.

 

 

 

Truth #3: Medicare is Not “Free”

https://www.linkedin.com/pulse/truth-3-medicare-free-denny-weinberg/

by Denny Weinberg

Someone Is Paying For The Whole Thing, You Know

The “Free-ness” of Medicare, like many other commodities, comes down to two important metrics discussed here; Cost, and Price.

Cost:

  • Costs for Medicare include all payments to hospitals, doctors, pharmacies, labs, imaging centers, etc.
  • Costs for Medicare also include amounts paid to 12 private companies contracted regionally to manage and administer the Medicare Program. (i.e. claims, payments, providers, appeals, inquiries, education, medical records, etc). These critical administrative functions have been outsourced to the insurance industry and its affiliates for many years.
  • Finally, Medicare costs include payments to dozens of private insurance companies who provide private alternatives to Medicare, such as Medicare Advantage PPO’s and HMO’s.

Price:

  • Current projections are that Medicare costs will increase about 5% per year and prices will have to increase much more than that to keep the program from insolvency in the next few years.
  • Most adult Americans (including many that are also beneficiaries) pay varying portions of this price through special taxes, depending upon their type and amount of income.
  • If a Medicare beneficiary has also chosen to take Social Security income (most do), varying portions of that price are mandatorily deducted from that Social Security income as well, automatically.

So What Does It Really Cost and How Much Is The Real Price?

In 2017, the Medicare program made over $700 Billion in Payments to private insurance administrators and care providers for Traditional Medicare or for alternatives (Medicare Advantage). That year, about 58 Mil beneficiaries were enrolled in the program. The result is a cost for each Beneficiary of just over $1,000 per month. In 2019 that cost and related price will both be higher due to inflation.

But the beneficiary share of that price also varies widely based upon several factors. Those include income, the number of qualifying years of employment and whether Part B or Part D (coverage for Doctors and Prescriptions) is chosen or waived. (This will be further offset by the amount [if any] of Social Security income deducted first).

Given all that, Medicare Prices for 2019 range as follows:

No alt text provided for this image

So Is Medicare Free?

When you consider a program that on average costs over $1,000 per beneficiary per month …

… Then knowing that a substantial part of the needed price is covered by the tax on virtually all workers and other income earners …

… and since many beneficiaries may not rationalize the substantial dollars being stripped away from the (unrelated) Social Security payments to help pay their share of the price

… and considering that a material number of beneficiaries have incomes over $85,000 per year (many still work) …

… and finally, comparing all the components of coverage Americans have received when younger and working (Hospital, Physician and Prescriptions) …

… These numbers, taken together, for many people are certainly not free.

 

 

 

Truth #2: Medicare Coverage May Not Be As “Good”​ As You Expected

https://www.linkedin.com/pulse/truth-2-medicare-coverage-may-good-you-expected-denny-weinberg/

Denny Weinberg

Background

In the mid 1960’s, Medicare was first created as a “Social Insurance Program”, designed to be consistently applied to all older Americans. Comprehensive, inexpensive, and relevant to the standards-of-care at the time, this was considered “Good” Coverage.

But the passing of years unveiled a multitude of unanticipated dynamics.

  • For example, the very definition of “health care” has both broadened and deepened materially since 1965. The first MRI or the first Angioplasty would not occur until a decade later.
  • Meanwhile, the age-65 life expectancy has expanded by nearly 50% since then, exposing the medical system to care demands and opportunities never contemplated, late in life.
  • While care technology, science and processes have responded to this expanding demand, they brought with them dramatically accelerating costs, year after year.
  • Finally, political pressures to respond to special populations, including dialysis patients, or emerging care settings like home health or hospice, or even outpatient prescription drugs… all resulted in substantial Medicare Program scope creep.

So it should not be surprising that since inception, Medicare COVERAGE itself has required regular, often dramatic modifications to keep its “social insurance purpose” in balance with these and other continually changing demands. Some of that pressure has even challenged the highly protected “social Insurance” model itself:

  • By the early 2000’s, these pressures yielded to means-based-pricing for seniors of varying income levels
  • A 2013 survey of Americans over age 65 revealed “raising the age of eligibility to 67” as the second most popular to reduce costs and improve long term viability.

Americans Are Not Very Informed About Medicare

Most Americans (even beneficiaries) are not really aware of the full effect of these sequential program changes, because they have been spread out over many years. After all, the Medicare program has been around for 50 years, but most beneficiaries participate for less than a dozen years. So, many assume this program has been stable and managable year after year, with surprising simplicity and effectiveness. But Medicare Coverage is not at all what it was 50 years ago.

Consider a small number of coverage dynamics between the late 1960’s and today:

No alt text provided for this image

Other coverage details and provisions have had to change along the way too, few offsetting the additional copayments, co-insurance, annual and lifetime limits or out-of-pocket cost exposure for beneficiaries.

Could Today’s Medicare Even Work Without The Private Market?

These exposures explain why most Medicare beneficiaries are compelled to purchase a supplemental private insurance plan to cover those costs not covered by today’s Medicare. Such private plans are called Medicare Supplement Plans, and they have been increasingly necessary as the exposures under the Traditional Medicare program have grown over the years. But they too have become expensive due to the the increasing uncovered portions of Medicare. Over the years, the average Medicare Supplement has increased in price from less than $20 per month in the 1980’s to a few Hundred dollars per month today.

Alternatively, Medicare beneficiaries today can choose to leave Traditional Medicare altogether, and apply their “benefit equivalent eligibility” to the purchase of an alternative from a private Insurance company. These programs, called Medicare Advantage Plans, attract nearly 1/3 of all Medicare Beneficiaries who simply can’t make Traditional Medicare pencil out.

So What Does This Mean?

Most of the Medicare-For-All proposals don’t advertise the high coverage gaps in the current model, and the dependency on either a private market supplement (Medicare Supplement Plans), or private market alternative (Medicare Advantage Plans). Without these, Medicare-For-All will be woefully inadequate to meet the coverage expectations of Americans. Alternatively, Medicare-For-All proposals could completely re-invent what Medicare is , increasing its coverage and raising its price substantially.

Either way, it is going to cost a lot of money.

 

 

Truth #1: Many Opt-Out of Medicare?

https://www.linkedin.com/pulse/medicare-all-opt-outs-denny-weinberg/

For All?

… like liberty and justice, Medicare is imagined by some to be All-American. But is it? Can it be? Should it be?

A Historical Perspective:

In 1965, the first year of Medicare, nearly 19 Million Americans enrolled, 56% of whom were previously uninsured according to a Kennedy-era study. It was a simple program back then, providing only acute hospital and physician coverage for Americans over age 65. It was the only real health insurance option for people over age 65, virtually all of whom retired by that age back then.

Today, an estimated 63 Mil or 18% of the US population are eligible for Medicare. And after decades of major program changes, the 2018 program covers more than just older Americans, and Medicare coverage is more complex and broader than the original program. Like the original program (Traditional Medicare), the coverage still has substantial patient exposures for deductibles, co-payments and lifetime / per-incident limits. And, despite popular folklore, it is far more expensive due to the same pressures that impact coverages for the rest of us.

Along the way, other alternative or complementary coverages have emerged. No surprise, this dynamic reflects in part, the vastly different nature and demands of American consumers including older American consumers. These newer coverage sources include private insurers, employers, unions, states, municipalities and school districts as well as expanded coverages for the poor (including the older poor).

Does Medicare ALONE Work For Those That Have Access Today?

Consider this:

  • 38 Mil, or only 60% of those eligible are enrolled in Traditional Medicare. But because of indexing coverage limitations, only 19% of these Traditional Program participants do not have some form of supplemental or alternative coverage.
  • Another 9 Mil are over 65 but still working, and only because of their employer wrap-around coverage, Medicare is workable.
  • Another 21 Mil are enrolled in Private Alternatives to Medicare called Advantage Plans after opting out of Traditional Medicare. In 2018 there were 2,317 such Medicare Advantage plans available nationwide allowing the average beneficiary to choose among 21, an increase from 19 in 2017. This is anything but single-payer and becoming less single-payer-like each year due to natural market dynamics.
  • Finally, 12 Mil of all of these are also enrolled in Medicaid (dually eligible), due to low income, disability, etc. Most are part of the 38 Mil people with Traditional Medicare, but only because of the Medicaid program, their Medicare is coverage and price affordable and/or relevant.

What Does This Say About Medicare For All?

Nearly 1/2 of all who are offered Medicare today choose a private market alternative, or can only make it work due to other private market wraparound safety nets. So why do we think Medicare will be attractive to the rest of the population without similar private market protections?

 

Hospitals Stand to Lose Billions Under ‘Medicare for All’

For a patient’s knee replacement, Medicare will pay a hospital $17,000. The same hospital can get more than twice as much, or about $37,000, for the same surgery on a patient with private insurance.

Or take another example: One hospital would get about $4,200 from Medicare for removing someone’s gallbladder. The same hospital would get $7,400 from commercial insurers.

The yawning gap between payments to hospitals by Medicare and by private health insurers for the same medical services may prove the biggest obstacle for advocates of “Medicare for all,” a government-run system.

If Medicare for all abolished private insurance and reduced rates to Medicare levels — at least 40 percent lower, by one estimate — there would most likely be significant changes throughout the health care industry, which makes up 18 percent of the nation’s economy and is one of the nation’s largest employers.

Some hospitals, especially struggling rural centers, would close virtually overnight, according to policy experts.

Others, they say, would try to offset the steep cuts by laying off hundreds of thousands of workers and abandoning lower-paying services like mental health.

he prospect of such violent upheaval for existing institutions has begun to stiffen opposition to Medicare for all proposals and to rattle health care stocks. Some officials caution that hospitals providing care should not be penalized in an overhaul.

Dr. Adam Gaffney, the president of Physicians for a National Health Program, warned advocates of a single-payer system like Medicare for all not to seize this opportunity to extract huge savings from hospitals. “The line here can’t be and shouldn’t be soak the hospitals,” he said.

“You don’t need insurance companies for Medicare for all,” Dr. Gaffney added. “You need hospitals.”

Soaring hospital bills and disparities in care, though, have stoked consumer outrage and helped to fuel populist support for proposals that would upend the current system. Many people with insurance cannot afford a knee replacement or care for their diabetes because their insurance has high deductibles.

Proponents of overhauling the nation’s health care argue that hospitals are charging too much and could lower their prices without sacrificing the quality of their care. High drug prices, surprise hospital bills and other financial burdens from the overwhelming cost of health care have caught the attention (and drawn the ire) of many in Congress, with a variety of proposals under consideration this year.

But those in favor of the most far-reaching changes, including Senator Bernie Sanders, who unveiled his latest Medicare for all plan as part of his presidential campaign, have remained largely silent on the question of how the nation’s 5,300 hospitals would be paid for patient care. If they are paid more than Medicare rates, the final price tag for the program could balloon from the already stratospheric estimate of upward of $30 trillion over a decade. Senator Sanders has not said what he thinks his plan will cost, and some proponents of Medicare for all say these plans would cost less than the current system.

The nation’s major health insurers are sounding the alarms, and pointing to the potential impact on hospitals and doctors. David Wichmann, the chief executive of UnitedHealth Group, the giant insurer, told investors that these proposals would “destabilize the nation’s health system and limit the ability of clinicians to practice medicine at their best.”

Hospitals could lose as much as $151 billion in annual revenues, a 16 percent decline, under Medicare for all, according to Dr. Kevin Schulman, a professor of medicine at Stanford University and one of the authors of a recent article in JAMA looking at the possible effects on hospitals.

“There’s a hospital in every congressional district,” he said. Passing a Medicare for all proposal in which hospitals are paid Medicare rates “is going to be a really hard proposition.”

Richard Anderson, the chief executive of St. Luke’s University Health Network, called the proposals “naïve.” Hospitals depend on insurers’ higher payments to deliver top-quality care because government programs pay so little, he said.

“I have no time for all the politicians who use the health care system as a crash-test dummy for their election goals,” Mr. Anderson said.

The American Hospital Association, an industry trade group, is starting to lobby against the Medicare for all proposals. Unlike the doctors’ groups, hospitals are not divided. “There is total unanimity,” said Tom Nickels, an executive vice president for the association.

“We agree with their intent to expand coverage to more people,” he said. “We don’t think this is the way to do it. It would have a devastating effect on hospitals and on the system over all.”

Rural hospitals, which have been closing around the country as patient numbers dwindle, would be hit hard, he said, because they lack the financial cushion of larger systems.

Big hospital systems haggle constantly with Medicare over what they are paid, and often battle the government over charges of overbilling. On average, the government program pays hospitals about 87 cents for every dollar of their costs, compared with private insurers that pay $1.45.

Some hospitals make money on Medicare, but most rely on higher private payments to cover their overall costs.

Medicare, which accounts for about 40 percent of hospital costs compared with 33 percent for private insurers, is the biggest source of hospital reimbursements. The majority of hospitals are nonprofit or government-owned.

The profit margins on Medicare are “razor thin,” said Laura Kaiser, the chief executive of SSM Health, a Catholic health system. In some markets, her hospitals lose money providing care under the program.

She says the industry is working to bring costs down. “We’re all uber-responsible and very fixated on managing our costs and not being wasteful,” Ms. Kaiser said.

Over the years, as hospitals have merged, many have raised the prices they charge to private insurers.

“If you’re in a consolidated market, you are a monopolist and are setting the price,” said Mark Miller, a former executive director for the group that advises Congress on Medicare payments. He describes the prices paid by private insurers as “completely unjustified and out of control.”

Many hospitals have invested heavily in amenities like single rooms for patients and sophisticated medical equipment to attract privately insured patients. They are also major employers.

“You would have to have a very different cost structure to survive,” said Melinda Buntin, the chairwoman for health policy at the Vanderbilt University School of Medicine. “Everyone being on Medicare would have a large impact on their bottom line.”

People who have Medicare, mainly those over 65 years old, can enjoy those private rooms or better care because the hospitals believed it was worth making the investments to attract private patients, said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University. If all hospitals were paid the same Medicare rate, the industry “should really collapse down to a similar set of hospitals,” he said.

Whether hospitals would be able to adapt to sharply lower payments is unclear.

“It would force health care systems to go on a very serious diet,” said Stuart Altman, a health policy professor at Brandeis University. “I have no idea what would happen. Nor does anyone else.”

But proponents should not expect to save as much money as they hope if they cut hospital payments. Some hospitals could replace their missing revenue by charging more for the same care or by ordering more billable tests and procedures, said Dr. Stephen Klasko, the chief executive of Jefferson Health. “You’d be amazed,’ he said.

While both the Medicare-for-all bill introduced by Representative Pramila Jayapal, Democrat of Washington, and the Sanders bill call for a government-run insurance program, the Jayapal proposal would replace existing Medicare payments with a whole new system of regional budgets.

“We need to change not just who pays the bill but how we pay the bill,” said Dr. Gaffney, who advised Ms. Jayapal on her proposal.

Hospitals would be able to achieve substantial savings by scaling back administrative costs, the byproduct of a system that deals with multiple insurance carriers, Dr. Gaffney said. Under the Jayapal bill, hospitals would no longer be paid above their costs, and the money for new equipment and other investments would come from a separate pool of money.

But the Sanders bill, which is supported by some Democratic presidential candidates including Senators Kirsten Gillibrand of New York, Cory Booker of New Jersey, Elizabeth Warren of Massachusetts and Kamala Harris of California, does not envision a whole new payment system but an expansion of the existing Medicare program. Payments would largely be based on what Medicare currently pays hospitals.

Some Democrats have also proposed more incremental plans. Some would expand Medicare to cover people over the age of 50, while others wouldn’t do away with private health insurers, including those that now offer Medicare plans.

Even under Medicare for all, lawmakers could decide to pay hospitals a new government rate that equals what they are being paid now from both private and public insurers, said Dr. David Blumenthal, a former Obama official and the president of the Commonwealth Fund.

“It would greatly reduce the opposition,” he said. “The general rule is the more you leave things alone, the easier it is.”