Tag Archives: Unexpected Medical Bills

Segment 9 – The Big Fix for U.S. Healthcare

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Segment 9 – The Big Fix for U.S. Healthcare

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This segment reviews the “Big Fix,” based on the idea of setting limits fairly. It describes the success of the Oregon Health Plan of 1994.

In the first 8 Episodes, we have reviewed the evolution of the US healthcare delivery system and insurance system. We have identified the relentless growth of healthcare spending as the root of the problem. And how rising costs are literally built into the system as it is now. Finally we have looked at American traditions and values that we all agree on, and we identified loaded political words and the seeming conflict between market justice and social justice that voters disagree on.

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Based on this understanding of the US healthcare system, we are now ready to look at what I’m calling the Big Fix. It is based on the idea of setting limits fairly. You’ll be surprised to know that it was already tried 20 years ago in Oregon. And it worked!

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So, let me tell you the story of the Oregon Health Plan. It all starts with a Roseburg Oregon emergency room doctor named John Kitzhaber. Half of his ER patients – as everywhere – were not real emergencies, just uninsured patients with no other place to get healthcare.

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So in 1989 when the Medicaid budget was being cut, he realized that many Medicaid patients would lose coverage, and would be flooding into his ER. Unless something was done.

He came up with an idea. Rather than keep the same level of benefits and cut patients, why not keep all the patients on Medicaid but limit their benefits? He formed a non-profit group to lobby for these low-income patients. This propelled him to the state senate and eventually to the governorship. He first created a list of 709 diagnosis-treatment pairs ranked by the dollar cost per life saved by each treatment (or “quality-adjusted-life-year”).

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But this produced some odd results, for example ranking lower-cost dental care above life-saving appendectomies. And so he next organized 60 town hall meetings to re-prioritize the list with common-sense consumer input. Actuaries then calculated the line (Line 581) above which the fixed Medicaid budget could cover all eligible patients. The final list gave priority to life-saving treatments such as antibiotics for pneumonia and appendectomy for appendicitis, as well as to proven effective treatments for heart disease and treatable cancers. It also included routine preventive care, maternal care, newborn care, well-child care and preventive dental care. Kidney dialysis was covered above the Line. The list did not cover conditions like remedies for the common cold that get better on their own, conditions where “home” treatment is effective like sprains, ineffective or futile care such as surgery for most back pains or aggressive treatment of end-stage cancer. For those terminal cancers, it did cover comfort care.

Here are the other main provisions of the Oregon Health Plan. By eliminating low-value health services, it was able to cover 100 percent of low-income citizens. The combination of sound research and consumer input gained it public acceptance.

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Here is the time line for the Oregon Health Plan. It actually took 5 years to gather public input and then to get necessary federal waivers approved.

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Here is a summary of the key successes of the Oregon Health Plan. Oregon was able to extend plan eligibility of those below federal poverty level from 57% to all 100%. This meant 100,000 more Oregonians on Medicaid. However 65,000 still did not enroll, presumably due to complicated enrollment procedures or copays up to $28. Total uninsured in Oregon did drop from 18% to 11%. Most importantly, Medicaid stayed within its budget. Medicaid physicians were paid on a par with others, resulting in robust doctor participation and 88% patient satisfaction.

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Let’s pause to consider a key question, Is it ethical to limit health benefits for low-income patients? Philosopher Paul Menzel (who I introduced in the last Segment) gives a resounding Yes. Here is his thinking. The right to prioritize healthcare services is especially important for lower-income patients. If they were given their Medicaid premium in the form of cash, many would spend only 33% of it on healthcare because they have more pressing needs for food, clothing, and shelter. Menzel also points out that these low-income patients would gladly accept a package of more restricted health services in exchange for first-dollar coverage. Lower-income patients live from paycheck to paycheck and don’t want the uncertainty of a large unexpected medical bill. Medicaid patients want healthcare insurance, but neither they – nor society at large – should pay more than it’s worth to them.

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In plain language, lower-income patients – and other savvy insurance buyers — need the real choice for a lower-cost package of limited health benefits that is “worth the money,” not just a menu of higher deductibles and copays but the same old package of exorbitantly costly, low-value care.

Please notice that this idea blends both market justice and social justice. It acknowledges that low-income patients are not entitled to everything, no matter what the cost. But it also provides for them a package that they – and society – think is costworthy. And does so with their consent freely given. Costworthy care is one of the key features of a fair health system, according to Menzel, as we saw in the last Segment, and consent is a key principle.

It is instructive to look at the fate of the Oregon Health Plan over the 8 years of its existence. Here is what happened. The legislature cut taxes. Healthcare costs rose with inflation. Oregon tried to get the poor to accept higher co-pays, but they could not afford them and so dropped out. Eventually these patients went back to traditional Medicaid or became uninsured again, spelling the end of the Oregon Health Plan.

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What are the lessons to be learned?

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First, limit-setting is politically feasible, ethically acceptable and pragmatically successful in controlling cost, access and quality.

Second, priority setting takes years to plan and years to implement.

Third, healthcare priority setting should be informed by cost-benefit research but driven by public participation, respecting minority rights and protection of the sick and vulnerable.

Fourth, two-tiered health benefits packages – one lower-cost and one higher-cost – is politically feasible and ethically acceptable (but so-called Essential Benefits should not arbitrarily cut entire categories of benefits like maternity care).

Fifth, sufficient primary care provider pay is needed to ensure doctor participation and patient access.

Sixth, sustaining healthcare system restraints and cost controls requires continual monitoring and periodic updating to keep up with new medical research and changing public values.

This is a critical point, because the casual observer might conclude that the Oregon Health Plan failed in 2002.

But I argue that the fact that the Plan was designed, politically adopted, implemented and sustained for 8 years proves the concept that limit setting can work, but also shows that something so big and so intricate needs ongoing political and administrative energy to sustain it.

Of course I have over-simplified the Oregon Health Plan. There are innumerable technical, legal, budgetary and administrative details involved.

Also, adopting a plan like Oregon’s today would need us to take into account 20 more years of research since then, with some very expensive but very effective treatments newly available. There are also many ethical nuances, such as should we budget for one patient needing a $100,000 treatment in place of 100 patients with $1,000 treatments, or vice-versa? But Oregon showed that all these issues can be managed in an orderly fashion.

I have also over-simplified that merely adopting the Oregon Health Plan cost-benefit method for limit setting would solve the entire cost problem. For example, many commentators have exposed the quirks of the US healthcare system that result in over-pricing, as discussed in Segment 5. That means that the same drugs, tests or treatments cost 2 to 10 times more in the US than in other countries. Those quirks should each be addressed in policies and regulations.

But the basic idea of fair limit setting – call it rationing, if you like – is the key, in my opinion. Limit setting would firmly challenge the common presumption that all healthcare is equally cost-worthy. It would put on notice the vested interests: if they play games with exorbitant pricing, they would ultimately lower their benefit-for-cost below the cut-off point, and drop themselves off the covered list altogether.

In the final Segment, I will talk about what each of us can do to promote health system reform and cost control.

I’ll see you then.

 

Americans’ Confidence in Their Ability to Pay for Health Care Is Falling

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http://www.commonwealthfund.org/publications/blog/2018/may/americans-confidence-paying-health-care-falling?omnicid=CFC1404232&mid=henrykotula@yahoo.com

President Trump is expected to soon address the nation about the rising cost of prescription drugs. But Americans are worried about more than drug prices. New findings from the Commonwealth Fund Affordable Care Act Tracking Survey show that consumers’ confidence in their ability to afford all their needed health care continues to decline.

Last week, we reported that the survey indicated a small but significant increase in the uninsured rate among working-age adults since 2016. In this post, we look at people’s views of the affordability of their health care. The Affordable Care Act Tracking Survey is a nationally representative telephone survey conducted by SSRS that tracks coverage rates among 19-to-64-year-olds, and has focused in particular on the experiences of adults who have gained coverage through the marketplaces and Medicaid. The latest wave of the survey was conducted between February and March 2018.1

Findings

Confidence in Ability to Afford Health Care Continues to Decline

In each wave of the survey, we’ve asked respondents whether they have confidence in their ability to afford health care if they were to become seriously ill. In 2018, 62.4 percent of adults said they were very or somewhat confident they could afford their health care, down from a high of nearly 70 percent in 2015 (Table 1). Only about half of people with incomes less than 250 percent of poverty ($30,150 for an individual) were confident they could afford care if they were to become very sick, down from 60 percent in 2015 and about 20 percentage points lower than the rate for adults with higher incomes. There were also significant declines in confidence among young adults, those ages 50 to 64, women, and people with health problems. Declines were significant among both Democrats and Republicans.

People in Employer Plans Have the Greatest Confidence in Their Insurance

We asked people with health insurance how confident they were that their current insurance will help them afford the health care they need this year. Majorities of adults were somewhat or very confident in their coverage; those with employer coverage were the most confident. More than half (55%) of adults insured through an employer were very confident their coverage would help them afford their care compared to 31 percent of adults with individual market coverage and 41 percent of people with Medicaid (Table 2). The least confident were adults enrolled in Medicare. Working-age adults enrolled in Medicare were the sickest among insured adults and the second-poorest after those covered by Medicaid (data not shown).2

One-Quarter of Adults Said Health Care Became Harder to Afford

We asked people whether, over the past year, their health care, including prescription drugs, had become harder for them to afford, easier to afford, or if there had been no change. The majority (66%) said there had been no change, one-quarter (24%) said it had become harder to afford, and 8 percent said it had become easier (Table 3). People with individual market coverage were significantly more likely than those with employer coverage or Medicaid to say health care had become harder to afford. About one-third of adults with deductibles of $1,000 or more said health care had become harder to afford, twice the share of those who had no deductible. About one-third of those enrolled in Medicare and 41 percent who were uninsured also reported that their health care had become harder to afford.

Only About Half of Americans Would Have Money to Pay for an Unexpected Medical Bill

Accidents and other medical emergencies can leave both uninsured and insured people with unexpected medical bills, which usually require prompt payment. We asked people if they would have the money to pay a $1,000 medical bill within 30 days in the case of an unexpected medical event. Nearly half (46%) said they would not have the money to cover such a bill in that time frame (Table 4). Women, people of color, people who are uninsured, those covered by Medicaid or Medicare, and those with incomes under 250 percent of poverty were among the most likely to say they couldn’t pay the bill.

Health Care Is Among People’s Top Four Greatest Personal Financial Concerns

Fourteen percent of adults said that health care was their biggest personal financial concern, after mortgage or rent (23%), student loans (17%), and retirement (17%) (Table 5). Those most likely to cite health care as their greatest financial concern were people who could potentially face high out-of-pocket costs because they were uninsured or had high-deductible health plans.

Policy Implications

Uninsured adults are the least confident in their ability to pay medical bills. But the risk of high out-of-pocket health care costs doesn’t end when someone enrolls in a health plan. The proliferation and growth of high-deductible health plans in both the individual and employer insurance markets is leaving people with unaffordable health care costs. Many adults enrolled in Medicare for reasons of disability or serious illness also report unease about their health care costs. An estimated 41 million insured adults have such high out-of-pocket costs and deductibles relative to their incomes that they are effectively underinsured. As this survey indicates, the nation’s health care cost burden is felt disproportionately by people with low and moderate incomes, people of color, and women.

The ACA’s reforms to the individual insurance market have doubled the number of people who now get insurance on that market to an estimated 17 million, with approximately half receiving subsidies through the ACA marketplaces. The ACA also has made it possible for people who were regularly denied coverage by insurers — older Americans and those with health problems — to get insurance. They are now entitled by law to an offer should they want to buy a plan.

But as this survey suggests, the ACA’s reforms did not fully resolve the individual market’s relatively higher costs for all those enrolled, compared to employer coverage or Medicaid. Moreover, recent actions by Congress and the Trump administration, including the repeal of the individual mandate penalty and loosened restrictions on plans that don’t comply with the ACA, are expected to exacerbate those costs for many. In the survey, people with individual market coverage are more likely than those with employer coverage or Medicaid to say that their health care, including prescription drugs, has become harder to afford in the past year. They express less confidence than those with employer coverage that their insurance will help them afford their care this year. As explained in the first post, there are a number of policy options that Congress can pursue that would improve individual market insurance’s affordability and cost protection. In the absence of bipartisan Congressional agreement on legislation, several states are currently pursuing their own solutions. But if current trends continue, the federal government will likely confront growing pressure to provide a national solution to America’s incipient health care affordability crisis.