Unlimited Health Insurance Benefits Will Cause Medical Overuse, Expert Says

6 May 2011 |

Anyone who has visited this blog before knows I believe that the Patient Protection and Affordable Care Act, sometimes called Obamacare, weakens the actuarial foundations of private health care insurance and will lead to its demise. Many people think this might be a good thing, or are ambivalent about it, but I disagree. Through the concept of shared risk, private health insurance has made the highest quality healthcare affordable for hundreds of millions of people. Undermining its sustainability will make healthcare in America worse, not better.

For Obamacare to work, large numbers of young and healthy adults who have made a choice to not purchase health care insurance will be forced, through fines and other mechanisms, to buy it. Because the law has cut the rates for older, sicker adults, the young people will pay higher premiums than they would if normal, actuarial science was employed to set rates. Supporters of Obamacare believe that forcing younger adult to enroll in health insurance will offset the costs of removing caps on benefits and restrictions on preexisting conditions. I disagree. Those who are forced to purchase health insurance are not going to simply pay their premiums and carry on as before. They will want to “get what they pay for,” so they will make much greater use of the healthcare system than they did when they were uninsured. That means there will not be a windfall of premiums to offset the losses through unlimited benefits. Those premiums will pay for the care the younger people receive: screenings, check-ups, care for minor injuries and common ailments. I saw a financial problem in this influx of new healthcare users. Rosemary Gibson, an expert on patient safety, sees a different problem.

Gibson, who has spent the last 16 years working for improve patient safety, believes mandatory health insurance exposes the younger generation health insurance consumers to the unscrupulous practices of some healthcare providers. Gibson, the author of The Treatment Trap: How the Overuse of Medical Care Is Wrecking Your Health, and What You Can Do About It, told Jordan Rau of Kaiser Health News:

Health insurance used to be about giving patients access to providers. That’s still true, but it is also about giving providers access to patients. The 32 million people estimated to be getting health insurance coverage when the law takes full effect will be exposed to overuse.

The health reform law also removes annual and lifetime caps. That can be an enormously valuable benefit to those who have a serious illness and need medical care; at the same time, it’s an open invitation for health care providers, device manufacturers, pharmaceutical companies and every other health care business to increase volume and price. It’s like a credit card without a credit limit. It’s as if we have this tsunami, this surge of tests, procedures and medication. With health reform, we will be merely transferring the bankruptcy of individuals to the eventual bankruptcy of the federal government.

Exactly!

In the interview, Rau suggested that using the word tsunami in the wake of the recent one that struck Japan was insensitive. Gibson stuck by her comparison. “There’s an estimated 8,000 deaths from the tsunami,” said Gibson, “and that toll is certainly going to increase. It’s a terrible tragedy. The National Cancer Institute estimates there are 14,500 deaths every year from cancer because of radiation exposure associated with diagnostic imaging. That’s just one example. In Japan at least they had a warning system; in U.S. health care we have no warning system about that potential harm of too much medical care.”

Gibson points out that even the effort to curb medical costs has the unintended consequence of exposing patients to medical overuse. “If we pay for episodes of care, suddenly we have a lot more episodes, particularly if we ratchet down the payment per episode. What we know in fee-for-service is if we reduce the payment per unit that creates the incentive to increase the volume.”

In other words, if you give people a free lunch, or at least a subsidized lunch, they will consume it—and that comes with risks.



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Kicking Cuts in Medicare Health Insurance Payments Further Down the Road

6 December 2010 |

Two events occurred this week that cast further doubt on how and, ultimately, if taxpayers will be able to pay for government-controlled health care insurance programs in the future.

First, Congress once more prevented cuts in payments to doctors by Medicare, the taxpayer-funded health insurance program for seniors, for the eleventh time since the cuts were authorized by Congress in the 1990s. It was the fifth time this year that the mandated cuts were delayed. And there no doubt will be another vote to delay the cuts later this month.

“This bill is a stopgap measure to make sure that seniors and military families can continue to see their doctors during December while we work on the solution for the next year,” explained Congressman Frank Pallone, a Republican from New Jersey who is the chair of the House Energy and Commerce health subcommittee.

The extension is only good for one month. Another cut in Medicare payments to doctors is scheduled for January 1, 2011.

If Congress had done nothing, Medicare payments to doctors would have been reduced by 23% on December 1. With the delay, doctors will continue to receive the full amount.

The cuts were part of the vaunted balanced budget that Congress passed in the 1990s, however this key provision has never gone into effect. The same law would have reduced payments to doctors by 21% in June (see previous post). The gradual step-down in payments would reach 25% with the January 2011 cut.

When Congress prevented the June cut to take effect, President Obama criticized lawmakers in both parties for “kicking cuts down the road.” The delay, Obama declared in June, just wasn’t “an adequate solution to the problem.”

The concern among members of Congress was that doctors would stop seeing Medicare patients if their pay was cut. If Congress keeps intervening, Medicare will pay out $300 billion in unbudgeted expenses over the next ten years, offsetting three fifths of the $500 billion in Medicare savings that the Congressional Budget Office (CBO) said would go toward paying for the national health insurance reform bill passed in March.

That bill, the Patient Protection and Affordable Care Act, was projected to cost the $788 billion over ten years and help reduce the deficit. Unfortunately something happened on the way to deficit reduction. Just a couple weeks after the bill was signed into law by President Obama in March, the CBO revised the cost of the legislation to $940 billion. The addition $152 billion was not covered by new taxes or savings, so it wiped out the $140 billion in deficit reduction that was supposed to occur. Then, in May, the CBO revealed that the implementation of the program would cost another $115 billion, also unfunded. That would put the program $127 billion in the red over ten years. If Congress continues to keep doctor payments were they are, that will mean that healthcare reform will run $427 billion in the red.

The other event that occurred this week also concerned the deficit: President Obama’s deficit reduction commission voted 11-7 to pass the panel’s recommendations on bringing down the deficit, but that fell short of the 14-vote super-majority needed for sending a package to Congress for a vote. Five of the six U.S. senators on the commission backed the plan, but only one of the six House members did so. This does not bode well for a deficit that is expected to hit $10 trillion over the next decade. The commission’s plans of cutting Medicare and Social Security by increasing the eligibility age, raising taxes, and cutting the defense budget, would have trimmed $4 trillion off the deficit.

Some people believe Congress will take up deficit reduction plans anyway, but if Congress doesn’t have the will to let Medicare cuts from the 1990s ever take effect, how will it ever get serious about cutting Medicare in the future?

Side note: Medicare is currently having open enrollment, a time to switch plans. Open enrollment closes on December 31, so if you or a loved one needs help deciding what to do, contact us now.


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Study Says Five Million Uninsured Kids Eligible for Subsidized Health Insurance

4 September 2010 |

A newly published study by Health Affairs finds that one fifth of the 25 million children who are eligible to receive free or low-cost, government-subsidized health insurance are not participating in the available programs.

Nationwide, 82% of eligible children are enrolled in taxpayer-subsidized health care insurance programs, but about 18%–a total of 5 million kids—are not.

Kathleen Sebelius, the Secretary of Health and Human Services called a press conference to challenge the states, which are responsible for implementing the federal programs such as Medicaid or Children’s Health Insurance Program, to do a better job. “The study confirms that a lot of states do a very good job,” said Secretary Sibelius. “But the study also gives us a much sharper focus on where kids are who need coverage.”

The states doing the best job of enrolling eligible children are concentrated in the East, especially the Northeast. The leading states are Maine, with 92% participation; Vermont, with 94% participation; and Massachusetts, with fully 95% participation. Of course, Massachusetts famously has had a statewide health care insurance program in place for about five years.

The states with the lowest participation are in the West, including Nevada, with only 55% participation; Utah, with 66% participation; Colorado, with 68% participation; and Montana, with 69%. Only one other state had less than 70% participation: Florida, with 69%.

The researchers behind the study expressed surprise that low-income children were much more likely to be enrolled in such programs than higher-income children were. The lowest participation in the programs came from families earning more than $88,000 a year, or twice the federal poverty rate $44,100 for a 4-person family.

These findings did not surprise me, however. I have found that families that can afford private health insurance often do not want to split the family between two plans, even if their children are eligible. In addition, many higher income families assume they are not eligible for programs, which they believe are for “the poor.” Even when they learn about their eligibility, some families balk at taking advantage of the government programs, either because of a social stigma attached to receiving government assistance or because they take pride in paying their own way.



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Health Insurance Commissioners Classify Loss Ratios

24 August 2010 |

Health Insurance Commissioners Classify Loss Ratios
An association of health insurance regulators tasked by Congress with defining what types of spending by health insurance companies constitute patient care came to an agreement on Tuesday regarding allowable spending.
The National Association of Insurance Commissioners voted overwhelmingly to adopt restrictive definitions of patient care.
The NAIC’s action has far-reaching consequences, because the Patient Protection and Affordable Care Act, the national health care insurance reform legislation signed into law in March by President Obama, mandates that health insurance companies must spend 85 percent of the premiums they collect from large group plans and 80 percent of premiums from small group plans and individual insurance directly on patient care. These percentages are known as the “loss ratio” of health insurance plans.
The insurance industry lobbied for a broad interpretation of patient care that included programs for improving communications between medical facilities, wellness incentives, and detection of redundant testing and fraud, all of which have a positive impact an patient care.
The insurance commissioners rejected the health insurance industry’s suggestions, leading patient advocacy groups to celebrate. “Today the NAIC took a step toward ending the health insurance companies’ stranglehold on our health care,” exulted Ethan Rome, executive director of Health Care for America Now. “The top state insurance regulators from across the nation voted to put patient care above insurance company profits.”
Insurance industry professionals worried that the strict definitions will hurt patients in the long run. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that the NAIC’s narrow interpretation of patient care “could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud.” By forcing private health insurance companies to absorb the cost of wellness incentives, fraud detection, and other programs, the NAIC is constraining innovation, argues Ignagni. “Preserving patients’ access to high-quality health care services is essential if the key goals of health care reform are to be achieved,” she says.

An association of health insurance regulators tasked by Congress with defining what types of spending by health insurance companies constitute patient care came to an agreement on Tuesday regarding allowable spending.

The National Association of Insurance Commissioners voted overwhelmingly to adopt restrictive definitions of patient care.

The NAIC’s action has far-reaching consequences, because the Patient Protection and Affordable Care Act, the national health care insurance reform legislation signed into law in March by President Obama, mandates that health insurance companies must spend 85 percent of the premiums they collect from large group plans and 80 percent of premiums from small group plans and individual insurance directly on patient care. These percentages are known as the “loss ratio” of health insurance plans.

The insurance industry lobbied for a broad interpretation of patient care that included programs for improving communications between medical facilities, wellness incentives, and detection of redundant testing and fraud, all of which have a positive impact an patient care.

The insurance commissioners rejected the health insurance industry’s suggestions, leading patient advocacy groups to celebrate. “Today the NAIC took a step toward ending the health insurance companies’ stranglehold on our health care,” exulted Ethan Rome, executive director of Health Care for America Now. “The top state insurance regulators from across the nation voted to put patient care above insurance company profits.”

Karen Ignagni, president and CEO of America's Health Insurance Plans

Karen Ignagni, president and CEO of America's Health Insurance Plans

Insurance industry professionals worried that the strict definitions will hurt patients in the long run. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that the NAIC’s narrow interpretation of patient care “could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud.” By forcing private health insurance companies to absorb the cost of wellness incentives, fraud detection, and other programs, the NAIC is constraining innovation, argues Ignagni. “Preserving patients’ access to high-quality health care services is essential if the key goals of health care reform are to be achieved,” she says.

Health Insurance Savings Tip: Ask Your Doctor for a Discount

4 August 2010 |

Your doctor’s office most likely offers discounts on medical care—all you have to do is ask.

Since many of today’s health insurance consumers have raised their deductibles to keep their premiums low, more people find themselves paying large out-of-pocket medical expenses than ever before. The federal government’s Centers for Disease Control and Prevention states that 20% of American consumers with group health insurance through their employers are in a high-deductible plan, with deductibles of $1,200 for individual coverage and $2,400 for family coverage. That percentage jumps to 47% among those with individual health care insurance coverage.

You don’t have to have a high-deductible health care insurance plan to feel the bite of out-of-pocket expenses. For example, an annual check-up that costs $350 likely will come in lower than the average annual deductible. Do not assume that you have to pay the full amount, however. Before the physical begins, confirm with your doctor that all the tests are absolutely necessary. Many doctors are practicing defensive medicine and do not realize that you will be paying out of pocket. Once they are aware of your situation, they might be able to eliminate one or two routine tests, shaving more than $100 off your bill.

Here are a few other ideas for saving on out-of-pocket medical expenses:

Cash Is King

Cash saves time, and time is money; so many doctor’s offices give discounts when you pay cash. “Some healthcare providers give anywhere from 10 percent to 60 percent off for paying cash,” reports Carrie McLean, a consumer expert with eHealthInsurance.com, an online health insurance broker. “It saves them time in having to bill you or set up a payment plan.”

Take an Interest Your Treatment and Tests

According to the Dartmouth Atlas Project, up to 30% of all medical treatments are not necessary. One reason for the waste: duplication of tests and procedures because of poor communication between physicians. Patients can eliminate the problem by taking a greater interest in their treatments and tests and bringing attention to tests that are being duplicated.

Shop Around

Just because your doctor recommends a test or care at a specific location it does not mean you have to go there. You can call around to find a lower price. Various providers charge various rates, often depending on their size. Larger institutions, such as hospitals, have more negotiating clout, and often are able to obtain higher prices from insurance companies. Smaller offices, such as ambulatory care centers, often charge less.

Compare Apples to Apples

Every procedure and test has a common procedural terminology (CPT) code that is used by health care providers to bill Medicare and health insurance companies. Find out the CPT for the test or procedure you need, and ask for pricing based on that code. That way you can compare apples to apples.

Get It In Writing

If you successfully negotiate a lower price with a healthcare provider, be sure to have them give it to you in writing. Because of time delays in appointments and the large number of people who go through every office, you cannot depend on office staff to remember your individual agreement. In addition, the majority of healthcare providers contract with a medical billing company that will not be aware of your agreement. Having the pricing documented will make it easier to correct any errors that might arise.

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More about California’s Preexisting Conditions Health Insurance Pool

20 July 2010 |

In my last post, I discussed California’s response to the federal mandate to create a high-risk health insurance pool for people who have been denied private health insurance due to preexisting medical conditions.

While researching that post, I went to the federal government’s health care insurance Web portal at http://www.healthcare.gov and followed the links to the California site. I clicked the link to receive an email about applying for the high-risk health insurance pool. Today I received an email response from the state of California:

Hello:

Thank you for your interest in California’s Pre-existing Conditions Insurance Plan (PCIP), also known as the temporary federal high risk pool.  Currently, we do not have applications available for the PCIP. The Managed Risk Medical Insurance Board (MRMIB) continues discussions on the specific rules for developing, implementing and operating the PCIP.

California’s goal for implementing the PCIP is to begin accepting applications in August 2010 with the first effective date of coverage beginning in September 2010.

To be eligible for the new PCIP, federal law sets out three requirements:

1. Be a US Citizen, US National or lawfully present individual;

2. Have a pre-existing medical condition that meets the guidelines set by the federal government; and

3. Have not had health insurance or public health coverage for at least six (6) months.

Applicants must have been uninsured for at least six months at the time they apply for the PCIP but the State high risk pool does not have such a requirement. You can access info on the CA Major Risk Medical Insurance Program at http://www.mrmib.ca.gov/MRMIB/MRMIP.shtml.

If you have included your name, address, telephone number, and email address, we will place your name on the list for a PCIP application when they are available in the next month or so.  If you have not included this information, please re-submit your request with that information.

We will be posting updates on MRMIB’s website under “What’s New” on the homepage at http://www.mrmib.ca.gov/.  Also, if you know others who want a PCIP application ask them to send us an email with their name, address, telephone number and email address to FHRP@mrmib.ca.gov.

Again, thank you for your interest in California’s PCIP.

I hope this helps anyone who has been denied coverage due to preexisting medical conditions.


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