Los Angeles Times
October 28, 2011
California gets OK for large cuts to Medi-Cal
By Anna Gorman

The Obama administration will allow California to cut hundreds of millions of dollars from Medi-Cal, a move doctors and experts say will make it harder for the poor to get medical treatment.

California plans to reduce rates by 10% to many providers, including physicians, dentists, clinics, pharmacies and most nursing homes, the Centers for Medicare and Medicaid Services announced Thursday.

Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services, told reporters the action gives California the flexibility it had requested to address its budget shortfall. “We know that the reductions that are being approved today will have significant impact on affected providers, and we regret the very difficult budget circumstances that have led to their implementation,” she said.

California, which already spends less per beneficiary than any other state, has led the way in aggressively slashing its programs. Now the government’s decision to allow California to move forward with its plans sets a precedent for other states seeking to reduce their Medicaid bills.

The California Medical Assn. expressed frustration over the new cuts, saying that physicians could receive as little as $11 a visit. Doctors will have no choice but to stop seeing Medi-Cal patients, said CEO Dustin Corcoran. “You can’t pay the bills at these rates,” he said. “They are unconscionably low.”

Federal healthcare reform, which includes a massive expansion of Medicaid, also could be seriously hampered by this new round of cuts, Corcoran said.

“They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation,” he said. “We have a hard time seeing how healthcare reform has a chance of being successful in the state of California after these cuts are implemented.”

http://www.latimes.com/news/local/la-me-medicaid-20111028,0,4273464.story

Comment:  One of the most important components of the Affordable Care Act is the expansion of Medicaid coverage for uninsured, low-income individuals. Does the Obama administration seriously believe that this will be an effective step toward bringing affordable health care to everyone?

Look at what they just approved for California. The state already spends less per Medicaid (Medi-Cal) beneficiary than any other state, yet the Obama administration has approved another 10 percent reduction. Just wait until the budget cutters in other states get wind of this!

Theoretically, drastic payment reductions are met by further ratcheting down overhead expenses. At $11 per office visit, only a fraction of expenses can be covered, no matter how stringent the budgeting. In essence, the government is asking providers to help finance Medicaid through their own personal charity. Trying to cover 7.6 million Medi-Cal patients in the state by depending on provider charity is asking more than the system can bear.

Two quotes above need to be repeated.

Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services: “We know that the reductions that are being approved today will have significant impact on affected providers.”

Dustin Corcoran, CEO of the California Medical Association: “They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation.”

And the other major component of the Affordable Care Act? A mandate for individuals to purchase inadequate coverage by paying unaffordable premiums.

The Obama administration officials and their co-conspirators in Congress could not have been serious about bringing us real reform. If they were, we would have an improved Medicare covering everyone.

Physicians for a National Health Program and the American Public Health Association are currently holding their national meetings in Washington, D.C. We need to go to Freedom Plaza and join the Occupy Movement.

______________________________________________
Quote-of-the-day mailing list
Quote-of-the-day@mccanne.org

http://two.pairlist.net/mailman/listinfo/quote-of-the-day

HERE’S A NEWS FLASH:

DEFINED CONTRIBUITION PLANS ONLY SHIFT COSTS TO PATIENTS AND HEALTH CARE CONSUMERS.

WAKE UP AND SMELL THE COFFEE!!!!!!!!!!!!!

KEEP DEFINED BENEFIT PLANS AT ALL COSTS.

Dr. McCann has it right, he should be the Secretary of HHS.

Institute of Medicine
Essential Health Benefits: Balancing Coverage and Costs (2011)

“The committee concludes that the EHB (Essential Health Benefits) should be defined as a package that will fall under a predefined cost target rather than building a package and then finding out what it would cost.” (Section 4, page 7)

http://books.nap.edu/openbook.php?record_id=13234&page=85

Comment:  When the Institute of Medicine (IOM) released its recommendations on the method for determining essential health benefits for the private plans to be offered in the state insurance exchanges called for in the Accountable Care Act, advocates of comprehensive health care for everyone were quite disappointed, to say the least. When looking through this 300 page report for an explanation as to why they recommended such intolerably skimpy benefits, the one sentence above stands out.

By predefining a specific cost target and then defining a benefit package to fit those costs, the committee explicitly has recommended that the new standard for health insurance in America should be a defined contribution rather than a defined benefit.

This concept, which is permeating our public and private social programs, has been one of the most destructive to our unifying stance of social solidarity. Many have seen their pensions based on defined benefits being converted into individual plans in which contributions are defined but benefits are no longer guaranteed, being dependent on the variables of investment returns and, more importantly, the gamble that you won’t outlive your personal account. (Of course, the annuity industry is quite willing to take a major portion of your account in exchange for guaranteeing you less generous payments for the remainder of your life.)

The privatization health care schemes, such as the proposed voucher program for Medicare, also would provide a defined contribution to be used to purchase a skimpier, ill-defined benefit package, unless the individual contributes more personal funds that many simply do not have.

The IOM recommendation for the exchange plans does the same. The standard defined contribution would be subsidies provided toward the price of a skimpy plan with inadequate benefits. If the individual wants a plan with adequate defined benefits, an additional personal contribution to the premium would be required to buy up to a better plan, again with the questionable assumption that the person has the funds.

The media keep reporting that participants in Occupy Wall Street and similar demonstrations throughout the nation don’t seem to know what they want. That is blatantly untrue. They want our economy to work not only for the top 1 percent, but for the other 99 percent of us as well. Taking away our defined benefits and substituting an inadequate contribution is precisely the the type of activity that has left middle-income Americans behind.

Let’s take a stand. Let’s immediately let President Obama and Secretary Sebelius know that we won’t tolerate this injustice. Then let’s expand the protests into a national movement that returns America to the people. We may have to have a dialogue with the Tea Party people as to just what that means. It doesn’t mean abandoning government, but rather it means taking control of our government so it works for the benefit of all of us – a defined benefit, if you’ll permit.

Quote-of-the-day@mccanne.org

So after a couple of years of working its way through the courts, it appears that a Supreme Court decision on the Constitutionality of the Individual Mandate will be rendered sometime in the Summer of 2012. Again, I predict that the U.S. Supreme Court will declare that the Individual Mandate section of the Act is Unconstitutional

It is going to be back to the drawing board to figure out a methodology to fund the The Affordable Care Act. The problem is that there is NO Methodology to fund the The Affordable Care Act and all alternative funding strategies are politically and financially non-starters.

Hey, how about a novel idea? – A Single Payer Financing System. Let’s call it Medicare-For-All.

The New York Times
September 29, 2011
Some Common Ground for Legal Adversaries on Health Care
By Adam Liptak

The 2010 health care overhaul law has provoked an unprecedented clash between the federal government and 26 states, dividing them on fundamental questions about the very structure of the federal system. But the two sides share a surprising amount of common ground, too, starting with their agreement in briefs, filed on Wednesday, that the Supreme Court should resolve the clash in its current term.

Their briefs also reflect agreement on matters of substance. The two sides, along with the judges in the majority in the appeals court decision most likely to be reviewed by the justices, all said the dispute is about means rather than ends. There are other ways, they said, for Congress to achieve near-universal health coverage, some of them more expansive than what was enacted.

“Both sides agree that Congress has the constitutional power to enact a national health care system that raised taxes to support a single government agency that pays all medical bills, just like Medicare,” said Walter Dellinger, who served as acting solicitor general in the administration of President Bill Clinton and supports the law. 

Randy E. Barnett, a lawyer for some of the plaintiffs who on Wednesday sought Supreme Court review, made essentially the same point. “What I’ve said from Day 1,” he said, “is that if Medicare is constitutional then Medicare-for-everyone is constitutional.”

http://www.nytimes.com/2011/09/30/us/health-care-adversaries-have-common-ground.html

However, historically the wealthy have always given us in the middle class a
small piece of the American Dream and the ability to raise our children with
the belief in a positive future. All that positive history is over, now the
wealthy will not even pay their fair share in taxes and expect the rest of
us to “Eat Cake”.

Well here’s a News Flash for the wealthy — if you push the middle class
over the financial edge because of your collective greed just remember what
happened after the French Revolution – the privileged class did not do so
well.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?

_r=1&emc=eta1

New York Times — Op-Ed Contributor

Stop Coddling the Super-Rich

By WARREN E. BUFFETT

Published: August 14, 2011

“We mega-rich should not continue to get extraordinary tax breaks while most
Americans struggle to make ends meet”.

By WARREN E. BUFFETT

OUR leaders have asked for “shared sacrifice.” But when they did the asking,
they spared me. I checked with my mega-rich friends to learn what pain they
were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most
Americans struggle to make ends meet, we mega-rich continue to get our
extraordinary tax breaks. Some of us are investment managers who earn
billions from our daily labors but are allowed to classify our income as
“carried interest,” thereby getting a bargain 15 percent tax rate. Others
own stock index futures for 10 minutes and have 60 percent of their gain
taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington
who feel compelled to protect us, much as if we were spotted owls or some
other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll
taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot
of money. But what I paid was only 17.4 percent of my taxable income — and
that’s actually a lower percentage than was paid by any of the other 20
people in our office. Their tax burdens ranged from 33 percent to 41 percent
and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your
percentage may be a bit lower than mine. But if you earn money from a job,
your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue.
Last year about 80 percent of these revenues came from personal income taxes
and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on
most of their earnings but pay practically nothing in payroll taxes. It’s a
different story for the middle class: typically, they fall into the 15
percent and 25 percent income tax brackets, and then are hit with heavy
payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my
percentage rate was in the middle of the pack. According to a theory I
sometimes hear, I should have thrown a fit and refused to invest because of
the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years
and I have yet to see anyone — not even when capital gains rates were 39.9
percent in 1976-77 — shy away from a sensible investment because of the tax
rate on the potential gain. People invest to make money, and potential taxes
have never scared them off. And to those who argue that higher rates hurt
job creation, I would note that a net of nearly 40 million jobs were added
between 1980 and 2000. You know what’s happened since then: lower tax rates
and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400
Americans reporting the largest income. In 1992, the top 400 had aggregate
taxable income of $16.9 billion and paid federal taxes of 29.2 percent on
that sum. In 2008, the aggregate income of the highest 400 had soared to
$90.9 billion — a staggering $227.4 million on average — but the rate paid
had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be
sure that any payroll tax for the 400 was inconsequential compared to
income. In fact, 88 of the 400 in 2008 reported no wages at all, though
every one of them reported capital gains. Some of my brethren may shun work
but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent
people. They love America and appreciate the opportunity this country has
given them. Many have joined the Giving Pledge, promising to give most of
their wealth to philanthropy. Most wouldn’t mind being told to pay more in
taxes as well, particularly when so many of their fellow citizens are truly
suffering.

Twelve members of Congress will soon take on the crucial job of rearranging
our country’s finances. They’ve been instructed to devise a plan that
reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however,
that they achieve far more than that. Americans are rapidly losing faith in
the ability of Congress to deal with our country’s fiscal problems. Only
action that is immediate, real and very substantial will prevent that doubt
from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich
America can’t fulfill. Big money must be saved here. The 12 should then turn
to the issue of revenues. I would leave rates for 99.7 percent of taxpayers
unchanged and continue the current 2-percentage-point reduction in the
employee contribution to the payroll tax. This cut helps the poor and the
middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such
households in 2009 — I would raise rates immediately on taxable income in
excess of $1 million, including, of course, dividends and capital gains. And
for those who make $10 million or more — there were 8,274 in 2009 — I would
suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly
Congress. It’s time for our government to get serious about shared
sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

A SUPERPOWER’S DECLINE – IS AMERICA NEXT?

History documents that all major civilizations, or superpowers, go through varying stages — from birth, to flourishing, to standardization and then ultimately onto their final demise. None escaped or were immune from the process. From Pharaonic Egypt, to Ancient Greece, to the Roman Empire and to the Dynasties of China, these and other great civilizations lasted on the average between 200 to 500 years before they died out to be replaced by another. Not to mention the mystical disappearance of the USSR emanating from the collapse of Russia’s preceding czarist regime and which is still a work in progress. In almost all cases their demise was marked by an internal collapse stimulated by a breakdown in the visionary stagnation of their leaders. Yet during their epic ascendancies few of their leaders would sense that they too would succumb to the vagaries of history. But that they did paving the way for a new socioeconomic order that wiped the slate clean and started the process anew.

Pause right here before you read further. Given the preceding, does anyone recognize similarities in America that are reflected in the behavior of our two party system of governance? Or the fact that America’s infrastructure of education, finance, energy use and production, and our healthcare system are in active stages of becoming irrelevant in meeting our present and future needs? If you’re not imprisoned in the partisan rhetoric of left or right, chances are you’ll agree. The connection between a dysfunctional political system and the breakdown of America’s key institutions is profound…with the inevitable decline of America the end by-product?

Yet suddenly, something else has entered the picture that is even of equal or greater significance to the future of America. We are entering a computerized technological world based on our evolving insatiable demand for efficiencies we’ve yet to fully comprehend. The Earth is running out of natural resources we’ve been accustomed to during the Industrial Revolution to where nothing now can be wasted. The slightest margin of error could produce catastrophic results on food, water and energy resources, along with pandemic consequences of global warming on virtually every other aspect of our existence. These stringent efficiencies can only be achieved by subservience to computer-enhanced decision-making we’ve ironically created to serve ourselves. In the process will we lose some of our cherished individuality? Undoubtedly.

The risk of producing major demographic change increases the already quantum disparity between rich and poor threatening upward mobility of people that has been a hallmark of our democracy. Escalating costs of higher education now becomes the exclusive realm of the privileged; which effectively creates the same autocratic monarchies that presently prevail in the Middle East that are currently under widespread internal revolt. Thanks in part to the recent Supreme Court decision permitting special interest out-of-control anonymous political contributions will transform wealth into a dominant minority cast system.

Overall, the Technological Revolution we’re entering is inescapable. It will end up forcing an accommodation on behalf of our people and our nation that will transform both beyond our present imaginations. Yet how much longer can we tolerate a two party system that is more part of the problem than the solution? How much longer can they vacillate, for right or wrong, over raising the national debt ceiling, privatizing Medicare and Social Security or strengthening the internal cost-containment capabilities of the Affordable Care Act; which could be readily resolved if they could get beyond conflicting schisms that never seemingly die? How much longer can we permit external actuarial parasitic practices of commercial insurers to consume around 20% of healthcare dollars that are required for providing needed care for all Americans; when no practical or moral imperative exists for their continuance? These are but examples.

The message for our future should be quite clear. Unfortunately it’s not. Outcomes are never fully predictable. But history, inertia, time and circumstance are not on our side. Given the unknowns, requires our ability to remain vigilant. Even though elected disciples of our two political parties are crammed aboard two brakeless freight trains racing to dismantle each other…and with both on the same track.

Lawrence Newell
Lns1newell@aol.com

However, the effectiveness (How much money is this program actually going to save?) of having Federal Auditors reviewing state health insurance rate increases remains to be seen. We hope it works in reducing the skyrocketing rate of HI increases but we doubt it will be successful without a comprehensive reorganization of the health insurance industry.

http://www.nytimes.com/2011/07/26/health/policy/26health.html?_r=1

Federal Auditors Will Soon Review Health Insurance Rates in 10 States

By ROBERT PEAR
Published: July 25, 2011

“Federal Auditors Will Soon Review Health Insurance Rates in 10 States”

“As of Sept. 1, the Obama administration will begin to review health insurance rates in states where it says regulation of premiums for personal and small business insurance is inadequate.”

WASHINGTON — The Obama administration will soon take over the review of health insurance rates in 10 states where it says state officials do not adequately regulate premiums for insurance sold to individuals or small businesses.

At least one state, Iowa, has protested the federal decision and asked administration officials to reconsider.

Several other states acknowledged that they lacked the power under state law to review health insurance rates. Several insurance commissioners tried and failed to get such authority from their state legislatures this year.

Starting Sept. 1, federal and state officials will begin to scrutinize proposed rate increases of more than 10 percent to determine if they are justified. White House officials say their ability to publicize excessive, unreasonable rates will be a major protection for consumers under President Obama’s health care law.

Many individuals and small groups of employees have seen premiums rise 20 percent or more in the last year.

Seven states — Alabama, Arizona, Idaho, Louisiana, Missouri, Montana and Wyoming — do not have effective rate review programs for either individual or small-group health insurance, so federal officials will do the reviews in both markets, the administration said.

In three other states — Iowa, Pennsylvania and Virginia — the federal government will review proposed rate increases for small groups and will allow states to review individual rates.

James J. Donelon, the Louisiana insurance commissioner, said: “I cannot quarrel with the federal finding. We do not have any authority to regulate health insurance rates under Louisiana law.”

“I am a Republican,” Mr. Donelon added. “I believe in competition as the best way to protect consumers from unreasonable rates. But I have no way of knowing whether they are reasonable or unreasonable because companies have not been required to file rate increases with our department.”

In Montana, a bill to provide the insurance commissioner with power to review health insurance rates died in the Legislature. The commissioner, Monica J. Lindeen, said she would seek such authority again next year because it would be much better for state officials rather than federal officials to judge what was reasonable.

“We have so much more experience, expertise and knowledge about companies and market conditions in Montana,” Ms. Lindeen said.

Federal officials have not publicly explained why they concluded that rate regulation in the 10 states was inadequate.

In a typical letter to one state, Steven B. Larsen, deputy administrator of the federal Centers for Medicare and Medicaid Services, said, “Iowa does not meet the criteria for an effective rate review program in the small-group market.” He did not cite specific deficiencies.

Susan E. Voss, the Iowa insurance commissioner and president of the National Association of Insurance Commissioners, said the Obama administration was evaluating states in an uneven, inconsistent way. Ms. Voss said she had at least as much authority to review rates as officials in other states whose procedures had been found acceptable.

Senator John Barrasso, Republican of Wyoming, complained that federal officials were stripping states of the freedom to run their health insurance markets.

“In Wyoming, state leaders have chosen to let the free market work,” Mr. Barrasso said, “ The president and his administration have no idea what is best for the people of Wyoming. The people of Wyoming know what works for our state better than any Washington bureaucrat.”

To win federal approval for its rate review program, a state must post information about proposed rate increases on a public Web site.

Bill Deal, director of the Idaho Insurance Department, said he could not meet this requirement because health insurance rate information was considered confidential and proprietary under state law.

Still, Mr. Deal said, “we carefully review rates for individuals and small groups, and it’s difficult for me to understand why we have to have another layer of regulation from the federal government.”

Federal officials will generally follow the definition of “small-group market” found in a state’s insurance laws. If state law does not define it, a small group will be defined to include employers with 50 or fewer employees.

Missouri does not require health insurers to file rate increases with the state, nor does it have authority to approve or disapprove increases.

Melissa L. Fox, a spokeswoman for the Pennsylvania Insurance Department, said, “We do not have rate review authority in the small-group market, with a few exceptions.”

And in Virginia, Kenneth J. Schrad, a spokesman for the State Bureau of Insurance, said the agency did not regulate small-group rates because “we can do only what state law authorizes us to do, and state law does not say anything about rate review in that market.”

The White House pointed to Oregon as a state where consumers benefited from strong rate regulation. Regence Blue Cross Blue Shield of Oregon sought a 22 percent increase in individual rates, but in a ruling last week the state allowed only 12.8 percent. The company said that was not enough to keep pace with anticipated medical spending for its members.

Congratulations to the health insurance industry they have finally hit the big bucks by getting away with denying necessary medical care and killing off those patients that cannot afford it. I hope that they enjoy their Blood Money and when they meet their maker can explain how they helped kill thousands of people for the sake of their bonuses.

I want to know — Where the HELL are the Regulators?

May God have mercy on their condemned souls.

Subject: {NY Times Letters to the Editor} The Self-Rationing of Medical Care



Huge Profits for Health Insurers as Americans Put Off Care

May 13, 2011
Health Insurers Making Record Profits as Many Postpone Care
By REED ABELSON
The nation’s major health insurers are barreling into a third year of record profits, enriched in recent months by a lingering recessionary mind-set among Americans who are postponing or forgoing medical care.

The UnitedHealth Group , one of the largest commercial insurers, told analysts that so far this year, insured hospital stays actually decreased in some instances. In reporting its earnings last week, Cigna , another insurer, talked about the “low level” of medical use.

Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.

Even with a halting economic recovery, doctors and others say many people are still extremely budget-conscious, signaling the possibility of a fundamental change in Americans’ appetite for health care.

“I am noticing my patients with insurance are more interested in costs,” said Dr. Jim King, a family practice physician in rural Tennessee. “Gas prices are going up, food prices are going up. They are deciding to put some of their health care off.” A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas, he said. (continued)

_________________________


The Self-Rationing of Medical Care

May 22, 2011

To the Editor:

Re “Health Insurers Profit as Many Postpone Care ” (front page, May 14):

How more scathing an indictment could there be of the insurance industry’s commodification of the nation’s health? In a faltering economy, the health insurers have rung up record profits, rewarded shareholders with new dividends and are demanding double-digit premium increases for fear of possible higher costs.

Is health a commodity to be sold for profit, for bonuses and dividends, or is our nation’s health a responsibility of our government? Can we not now, or ever, see the need to replace this needless, costly, money-sucking, claim-denying middleman, this so-called health insurance industry, with a single-payer government-administered system?

HERBERT BENGELSDORF
Hastings-on-Hudson, N.Y., May 14, 2011

The writer is a retired psychiatrist.

To the Editor:

You report that “major health insurers are barreling into a third year of record profits.” A major reason: use is down among their policyholders, and therefore care providers are submitting fewer bills than expected. Policyholders did not suddenly become healthier, however. Rather, the cost-sharing required by the policies they can afford has become too burdensome. So they deny themselves beneficial care.

Research shows that patients have trouble differentiating between services they really need and those they can safely avoid. As a result, many become sicker unnecessarily and require services they would not have needed if they had taken care of the condition before it became too serious to ignore. And when that happens, the insurer — as well as the system — spends more than it would have otherwise.

Surely, we should not reward the insurers responsible for this situation with the double-digit rate increases they are seeking.

STEPHEN M. DAVIDSON
Boston, May 16, 2011

The writer is a professor at the Boston University School of Management and the author of “Still Broken: Understanding the U.S. Health Care System.”

To the Editor:

I am a retired pediatrician who has AARP’s health care option through UnitedHealthcare as my supplementary insurance for Medicare. This year, the premium has risen to $6,000 for me and my husband, an internist. It seems quite obvious that a universal health care plan sponsored by the government (Medicare for all) would not be profit-driven and in the long run would lower medical costs. We would be willing to pay higher taxes for this.

It is truly immoral that about 50 million people are uninsured. Despite all our medical expertise, we have among the poorest outcomes in the developed world. Incidentally, we are among the lowest taxed of those nations that enjoy better outcomes.

I read recently in this newspaper that Medicare runs a 2 to 6 percent overhead compared with the average managed-care companies of 12 percent. It seems wrong that insurance companies are middlemen making a handsome profit on a vital service that could well be done (and has been) without them.

The insurance companies must have a powerful lobby and influence in Washington. Something is very rotten, not in Denmark, but right here in the U.S.A.

NANCY SHEVELL SCIALES
Flushing, Queens, May 15, 2011

To the Editor:

Acknowledging lower use of health insurance benefits by enrollees as a result of higher premiums, deductibles and co-pays, insurance companies, you report, “continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends.”

Is this not rationing? It is dollar, not health resource, rationing, however: preserving profit flow at the expense of timely medical care.

This form of rationing does not address costs per se, because deductibles apply across the board (as opposed to exempting basic preventive or chronic health maintenance care, which would encourage judicious use of resources), and ensures, ultimately, higher mortality per enrollee through delayed diagnosis. Where are the cries of “death panels”?

DAY HILLS
Seattle, May 16, 2011

The writer is an oncologist.

http://blog.cardiosource.org/post/A-Murky-Future-for-Accountable-Care-Organizations.aspx

American College of Cardiology Blog

A Murky Future for Accountable Care Organizations

by Jack Lewin March 22, 2011 08:00

The ACO concept — while arguably still pretty foggy — is certainly attracting a lot of attention in the health sector.  But, are ACOs going to eat up the non-integrated private sector?  Certainly not imminently.  But the ACO concept is worth some serious consideration by the profession. The ACC is certainly going to explore how the concept might be beneficial to some members and patient populations. There is potential here — maybe.

Assuming the Affordable Care Act prevails in its legal challenges (and if it somehow does not, something similar to it needs to be created post haste to deal with the rising numbers of uninsured persons and costs of US health care), ACOs represent are a major element of the law, and the Secretary of Health and Human Services will have broad authority to provide financial incentives for them. Money is promised to flow here.

In fact, ACOs have become central to current thinking about how American health care might find ways to bend the cost curve and better organize health care. Huge conferences occur every week in DC it seems on what ACOs might be and how to build one. The idea is to bring doctors, hospitals, and health plans and Medicare (and Medicaid) together in ways that would hopefully streamline health care, improve patient health status and outcomes, reduce variation in care, and lower costs. Sounds like a fairy tale, doesn’t it? But, hospitals are wildly buying up physician practices to be ready to create ACOs. Health plans, particularly United and CIGNA, have already started buying up medical groups to build ACO networks and pilots — health plans do NOT want to see hospitals predominate in this proposed transition of the delivery system. Even many physician IPAs and medical groups in California, Colorado, and elsewhere are similarly gearing up. All are hoping to land CMS “innovation center” grants.  ACO policy wonks and consultants are multiplying and are in evidence everywhere one looks.

This frenetic activity is all certain to keep churning along, driven by market forces, even if the ACA controversy drags on through next year. However, the ACA directs the Secretary of HHS and CMS to publish regulations on how ACOs will be structured and financed. The big question is — where are the proposed regulations from CMS?  The ACO regulations were promised in January, then February, and now it’s mid-March. Whassup? 

Rumors are that the regs have gotten hung up over anti-trust concerns with DOJ and the FTC (Federal Trade Commission). Since ACOs will likely only be effective if they can bring physicians, hospitals, and health plans together to cover a large population and geography, issues around market dominance and anti-trust develop.  One of the ridiculous aspects of current US anti-trust policy that health plans are exempted from most market domination provisions. Hospitals and doctors are not. The Secretary supposedly has authority in the Affordable Care Act (ACA) to waive some anti-trust concerns for ACOs, and this is likely to be challenged by the FTC and the current Congress. So, the regs are in limbo. But that’s not stopping the action sans ‘regs.

Modern Health Care this week carried a story on an anti-trust debacle developing in Nevada as an ACO there tries to take shape. The Nevada attorney general’s office and the FTC have launched an inquiry into a patient-care collaboration between Reno-based Renown Health and a local cardiology practice, Sierra Nevada Cardiology Associates. The alliance was the first step in forming an accountable care organization for the two organizations. 

“Their interest is not unexpected given the size of the transaction, and we’ve met and are cooperating and providing requested information,” said Terri Hendry, Renown’s spokeswoman, said in the article. “We are confident that this change is in the best interest of consumers and will result in improved coordination of heart services in the region.” The ACC is monitoring this process and the entire process of the amazingly rapid changes occurring in the US health care delivery system around integration, physician employment, population based health systems, and payment reforms. Whew. A lot is happening, folks, despite what Congress thinks they can control.

http://www.kaiserhealthnews.org/Stories/2011/March/20/health-insurers-reform-business.aspx

Kaiser Health News
March 19, 2011
Health Insurers Respond To Reform By Snapping Up Less-Regulated Businesses
By Christopher Weaver

Here’s one change few were talking about when the health overhaul law passed: It’s sent insurers – worried the law could stunt profits and growth – looking for new types of business.

Where are they investing? In less-regulated companies that could yield strong profits and make the main business – insurance – more lucrative. The purchases also could increase insurers’ control over more parts of the health system.

Insurers have moved into technology, health-care delivery, physician management, workplace wellness, financial services and overseas ventures in wide-ranging efforts to mitigate the new rules imposed by the law.

The current trend is largely driven by the health law, said Ana Gupte, an analyst with Sanford C. Bernstein & Co.

The newer ventures will not replace the core business of selling health coverage.

“They’re very synergistic with the health-insurance [product],” Gupte said, giving insurers more tools to control medical costs while potentially increasing earnings.

As more people receive insurance under the law, insurers would welcome 15 million new customers, according to the Congressional Budget Office. But the companies worry that the rules requiring most Americans to obtain coverage will prove too weak and allow many to go uncovered, said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.

That could leave insurers with slim gains, even as they face regulations that could limit profits, prohibit the practice of charging sick people higher rates, and funnel individuals and small businesses into government-created exchanges to buy policies.

“I’ve seen a big trend in getting further down the supply chain towards the point of care,” said Sarah James, an insurance industry analyst at Los Angeles-based Wedbush Securities. “Everybody’s looking to add on staff physicians and clinics” that can help control medical spending.

For instance, OptumHealth, a UnitedHealth subsidiary, has quietly taken control of Memorial Healthcare IPA, a Los Angeles company that manages more than 400 doctors, according to a document filed with the California Secretary of State’s office. OptumHealth declined to discuss details of the deal.

With its recent acquisitions, Humana is dipping its hand directly into patient care, gaining more control over doctors. That’s what makes acquisitions such as Concentra a “two-for-one deal,” Kusserow said. Concentra will continue to generate “great margins” for the company as a stand-alone business, he said, but also will give Humana a workforce of physician gatekeepers controlling access to costly services.

In a sign of Aetna’s interest in future acquisitions, the company hired Charles Saunders, a physician and recent veteran of the private equity firm Warburg Pincus, in January to oversee “strategic diversification.”

Some analysts do not see much of a future for companies that just stick with the business of selling insurance policies.

“If you’re a health plan, you either become a care delivery system or an information services company,” said David Brailer, a former George W. Bush administration health official who now leads an investment firm. “The traditional business is dead.”

Let me boil it down to this “Can you afford today to pay 40% of your health care costs?” I agree completely with his comments: “Perhaps one of the most alarming provisions of the Act is that plans with a 60 percent actuarial value (patients pay an average of 40 percent of their health care bills) qualify to fulfill the employers’ obligations to provide coverage or pay an assessment.”

Let’s get real people, a 40% deductible, co-payment or whatever you call it on a patients health care bill will bankrupt a majority of middle class families. Whose brilliant idea was this – DAH!!

Health Affairs/Robert Wood Johnson Foundation
March 9, 2011
Health Policy Brief
Employers and Health Care Reform

To expand access and strengthen the employment-based health system, the Affordable Care Act of 2010 will require midsize and large companies to make payments to the federal government if they do not offer health insurance to their employees and dependents starting in 2014. 

What’s in the law?

Under the Affordable Care Act, beginning in 2014 employers with at least 50 full-time employees (or equivalent full- and part-time workers) will have to provide “qualified” health insurance coverage to their full-time employees and their dependents. Qualified coverage means that plans are comprehensive (pay at least 60 percent of health care expenses) and affordable (cost less than 9.5 percent of employees’ household incomes).

If employers don’t offer qualified coverage, and if their employees purchase coverage instead through a new state insurance exchange with the assistance of federal subsidies, companies will have to make an “assessable payment” of up to $2,000 for every full-time employee beyond the first 30 employees. The amount of the assessment will be adjusted annually to reflect the growth in national insurance premium costs.

If employers do offer coverage, but the coverage does not meet certain parameters, they may still have to pay assessments. First, employers will be assessed if a plan is judged not to be comprehensive. This means the coverage must have an “actuarial value” of at least 60 percent. In other words, the employer pays on average at least 60 percent of health care expenses and the employee pays on average 40 percent of these expenses through deductibles and copayments.

Second, employers will be assessed if the employees’ premiums are considered unaffordable relative to their household incomes. Specifically, the employee’s share of the premium must not exceed 9.5 percent of his or her annual household income.

Starting in 2014, if either of these two conditions is not met, the employer must pay a $3,000 annual assessment for each employee who declines his or her employment-based insurance and obtains government-subsidized coverage through an exchange.

Small businesses with fewer than 50 full-time employees (or equivalent full- and part-time workers) don’t have to meet the requirement and are exempt from having to offer health insurance.

Many companies face payments:

A study by the Mercer consulting firm found that 38 percent of US employers may face paying assessments starting in 2014, because their coverage might not be considered affordable for at least some of their employees.

“Free-choice vouchers”:

Employees who earn less than four times the federal poverty level (in 2011, $43,560 for an individual and $89,400 for a family of four) and whose share of the premium is between 8 percent and 9.5 percent of his or her household income, can choose to enroll in an exchange instead of the employer plan. The employer must issue the employee a “free-choice voucher” equal to the amount the employer would have paid under the employer’s plan.

Tax on high-value health plans:

Beginning in 2018, “Cadillac” or high-value health plans will be subject to a 40 percent excise tax on premium amounts exceeding $10,200 for single coverage and $27,500 for families.

What’s the likely impact?

The Congressional Budget Office (CBO) and the Joint Committee on Taxation estimated that provisions of the Affordable Care Act, including the employer requirement, will result in 3 million fewer people having employer-provided coverage in 2019. This would be the net result of a series of big changes.

First, the CBO estimates that 6–7 million people would acquire employer coverage for the first time because the requirement would increase workers’ demand for coverage through their jobs. Second, another 1–2 million who currently have employment-based coverage would instead move to the exchanges because the coverage would be more affordable. Third, about 8–9 million others covered under an employer plan under current law would lose employer coverage because firms would choose to no longer offer coverage. These firms are likely to be smaller companies employing lower-wage workers who would be eligible for exchange subsidies.

In addition, according to the CBO, employers will pay about $52 billion in additional assessments between 2014 and 2019. Under the law, that money will be put toward the new subsidies for millions of workers and their families to defray the cost of purchasing health coverage through the exchanges.

“Pay and walk away”:

Among companies of all sizes currently offering benefits, 76 percent reported they would continue to do so in January 2014. Of the rest, 15 percent reported they would offer coverage to at least some full-time employees, and 9 percent said they would stop offering coverage altogether. Among firms with 200 or more full- and part-time equivalent employees, 7 percent planned to drop coverage. “For some large firms, in particular, there is a desire to pay and walk away,” said Susan McIntyre, senior vice president of Market Strategies International’s health care division, in a statement.

Tempted to drop coverage:

The math could make the idea to drop coverage tempting. In 2010, the average annual premium cost for employer-based coverage was $5,049 for a single person and $13,770 for a family, although employers generally do not pay the entire cost. Many employers might consider paying $2,000 or $3,000 in assessments to be more cost-effective. On the other hand, many large employers say they view offering health coverage to be an important part of their overall compensation strategy, and necessary to attract the best workers.

It is possible that employers will watch closely to see how their peer companies respond. In a July 2010 survey by Fidelity Investments, 65 percent of large employers said they were not seriously considering eliminating health care benefits because of the new law. But when asked what they would do if others dropped coverage, 36 percent said they too would consider eliminating coverage. Another 36 percent said they would not drop coverage and the remaining employers were unsure.

http://www.healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_42.pdf

Comment:  What will happen to employer-sponsored coverage under the Affordable Care Act? Perhaps one of the most alarming provisions of the Act is that plans with a 60 percent actuarial value (patients pay an average of 40 percent of their health care bills) qualify to fulfill the employers’ obligations to provide coverage or pay an assessment. Thus the Act is establishing under-insurance as the new standard.

Premiums on more generous plans are approaching a level that will trigger a a 40 percent excise tax. One way to avoid that tax would be to reduce the actuarial value of the plans to the minimum requirement. With employers’ aversion to taxes, many will surely consider that.

With these low actuarial value plans, employees will surely complain about the high out-of-pocket costs they will face when they need health care. Since employers won’t want to make their employees unhappy, they will be motivated to drop their plans altogether and pay the much lower assessments required by the Act. We already know that most employers may not want to lead on this, but a great many will certainly follow once a few do it, and they have said so.

It is frequently stated that employers will want to continue to offer plans in order to attract more qualified employees, but this argument seems rather disingenuous. Employers now have an out.

When employers drop their health plans, there is no assessment on the first 30 employees, and then only $2000 for each beyond the 30. Employers can use some of the savings for pay raises, and then the employees, most of whom will be eligible for government subsidies, can select their own plans in the exchanges. Why would employers use health plans as an enticement – plans that are otherwise readily available in the exchanges – when they can use higher wages to compete in the labor markets?

Our experience shows that plans with low actuarial values – usually high-deductible plans – still frequently have premiums that are unaffordable for many. Combining unaffordable premiums with low actuarial values, it won’t be long before middle-income Americans realize that the private insurers have foisted off on us a highly defective product: UNAFFORDABLE UNDER-INSURANCE. You go broke if you buy it, and you go broke if you need to use it!

Single payer, anyone?
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