Category Archives: Health care

Make It Easier for Physicians to Donate Medical Care

extremesAugust “Augie” Wallmeyer, a long-time lobbyist and member of Virginia’s political class, decided in his semi-retirement years to tour the state, with special attention to rural regions that are largely unknown to those who dwell in Virginia major metropolitan areas. In compiling material for his soon-to-be-published book, “The Extremes of Virginia,” he says, he’d “met dozens of people, heard their stories, listened to their dreams, their fears, their hopes, their gripes.”

In a four-part series in the Richmond Times-Dispatch editorial page, Wallmeyer has done a fine job describing the hardships and challenges of Southwest Virginia, Southside and the Eastern Shore. Like a good public policy wonk, he offers a number of suggestions on how the General Assembly can help. For the most part, specific proposals are small-bore, suggesting that he sees no sweeping remedies, no magic bullets.

But one idea struck me as immensely practical: Physicians and lawyers need to figure out how to change the malpractice laws to make it easier for health care professionals to donate their care. Writes Wallmeyer:

Physicians who treat poor and indigent people without charge fear getting sued by their patients, which is one reason very many doctors simply don’t treat the poor. They fear not only lawsuits related to their medical practice, but also being accused of crimes by their patients, some of whom have mental health problems. …

Virginia’s legislature should forcefully insist that the medical and legal communities mutually resolve this problem and then adopt a statute that actually protects doctors from lawsuits when treating poor people, while appropriately preserving the legitimate legal rights of the poor.

Bacon’s bottom line: On this blog, I have highlighted several proposals to improve affordability and access to the health care system for Virginia’s poor that don’t expose taxpayers to the enormous risk of expanding Medicaid. Add Wallmeyer’s idea to the list.

— JAB

Lies, Damn Lies, and Statistics from Hell

Source: Kaiser Family Foundation

Source: Kaiser Family Foundation

by James A. Bacon

Katie Demeria ran an article in the Richmond Times-Dispatch today quoting data from the Kaiser Family Foundation and the Health Research and Education Trust showing a positive trend in health insurance premiums. In Virginia, premiums for employer-sponsored health plans grew an average of 4.8% per year from 2010 to 2015 compared to 7.6% from 2000 to 2010.

Demeria quoted Aviva Aron-Dine, a senior counselor with the Department of Health and Human Services, as saying in a news conference touting the report: “Since the Affordable Care Act was passed, we’ve experienced five of the slowest growth periods reported since Kaiser started doing its survey.”

Aron-Dine’s remarks calls to mind Mark Twain’s famous adage about lies, damn lies and statistics. It takes a special kind of audacity to credit Obamacare with slowing increases in private health plans even as Virginia insurers were requesting weighted average price hikes of nearly 18 percent for plans offered on the Obamacare health exchanges in 2017.

As far as I can see from perusing the Web, Aron-Dine has not identified a mechanism by which Obamacare regulations positively impacted the private health care marketplace. If she’d said that Medicare or Medicaid cost increases were moderating thanks to Obamacare, she would have at least a fig leaf of plausibility because those programs, after all, are designed and funded by the government. But she offers no more than a coincidence in time — the implementation of Obamacare occurred in the same years as private premiums were slowing — to justify her insinuation about market-based plans.

Ironically, the Kaiser Foundation itself explained in its report what is really responsible for the slowdown in private premium increases — private companies have been shifting aggressively to health plans with high deductibles and Health Savings Accounts.

deductables

Forcing employees to eat higher deductibles does two things. First, it lowers the company’s exposure to health care costs because employees are covering the first $1,000 in medical expenses (as see in the chart above), not the employer. That lowers the cost basis used to establish insurance premiums. Second, when employees pay for health care out of their own pocket, they are more selective about visiting the doctor and taking tests, which reduces costs. Third, Some companies are coupling these policies with wellness campaigns and resources to help employees shop around for better prices on discretionary procedures.

A couple of points to note: While increases in health care premiums may be slowing, that doesn’t mean that total payments, including out-of-pocket, are. Kaiser did not provide total-payment data. Nowhere is the tradeoff between premiums and out-of-pocket expenses clearer than the Obamacare health plans themselves, many of which increase deductibles as a way to offset higher premium.

While the Affordable Care Act does contain measures to contain exploding health costs, such as incentives for hospitals to reduce re-admissions, it also is accelerating the cartel-ization of hospitals, physicians and other health providers and, in response, the cartel-ization of health insurers. Economic power in the health care industry is more concentrated and less competitive than ever before.

With Health Care Premiums Up 14%, Virginia Should Act

Lasik eye surgery . Eww, it looks gross. But it's cheap, it's safe and it's unregulated and unsubsidized.

Lasik eye surgery . Eww, it looks gross. But it’s cheap, it’s safe and it’s unregulated and unsubsidized.

by James A. Bacon

Insurance companies participating in Virginia’s Affordable Care Act health exchanges are asking to increase rates by an average of 14% next year. In making presentations to the State Corporation Commission yesterday, they said the increases reflect (1) general health care inflation that affects everyone, and (2) and an imbalance in sick versus healthy participants in the plans.

Under state law, the SCC is required to review and approve premium rates for all types of health plans, reports Katie Demeria with the Richmond Times-Dispatch. If an insurance company’s rate filing has met the state’s minimum loss ratio requirements and all assumptions are defensible from an actuarial perspective, it is virtually impossible to turn down the rate-hike request.

“Some of these rate increases are more than what people would want and, in some cases, could be more than what some people would bear,” said Commissioner Mark Christie. “But we also have an obligation to ensure that these companies remain in business so that the can pay the claims they’re obligated to pay by the people who pay their premiums.”

Bacon’s bottom line: There is not much that the Commonwealth can do about the imbalance between sick and healthy participants. The Affordable Care Act (widely known as Obamacare) anticipated the problem by taxing people who fail to enroll. The incentive, as stiff as it is, is not sufficient to induce as many healthy people to enroll as are needed. This design flaw in the federal legislation is beyond the power of Virginia lawmakers to fix.

But the General Assembly does influence how health care markets operate in Virginia, and lawmakers can affect the general cost of delivering health care. Not only do legislators have a political responsibility, they have a moral responsibility to create the conditions for Virginia health care markets to become more affordable and accessible.

Existing state-level laws and regulations muck up the efficient functioning of health care in many ways. First and foremost is the Certificate of Public Need (COPN) law that thwarts competition from newcomers and ossifies the existing delivery system in place. Legislators are on top of that one, and they’re not letting go.

But there are many other areas that need reform. The most glaring is state-mandated benefits for small-group insurance policies. Employers big enough to self-insure can structure their policies packages any way they want. Small employers who have to band together to create a viable risk pool don’t have that option. Insurers must package some 30 state-mandated benefits into their policies, whether those benefits are desired or not. These include everything from “newborn children” to “reconstructive breast surgery” and “colorectal cancer screenings.”

While any one of these benefits may not seem unreasonable in itself, the collective package severely limits the ability of insurers to offer affordable, trimmed-down plans. For example, one plan that I think would sell well (because I would buy it) would have two main features: (1) negotiated rates so I don’t have to pay the outrageous nominal fees that hospitals and doctors charge, and (2) catastrophic coverage if medical bills exceed, say, $20,000 in a year. In other words, I would pay all bills out of pocket up to $20,000 but at negotiated, discounted rates, and I would be protected from catastrophic loss. Such a plan, as I understand it, is illegal. That’s why you cannot find it in the Virginia marketplace.

A third way the state could help is increase price transparency so patients can exert consumer pressure on health providers for discretionary procedures. Consumer pressure has kept down the cost of Lasik eye surgery and cosmetic surgery, which are not regulated or funded by government. Consumers could exert downward pressure on many other procedures as well if they had easy access to the price data.

There’s much more, but those are the big three. As a nation and a state, we can continue to fixate on the zero-sum question of “who pays?” — transferring wealth from Peter to Paul — or the win-win question of how we make the system function better for everyone. The wealth-redistribution approach has not worked well for anyone. It’s time to try win-win.

Boomergeddon Update: Medicare HI

Image credit: 2016 Medicare Trust Fund Board of Trustees annual report

Image credit: 2016 Medicare Trust Fund Board of Trustees annual report

by James A. Bacon

The Hospital Insurance Trust Fund, one of the four major components of the Medicare program, will run out of money in 2028 — two years earlier than previously projected. That appraisal comes from the Medicare Board of Trustees, which, the last time I checked, is not funded by the Koch Brothers.

The news of the accelerating structural crisis in the nation’s health care safety net stirred only the slightest of ripples in the news media, which buried the story deeper than an Iranian nuclear research facility. One would think the news to be of more than passing interest to the program’s 55.3 million recipients and thus to major media, but the nation’s elite journalists are so obsessed with the latest Tourettes-like tweets by Donald Trump that they cannot bestir themselves to ask the presidential candidates how they intend to preserve the social safety net.

This news comes soon after Congress and the Obama administration avoided the impending depletion of Social Security’s Disability Insurance (DI) trust fund only through the expediency of folding it into the Old Age Survivors Insurance trust fund, thus accelerating by a year the impending breakdown of both by 2034.

Medicare and Social Security will not collapse when the trust funds run out, but the gap between spending and revenues will have to be covered either by a hike in taxes, a cut in benefits or an increase in government borrowing, each of which would be grievous in its own way. The magnitude of this gap, caused by the retirement of the Baby Boomer generation, will precipitate the nation’s greatest economic crisis since the Great Depression — what I call Boomergeddon.

And to what do we owe the accelerating crack-up of Medicare’s hospital insurance program (often referred to as Medicare Part A). Not to accelerating health care costs, ironically enough. “Since 2008, U.S. national health expenditure (NHE) growth has been below historical averages, despite having accelerated in 2014 mainly due to insurance expansions,” state the Medicare trustees.

But having said what the problem is not, the Medicare trustees fail to explain what it was. That is understandable, given the politically sensitive nature of what appears to be going wrong — weak job growth, the low labor participation rates, and less-than-expected payroll revenues. After real-world economic performance has under-performed forecast economic forecast every year for seven years running, the Obama administration appears to be adjusting its long-range forecasts for purposes of long-term budgetary planning.

Nobody wants to admit, least of all in an election year, that economic growth and job creation stink. But that is precisely what underlies the rush to ruin of Medicare, Social Security and the federal budget deficit generally. A weak economy means weak revenue.

Bacon’s bottom line. Boomergeddon is running right on track. The Congressional Budget Office projects a $534 billion deficit this year. (We don’t hear about that number from our journalistic elite either.) Were it not for monetary easing, ultra-low interest rates and multi-billion remittances from the Federal Reserve Bank, the deficit would be far bigger. In any case, CBO projects a cumulative $9.4 trillion in deficits, to be added to the existing $19 trillion national debt. The U.S. is on track to carry World War II levels of borrowing by the mid-2030s, the big difference being that in 1945 the war was over and the nation could demobilize its massive military, while in 2035 the nation will not be in a position to demobilize its social safety net.

Meanwhile, the structural budget deficit of the United States must be viewed in the context of chronic deficits of the European countries and Japan, and the massive over-leveraging of the Chinese economy. As McKinsey & Co. pointed out in a 2015 report, the global economy has added $57 trillion since the Great Recession; rather than de-leveraging, virtually every major nation has doubled down with increased borrowing. Systemic risk has never been greater. All it takes is a black swan event, and financial chaos will rip through the global economy, transmitted by financial linkages that public policy makers don’t even know exist. The Bear Stearns/Lehman Brothers financial panic will be a picnic by comparison.

The question, as always, for Virginians is this: How do we as citizens and taxpayers protect ourselves from the inevitable financial reckoning? Borrowing more is not an answer. (Somebody please tell Richmond Mayor Dwight Jones, who proposes raising the city’s debt limit in order to borrow $580 million more in bonds over the next 10 years.) Building new transportation mega-projects that require subsidies indefinitely into the future is not an answer. Expanding social welfare programs like Medicaid is not an answer. The storm is coming, and we must prepare.

Health Insurance Rates Up 16% Next Year

obamacareThe Affordable Care Act isn’t looking so affordable. Health insurance plans in the Affordable Care Act’s Virginia marketplace could increase in cost by an average of 16% next year, reports the Richmond Times-Dispatch. The numbers are based upon rate changes that insurers have submitted to the Bureau of Insurance ahead of a State Corporation Commission hearing.

The increases are roughly in line with the 11% average increase expected nationally based on a Kaiser Foundation survey of 14 major cities. Richmond, one of the cities surveyed, actually fares better than the state and national averages with an increase of benchmark silver plans of only 6%. Presumably, other parts of the commonwealth are faring worse.

What’s going on? In a word, adverse selection. Sick people who anticipate big medical bills are signing up while healthier people are paying the penalties (or taxes, depending upon your legal context) for not participating and then enrolling when they need the coverage.

Or as Doug Gray, executive director of the Virginia Association of Health Plans, put it to Katie Demeria with the T-D: “The problem is we haven’t gotten all the healthy people, but we have gotten most of the sick people.”

The problem was widely anticipated. Indeed, the Affordable Care Act attempted to forestall adverse selection by imposing penalties/taxes on uninsured Americans who declined to enroll. But it turns out that the incentives were not harsh enough. (It would be interesting to know how aggressively the Obama administration is enforcing the provision — strict enforcement could create a political backlash.)

Obamacare advocates said that other provisions in the legislation would keep costs under control. They don’t appear to be working. The big question now is whether the Affordable Care Act is in a death spiral — and what comes after it collapses. Does Virginia have an answer?

— JAB

Another Blow to Free Market Health Care

dpcby James A. Bacon

Citing fiscal reasons, General Assembly Republicans have blocked Medicaid expansion that would have extended medical coverage to 400,000 uninsured Virginians. But they have tried to enact other measures to make medical care more accessible and affordable. Among other ideas, they have fought for expanding medical clinics, rolling back Certificate of Need restrictions on competition, and pooling insurance company data to create databases that allow analysts to spot inefficiency and poor outcomes in the health care system.

This year, a bill sponsored by Del. R. Stephen Landes, R-Verona, would have eliminated legal ambiguities discouraging physicians from contracting directly with their patients to provide primary care services for a fixed monthly fee. The bill declared that the contracting arrangement, commonly known as Direct Primary Care (DPC), did not constitute insurance and, thus, was exempt from insurance regulation. DPC proponents say it provides a cheaper alternative to accessing primary care through health insurance, which adds layers of bureaucracy and cost.

But Governor Terry McAuliffe vetoed the bill last week, saying, “While I applaud the patron’s desire to increase access to care, I feel this concept needs further scrutiny and study. … Not only would a product like this deter an individual from purchasing health insurance, it would still not cover any catastrophic care or chronic conditions requiring a specialist.”

Landes’ bill passed the House 97 to 0 with broad backing from patients, family practice doctors, small business lobbies and chambers of commerce. But it ran into trouble in the Senate when the insurance industry began lobbying heavily against it. As reported by the Associated Press:

Insurance companies don’t oppose the idea of direct primary care in principle, but don’t want imperfect legislation rushed through, said Doug Gray, executive director of the Virginia Association of Health Plans. This legislation, he said, is unnecessary and provides no consumer protections.

McLaughlin has joined a tiny but growing movement of doctors nationally — there are only a handful in Virginia — who have begun to provide subscription-like service to patients, a model known as direct primary care.

Similar to concierge medicine for the rich, direct primary care can appeal to middle and low-income patients who struggle with high deductibles or can’t afford insurance at all. McLaughlin charges $60 a month for people over 31, $30 for 30 and under and $15 for kids whose parents are enrolled.

The change from typical primary care has been “wonderful,” McLaughlin said: She can focus on fewer patients, spend more time with each one, and worry less about dealing with insurance companies. Other doctors are taking notice, she says, including young ones, who might otherwise avoid going into primary care because of its relatively low profit margins and high-volume demands.

“This can change the trajectory of our whole system,” McLaughlin said.

That may be the real problem with Direct Patient Care — it would change the trajectory of the system. Many players in the health care industry are vested in the status quo and don’t want to see the system change, except on their own terms. And many politicians are so ideologically committed to an expanded role for government in health care that they want to grind out market-based alternatives before they can prove their efficacy. Meanwhile, legal uncertainties may discourage other physicians from following McLaughlin’s example, and Virginia consumers will be denied a choice that might benefit them.

Virginia 11th Best for Veteran Retirees

Source: WalletHub

Virginia scores a disappointing 11th place in WalletHub’s ranking of the “2016 Best & Worst States for Military Retirees” based on 20 metrics encompassing economic environment, quality of life and health care.

The Old Dominion racked up creditable 3rd place for economic environment (eight metrics including state taxes on military pensions and percentage of veteran-owned businesses, among others) and 4th place for quality-of-life (seven metrics including veterans per capita and percentage of homeless veterans). But the state scored a dismal 48th place finish for health care, which reflects five metrics including the number of VA health care facilities per number of veterans and recommendability of VA hospitals.

The impression created by the metrics is that veterans receive sub-par health care in Virginia. Whether that is a function of poorly run VA facilities or issues with Virginia’s broader health care system is impossible to deduce from WalletHub’s presentation. But it’s a question worth asking.

— JAB