Wednesday, October 31, 2018

2 Moves By Trump This Past Week Could Reshape U.S. Health Insurance In Big Ways

The week's first move came on Monday morning, when Trump's health officials issued guidance that could undercut the exchanges set up for people who buy their own health insurance. The administration's guidance makes it easier for states to get around some ACA requirements, Trump's guidance would allow the use of federal subsidies for skimpier plans that can reject people who have pre-existing medical conditions.

By the next day, the administration had made a second move with a proposed rule that could bolster the health of the ACA marketplaces by sending millions of people who now have job-based coverage into the exchanges, armed with tax-free money from their employers to buy individual plans.

Both efforts play into the parallel narratives — one from Republicans and the other from Democrats — that are dominating the parties' bitter political debate over the ACA, also known as Obamacare.
Frustrated that a Republican-controlled Congress has been unable to repeal the Affordable Care Act outright, the Trump administration has continued to work to undermine that law by weakening the marketplaces and the law's consumer protections, some critics and health policy specialists say.

Trump's efforts make it easier for insurers to offer skimpier policies that bypass the law's rules, such as protections for people with pre-existing conditions or a ban on annual or lifetime limits on what insurers will pay.

Congress also zeroed out the tax penalty on Americans who don't sign up for health insurance, effective next year. Combined, these moves could reduce enrollment in ACA health plans — potentially driving up premiums for those who remain.

The administration and Republicans in Congress say they are looking to assist those left behind by the ACA — people who don't get subsidies to help them buy health insurance and who are desperate for less expensive options — even if that means allowing the purchase of less robust coverage
Even without repealing the ACA, the Republican efforts are shifting control of health insurance policy decisions back to the states, say policy analysts.

"Some states will do everything they can to keep individual markets strong and stable. Others won't," says Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.

So what expectations should consumers have? Analysts say there are three key takeaways.

Protections for pre-existing health problems are uncertain

Polls show that keeping the ACA's guarantees of coverage for people with medical problems is a top concern for Americans, and Democrats have made their defense of the health law a key part of their midterm election campaigns.

Republicans have gotten that message; even those who voted to repeal the ACA or joined a lawsuit by 20 red states to overturn the federal law now say they want to protect people with pre-existing conditions. Still, GOP lawmakers have not introduced any plan that would be as protective as the current law.

In August, the administration released a rule allowing expanded use of short-term health plans, which are less expensive than ACA policies. To get those lower prices, most of these plans do not include insurance coverage for prescription drugs, maternity care or mental health or substance abuse treatments.

The move is unlikely to benefit people who have chronic health problems, because short-term plans are allowed to reject people with pre-existing conditions or to decline to cover care for those medical problems.

Under the rule, insurers can sell these short-term policies (which may be sold as soon as next month) to last for up to a year's duration, with an option to renew for up to three years. That reverses an Obama-era directive that limited the length of such policies to a maximum of 90 days.

Administration officials estimate such plans could draw 600,000 new enrollees next year, and others have estimated the numbers could be far higher. The concern is if many healthy people in 2019 switch out of the ACA market and choose short-term plans instead, premiums will rise for those who remain in the ACA market. That would hike premiums for people with pre-existing conditions. It would also make the ACA market less attractive for insurers and could lead them to stop offering plans on the exchange.

Which state you live in matters
One of the biggest changes ushered in with the ACA was a standard set of rules across all states.
Before the law took effect, consumers buying their own coverage saw tremendous variation in what was offered and what protections they had depending on the state where they lived.

Most states, for example, allowed insurers to reject applicants who have medical conditions such as diabetes, cancer, depression, Down syndrome or asthma.

A few states required insurers to charge similar premiums across the board, but most allowed wide variation in the size of the premium a customer might be charged, based on age, gender or health.

Some skimpy plans didn't cover prescription drugs, chemotherapy or other medical services.

By standardizing the rules and benefits, the ACA barred insurers from rejecting applicants who have medical conditions and from charging these applicants higher premiums. The ACA guarantees that women cannot be charged more than men for the same health policy, and insurers are permitted to charge older people no more than three times what they charge younger applicants.

But under the new guidance issued this week that gives states more flexibility on what is offered, consumers could again see a wide variation in coverage, premium rules and even subsidy eligibility.

"It shifts pressure to state politicians," says Caroline Pearson, a senior fellow at NORC, a nonpartisan research institution at the University of Chicago. "You risk making some [constituents] worse-off by threatening those markets," says Pearson. "That is always going to be hard."

Millions more are likely to join the 'buy-your-own' ranks
The proposed rule released Tuesday allows employers to fund tax-free accounts — called health reimbursement arrangements, or HRAs — that workers can use to buy their own coverage on the ACA marketplaces.

The administration estimates about 10 million people will do so by 2028 — a substantial boost for federal and state ACA exchanges, which policymakers say never hit the enrollment numbers needed to attract enough insurers and hold prices down.

John Barkett, senior director of policy affairs at Willis Towers Watson, a benefits consulting firm, says he expects some employers to now "seriously consider" relying on a state or federal health insurance exchange to furnish health insurance to their workers. And if they do, the infusion of workers will improve options within those insurance exchanges by attracting more insurers, Barkett says.

"These people coming in will be employer-sponsored, they'll have steady jobs," Barkett notes, and will likely stick with coverage longer than those typically in the individual market.

Currently, about 14.4 million people buy their own insurance, with about 10.6 million of those using federal or state ACA marketplaces. The others buy private plans through insurance brokers.

Trump's proposed rule won't be finalized for months, but it could result in new options by 2020.

If these workers seeking coverage are generally healthy, the infusion could slow premium increases in the overall ACA marketplace because it would improve the risk pool for insurers.

However, if employers with mainly higher-cost or older workers opt to move to the marketplaces, it could help drive up premiums.

Curiously, the administration notes in its proposed rule that the ACA has provisions that could protect the marketplace from that type of adverse selection, which can drive up prices. But most of the protective factors cited by the rule have expired or been weakened or removed by Trump or the Republican-controlled Congress — such as the tax penalty for being uninsured and the federal subsidies to insurers to cover lower deductibles for certain low-income consumers.

Benefits consultants and health policy specialists are skeptical about how many companies will move to an HRA plan, given the tight labor market. Continued uncertainty about the fate of the ACA marketplace may keep them reluctant to send workers out on their own to find health insurance, these analysts say.

The health benefits package a company offers its employees is now a big factor in its ability to attract and retain workers, says Chris Condeluci, a Washington attorney. He previously worked for Sen. Chuck Grassley, R-Iowa, and served as counsel to the Senate Finance Committee during the drafting of the ACA.

"Most employers believe their group health plan will provide better health coverage than an individual market plan," Condeluci says.


Schumer: Albany area hospitals to lose $44M in drug discounts

U.S. Senate Minority Leader vows to restore cuts to 340B drug pricing program
ALBANY — U.S. Sen. Charles Schumer stopped by Albany Medical Center on Monday to decry recent cuts to a little known drug-pricing program that area hospitals say are making it harder for them to serve needy populations.
The federal 340B Drug Pricing Program was enacted by Congress in 1992 and allows hospitals that serve a disproportionate share of low-income and uninsured patients to purchase drugs at a 20 to 50 percent discount, while keeping their Medicare reimbursements at non-discounted levels. The extra reimbursement money, in theory, provides a financial "safety net" to hospitals whose patients are more at risk of getting sick and less able to afford it.

But criticism of the program has grown in recent years, with lawmakers and several studies noting that the eligibility criteria is too expansive and that some hospitals are pocketing the profits rather than reinvesting them into improving care. Other studies show it's led to increased supply of certain drugs, and incentivized providers to choose more expensive drugs.

In November 2017, the Trump administration announced plans to scale back reimbursement rates under the program, and a 28.5 percent cut in reimbursements took effect in January 2018.
"This was a great program and no one complained about it, except maybe the pharmaceutical industry," said Schumer, a Democrat. "But they seem to have a lot of sway in Washington with this administration."

Participating Capital Region hospitals insist they never used savings to line their own pockets. Instead, they said, the money was used to bolster pediatric cancer and outpatient infusion services at Albany Med, drug coverage for Medicaid recipients at Ellis Medicine in Schenectady, and maternal and mental health care at Columbia Memorial Hospital in Hudson.

Other area hospitals that receive discounts include St. Mary's Healthcare in Amsterdam and Nathan Littauer in Gloversville.

"No one went home and put money in their pockets," Schumer said. "These are nonprofit medical institutions... they expanded medical care, they were able to hire that extra nurse or doctor, they were able to buy a machine that would save lives."

The slashed reimbursement rates are poised to hit Ellis the hardest.

The Schenectady-based hospital system will see $23 million in lost savings over the next decade under the cuts. Albany Medical Center will lose out on $11.5 million over the same period, followed by St. Mary's Healthcare at $7.8 million, Columbia Memorial at $1.6 million and Nathan Littauer at $503,000.

Statewide, participating hospitals are poised to lose out on nearly $1.8 billion in prescription drug discounts. So far this year, they've lost out on $160 million worth of discounts.

This month, Schumer received a letter from more than 700 hospitals, including 26 in New York, asking for his help to reverse the cuts. On Monday, he vowed to do just that, and added that he's heard from many hospitals that are more than happy to provide increased accountability as to how they spend the drug savings.

"We can deal with increased reporting requirements," said Dr. Ferdinand Venditti, executive vice president for system care delivery at Albany Med. "We're not opposed to those."

Although the cuts were touted as a way to bring down drug costs, which are a real and significant problem in the U.S., Venditti said they're more likely to profit the pharmaceutical industry and lead to increased costs elsewhere in the health care system.

Smaller drug discounts means fewer patients who are able to afford them, said Paul Milton, president and CEO at Ellis Medicine.

"If they can't afford them, they may not take them," he said. "If they don't take them, they end up in our ER. They'll be sicker and I think in the long run it's going to really harm communities — particularly communities like Schenectady that are trying to serve the underserved."


Monday, June 11, 2018

‘More independent rural hospitals will seek some type of affiliation with a larger hospital.’

More than 40% of the country’s rural hospitals that have been operating in the red as they try to manage care for a declining population that is often older, sicker and poorer than their urban counterparts.

The city of Greenville, Ala., purchased L.V. Stabler Memorial Hospital in November 2017, but it needed help from the community and the University of Alabama Birmingham to keep it open.
Quorum Health sold the 74-bed facility for a discounted price of $2.8 million. The move restored local decision-making, said Greenville Mayor Dexter McClendon, who also chairs the hospital’s board of trustees.

Residents of Greenville, population 8,100, voted to support a half-cent sales tax increase that helped pay for the loan used to buy the hospital and will provide the community hospital $825,000 a year through 2032. Still, L.V. Stabler needs a major restructuring to rectify its $2.5 million operating loss in 2017, stemming from declining admissions and growing expenses.

Partnering with the University of Alabama Birmingham was like landing a five-star recruit, McClendon said.

“Without UAB and the sales tax, we would’ve closed,” he said.

L.V. Stabler could be the poster child for many rural hospitals—44% of rural facilities across the nation are operating in the red as they try to manage care for a shrinking population that is often older, sicker and poorer than their urban counterparts, according to analysis from the Chartis Center for Rural Health.

Independent government-owned hospitals, many of which are in rural areas, had an average annual operating margin of negative 16.6% and a $15.8 million operating loss in 2016 compared with a negative 7.9% operating margin and $8.4 million operating loss for their system-owned peers, according to a white paper from Healthcare Management Partners, Waller Lansden Dortch & Davis, and Taggart, Rimes & Graham that analyzed more than 70,000 Medicare cost reports. Those in the mid-South region—Alabama, Arkansas, Mississippi, Tennessee and Texas—are far worse, reporting a negative 41.9% operating margin and a $26.6 million operating loss.

Independent critical-access hospitals in the mid-South, which have fewer than 25 beds and are at least 35 miles away from another hospital, averaged a negative 20.3% operating margin and a $3 million operating loss.
“Southern states with a higher share of the aging population combined with lower incomes—that’s where you see more chronic cases of obesity and lifestyle challenges,” said Bret Schroeder, partner of PA Consulting Group. “Providers in these rural communities experience the most pain.”
More than 70% of all government-owned hospitals reported an operating loss in 2015 and 2016, researchers found.

Government ownership requires a level of public accountability and scrutiny that often set hospitals’ even further back, the white paper said. Reimbursement levels also favor urban and system-owned hospitals. Bundled purchases, centralized administrative functions and access to better technology help system-owned hospitals drive costs down, one of the most valuable metrics in the industry’s changing payment paradigm.

Left out

The situation is magnified in states that did not expand Medicaid coverage, like Alabama.
Rural hospitals in those states had higher rates of uncompensated care as a percentage of revenue than hospitals in expansion states, according to a 2015 study published in Health Affairs.

“It’s a heck of a challenge keeping a hospital open in a town of 8,100, especially when our governor did not take the Medicaid money,” McClendon said. “For a county like us, it almost shot our legs out from under us and nearly made it impossible.”

Payers compound the problem, said Farrell Turner, president-elect of the Alabama Rural Health Association. They often will perform an internal audit and take back money that was doled out two years ago, he said.

“Payers are just beating us up,” Turner said. “Payers are constantly changing the rules and small rural hospitals, physicians and clinics in those communities don’t have a lot of resources to stay up to date.”

Twelve hospitals in the state have closed since 2011, six were in rural areas, according to the Alabama Hospital Association. The median rural hospital in Alabama operated at a negative 12.2% margin in 2016 and 88% were losing money. Charitable donations dropped by a quarter. Nearly two-thirds reported an increase in uninsured patients while nearly half reported an increase in Medicaid beneficiaries. Nearly three-quarters experienced a increase in emergency department visits. Half reported a drop in inpatient admissions.

“Access to care in the Black Belt of Alabama is already lacking; we can’t afford to lose anything more,” said Danne Howard, the hospital association’s chief policy officer.

Without the right partnerships in place, maintaining a rural hospital is often a losing battle.

UAB started to partner with rural hospitals about eight years ago as a way to protect referral sources, but it has evolved into much more, said Don Lilly, senior vice president of clinical network development and director at UAB Health System.

The largest health system in the state partners with medical providers in Anniston, Alexander City, Bessemer, Camden, Demopolis, Florence, Greenville, Mobile and Montgomery.

UAB recently purchased property in Hoover that will be converted into a 39,000-square-foot medical facility to house primary care, OB/GYN, oral surgery and other specialties.

The university system also operates neighborhood clinics in Hoover, Leeds, Inverness and Gardendale, where a free-standing ED and medical office are under construction.

It also has 40 physicians planted in different markets around the state. In addition to a telestroke program it recently rolled out in Demopolis, it has a teleradiology service that 18 hospitals use and a cancer network with 12 centers in Alabama and surrounding states.

“Rural hospitals’ survival and their ultimate effectiveness benefit everybody, including payers,” Lilly said. “Keeping patients in local markets and out of higher-end tertiary facilities saves money and improves quality.”

UAB Hospital’s 1,157 beds have been nearly full for two years, he added.

The health system is working with local jurisdictions to recruit family medicine doctors to boost primary care, pre-natal, and labor and delivery services in Alabama.

The 99-bed Bryan Whitfield Hospital in Demopolis—a town with a population of 8,000 about 60 miles south of Tuscaloosa—staffs about 57 beds and runs at around 60% occupancy. The hospital closed its labor and delivery unit in 2014.

About 45% of rural communities do not have a hospital with dedicated maternity care. Nearly 1 in 10 rural counties lost their hospital-based obstetrics programs from 2004 to 2014, according to research published in Health Affairs in September.

“I understand first and foremost that not every county in every state can have a hospital—the financial challenges we face are astronomical,” said Arthur Evans, CEO of Bryan Whitfield Hospital. “Given that however, each county has to assess what their healthcare needs are, whether they require a hospital, an emergency room, ambulatory or other services.”

One of main issues is that Alabama has the lowest Medicare reimbursement rates in the country, Howard said. Alabama hospitals are reimbursed significantly below the national average, primarily due to a formula implemented in the 1980s known as the Medicare wage index that weights other states like California higher based in part on cost of living, according to the Alabama Hospital Association.

“That’s why rural hospitals can’t make capital equipment purchases, they have to freeze wages, eliminate service lines and stop delivering babies,” Howard said. “They are looking into telemedicine and mergers, but the fact is without adequate reimbursement, rural hospitals aren’t appealing to larger systems.”

That’s partly why UAB is driving change on the legislative front, university executives said.

Bill of health

UAB lobbied for state legislation that would create a resource center for rural hospitals.

To be housed at UAB, the center would help fund rural public hospitals in Alabama improve revenue cycle, purchasing and supply chain functions, strategic planning, insurance and cost reporting, coding, recruitment, and compliance. It would also provide funding for administrative residents to work in rural hospitals. Signed into law in March, the program has not yet been funded.

It’s also proposing legislation that would implement a global budgeting model for rural hospitals. A board would perform a needs assessment for each community, which would shape a statewide budget. Local, regional and state authorities would agree on specific amount of revenue for the upcoming fiscal year, regardless of the volume of services. The bill was shelved in April, but Alabama has been selected as one of five states to participate in a state policy academy on global budgeting for rural hospitals.

“They wouldn’t have to worry about doing what they can to keep the doors open, they would be able to do what’s right,” said Will Ferniany, CEO of UAB Health System.

It creates true statewide health planning in areas that don’t have a collective measurement of what services are needed or redundant, Lilly said.

UAB will try to work out the kinks in a pilot program that will test the global budgeting model in two to three areas of the state.

“It takes away the financial risk,” Lilly said.

UAB will continue to build out its telemedicine network. Bryan Whitfield Hospital launched a telemedicine-equipped stroke center in late April with the help of UAB.

“Telehealth is something that will push us to next level," Evans said. "Transportation is a major issue all the time. We can do these services cheaper here than in an urban facility, which may be overburdened, and patients are happier seeing their local doctors.”

Staying connected

Providers are using telemedicine to not only increase access to specialists, but also train physicians in rural areas.

MD Anderson Cancer Center in Houston teamed up with providers in the Rio Grande Valley in Texas to identify the early stages of cervical cancer. MD Anderson uses Project ECHO’s (Extension for Community Healthcare Outcomes) telehealth technology to mentor non-gynecology doctors and discuss their de-identified cases.

Since the program’s implementation four years ago, the cancer center has helped screen more than 16,000 women and perform 200 procedures to eliminate early-stage cervical cancer.

“We teach local providers who aren’t specialists to do specialty care, which is critical because Texas has some of the highest rates of cervix cancer in the country,” said Dr. Kathleen Schmeler, an associate professor at MD Anderson.

Specialists from MD Anderson, the University of Texas Medical Branch and the University of Texas Rio Grande Valley coordinate virtual visits with rural providers in the Rio Grande Valley twice a month. The 1-hour sessions include a 15-minute didactic so they can get continuing medical education credits, which are tough to secure in rural areas, Schmeler said.

It also offers some hands-on training courses to teach colposcopies, cervical biopsies and loop electrosurgical excisions with providers in Harlingen, Laredo and Sherman.

“We need to help increase access, which is a problem in these underserved areas,” Schmeler said.

“They need to get screened locally with a nurse they trust rather than traveling to Houston.”

Many won’t travel at all because they are undocumented, she added.

The cancer center also helped the University of Texas start a school-based HPV vaccination pilot program in Rio Grande City to help prevent cervical cancer.

“We need to demonopolize and democratize knowledge and get it out of an academic medical center and get it to communities that need the support and can share specialty knowledge,” Schmeler said.

St. Louis-based Mercy health system implemented a telehospitalist program that’s eased the workload of physicians in rural hospitals, said Diana Smalley, regional president of west communities for Mercy.

Hospitalists in Mercy’s urban markets assist rural medical teams with 24/7 backup and video consultation, allowing physicians to maintain a better work-life balance, Smalley said.

Specialists are notoriously hard to attract and keep in rural communities. But if they are, through debt forgiveness incentive programs for instance, they’re often retained on a temporary basis, which can be costly.

“If we can become less dependent on specialty services in rural markets and focus on primary care and emergent services for diagnosis and initial treatment, we are all better off in the long run,” Smalley said.
Mercy created a community paramedic program in Ada, Okla., where practitioners travel to the homes of about 1,000 emergency department “frequent fliers” and enroll them in a virtual care program. They identify what consumers need in their homes to improve their health and provide them with an iPad and other tools to monitor their blood pressure, glucose levels and other vitals.

In one case, a man kept coming to one of Mercy’s rural EDs because he had trouble breathing. One of the nurses overheard him saying that he was so uncomfortable lying flat to sleep, but didn’t have enough money for an adjustable bed.

Mercy paid for a reclining bed and his number of ED appearances dropped dramatically, Smalley said.

But without the backing of a bigger system, more hospitals, both urban and rural, will inevitably close their doors as demand for inpatient care decreases along with length of stay, Smalley said. It’s a natural byproduct of preventive care, she said.

“I think the overall the state of rural healthcare is somewhat precarious,” Smalley said. “These hospitals are somewhat isolated from a larger healthcare system, so there is not a consistent approach on how to deal with some of the challenges they are facing. More independent rural hospitals will seek some type of affiliation with a larger hospital.”

Team effort

Pharmacists are also helping fill the healthcare services void in rural areas.

Deines Pharmacy in Beatrice, Neb., operates in a town of about 12,000 people 40 miles south of Lincoln, alongside one of the larger critical-access hospitals in the country, Beatrice Community Hospital.

The pharmacy resembles an urgent-care clinic, which Beatrice lacks. Deines Pharmacy has done more strep throat, flu, cholesterol and other point-of-care testing to keep people out of the ED, which aligns with payers’ push to deliver care in lower-cost settings.

People typicaly see their primary-care providers about three times a year while they visit their pharmacy 35 times a year, said Mitch Deines, co-owner of the pharmacy.

“They trust us,” said Deines, who also serves on the Beatrice Community Hospital board. “We are accessible. Then we need to form a closer partnership with the physicians, which improves care.”
Previously, hospitals would get defensive when pharmacies would encroach on their turf and potential reimbursement, Deines said. Now, with the focus on preventive medicine, hospitals champion and promote these types of programs, he said. That shift is taking place across the healthcare industry.

Deines Pharmacy is part of a national clinically integrated network of pharmacists that started in North Carolina. The Community Pharmacy Enhanced Services Network works with insurers to identify ways to better coordinate care for consumers with chronic conditions.

The pharmacy also participates in a pharmacist e-care plan through a pilot project with the Centers for Disease Control and Prevention. Every time pharmacists give a flu shot, they send that data to a statewide network that is integrated with electronic health records, helping to reduce unnecessary care, Deines said.

“We have to close that loop somehow,” he said. “It’s a thought shift for providers. As things get tougher, physicians are looking at us as part of the team.”

The Alabama Hospital Association is also working with Blue Cross and Blue Shield of Alabama to reimburse rural hospitals for imaging and diagnostic services at the same rate as outpatient facilities. While it’s a discounted rate, that could increase access and provide some business for rural providers, Howard said.


As for L.V. Stabler Hospital in Greenville, Ala., more changes are coming.

Administrators will probably change the name of the hospital to mark a fresh start, McClendon said.
McClendon hosts a radio show after each city council meeting to keep Greenville residents informed. He also speaks at chamber of commerce events.

Public officials and healthcare executives have a responsibility to keep a running dialogue with the community, McClendon said.

“We do not need to try to be everything to everyone,” he said. “We need to figure out what you need to do that fits our community.”

Editors: Matthew Weinstock, Paul Barr and Aurora Aguilar | Copy editors: David May and Julie A. Johnson | Joanne Kim contributed to this project


Wednesday, May 16, 2018

Medical Mystery: Something Happened to U.S. Health Spending After 1980

The spending began soaring beyond that of other advanced nations, but without the same benefits in life expectancy.

The United States devotes a lot more of its economic resources to health care than any other nation, and yet its health care outcomes aren’t better for it

That hasn’t always been the case. America was in the realm of other countries in per-capita health spending through about 1980. Then it diverged.

It’s the same story with health spending as a fraction of gross domestic product. Likewise, life expectancy. In 1980, the U.S. was right in the middle of the pack of peer nations in life expectancy at birth. But by the mid-2000s, we were at the bottom of the pack.

Health spending and life expectancy are not necessarily closely related, so it’s helpful to consider them separately. 
“Medical care is one of the less important determinants of life expectancy,” said Joseph Newhouse, a health economist at Harvard. “Socioeconomic status and other social factors exert larger influences on longevity.”

For spending, many experts point to differences in public policy on health care financing. “Other countries have been able to put limits on health care prices and spending” with government policies, said Paul Starr, professor of sociology and public affairs at Princeton. The United States has relied more on market forces, which have been less effective. 

“Confronted with fiscal pressures, as the share of G.D.P. absorbed by health care spending began to get serious, other nations had mechanisms to hold down spending,” said Henry Aaron, a health economist with the Brookings Institution. “We didn’t.”

One result: Prices for health care goods and services are much higher in the United States. Gerard Anderson, a professor at Johns Hopkins and a lead author of a Health Affairs study on the subject, emphasized this point. “The differential between what the U.S. and other industrialized countries pay for prescriptions and for hospital and physician services continues to widen over time,” he said. Other studies also support this idea. However, by some measures, growth in the amount of health care consumed has also been a factor. 

The degree of competition, or lack thereof, in the American health system plays a role. A recent study by economists at the University of Miami found that periods of rapid growth in U.S. health care spending coincide with rapid growth in markups of health care prices. This is what one would expect in markets with low levels of competition.

Although American health care markets are highly consolidated, which contributes to higher prices, there are also enough players to impose administrative drag. Rising administrative costs — like billing and price negotiations across many insurers — may also explain part of the problem. 

The additional costs associated with many insurers, each requiring different billing documentation, adds inefficiency, according to the Harvard health economist David Cutler. According to a recent study, the United States has higher health care administrative costs than other wealthy countries.
“We have big pharma vs. big insurance vs. big hospital networks, and the patient and employers and also the government end up paying the bills,” said Janet Currie, a Princeton health economist. 

Though we have some large public health care programs, they are not able to keep a lid on prices. Medicare, for example, is forbidden to negotiate as a whole for drug prices, as Ms. Currie pointed out.

But none of this explains the timing of the spending divergence. Why did it start around 1980?
Mr. Starr suggests that the high inflation of the late 1970s contributed to growth in health care
spending, which other countries had more systems in place to control. Likewise, Mr. Cutler points to related economic events before 1980 as contributing factors. The oil price shocks of the 1970s hurt economic growth, straining countries’ ability to afford health care. “Thus, all across the world, one sees constraints on payment, technology, etc., in the 1970s and 1980s,” he said. The United States is not different in kind, only degree; our constraints were weaker. 

Later on, once those spending constraints eased, “suppliers of medical inputs marketed very costly technological innovations with gusto,” Mr. Aaron said. They “found ready customers in hospitals, medical practices and other entities eager to keep up with rivals in the medical arms race.”

The last third of the 20th century or so was a fertile time for expensive health care innovation. Sherry Glied, an economist and a dean at New York University, offered a few examples: “Coronary artery bypass grafting took off in the mid-to late 1970s. Later, we saw innovations like drug treatments for H.I.V. and premature babies.” 

These are all highly valuable, but they came at very high prices. This willingness to pay more has in turn made the United States an attractive market for innovation in health care.

Yet being an engine for innovation doesn’t necessarily translate into better outcomes. Almost no matter how it’s measured, longevity in the United States has not kept pace with that of other nations. Again, the inflection point is around 1980. Why?

A study examining the period 1975 to 2005 by Ms. Glied and Peter Muennig, from Columbia, suggests that international differences in rates of smoking, obesity, traffic accidents and homicides cannot explain why Americans tend to die younger. 

Some have speculated that slower American life expectancy improvements are a result of a more diverse population. But Ms. Glied and Mr. Muennig found that life expectancy growth has been higher in minority groups in the United States. Another study, published in JAMA, found that even accounting for motor vehicle traffic crashes, firearm-related injuries and drug poisonings, the United States has higher mortality rates than comparably wealthy countries.

The lack of universal health coverage and less safety net support for low-income populations could have something to do with it, Ms. Glied speculated. “The most efficient way to improve population health is to focus on those at the bottom,” she said. “But we don’t do as much for them as other countries.” 

The effectiveness of focusing on low-income populations is evident from large expansions of public health insurance for pregnant women and children in the 1980s. There were large reductions in child mortality associated with these expansions. “Those reductions were much larger for poor children than for richer children,” Ms. Currie said.

A report by RAND shows that in 1980 the United States spent 11 percent of its G.D.P. on social programs, excluding health care, while members of the European Union spent an average of about 15 percent. In 2011 the gap had widened to 16 percent versus 22 percent.

Although this is a modest divergence over time, Mr. Anderson says it could be significant nonetheless. “Social underfunding probably has more long-term implications than underinvestment in medical care,” he said. For example, “if the underspending is on early childhood education — one of the key socioeconomic determinants of health — then there are long-term implications.”

Slow income growth could also play a role because poorer health is associated with lower incomes. “It’s notable that, apart from the richest of Americans, income growth stagnated starting in the late 1970s,” Mr. Cutler said.

Even if we can’t fully explain why the United States diverged in terms of health care spending and outcomes after 1980, one thing is clear: History demonstrates that it is possible for the U.S. health system to perform on par with other wealthy countries. That doesn’t mean it’s a simple matter to return to international parity. A lot has changed in 40 years. What began as small gaps in performance are now yawning chasms. And, to the extent greater American health spending has spurred development of valuable health care technologies, we may not want to trade away all of our additional spending.

Nevertheless, Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health and the director of the Harvard Global Health Institute, is hopeful: “For starters, we could have a lot more competition in health care. And government programs should often pay less than they do.” He added that if savings could be reaped from these approaches, and others — and reinvested in improving the welfare of lower-income Americans — we might close both the spending and longevity gaps.

Austin Frakt is director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System; associate professor with Boston University’s School of Public Health; and adjunct associate professor with the Harvard T.H. Chan School of Public Health. He blogs at The Incidental Economist, and you can follow him on Twitter.@afrakt


Thursday, May 10, 2018

Gnawing Away at Healthcare

Paul Krugman - May 7, 2018 - At the beginning of 2017, Republicans promised to release the kraken on Obamacare — to destroy the program with one devastating blow. But a funny thing happened: Voters realized that repealing the Affordable Care Act would mean taking health insurance away from tens of millions of Americans. They didn’t like that prospect — and enough Republicans balked at the backlash that Obamacare repeal fizzled.

But Republicans still hate the idea of helping Americans get health care. So instead of releasing the kraken, they’ve brought on the termites. Rather than trying to eliminate Obamacare in one fell swoop, they’re trying to undermine it with multiple acts of sabotage — while hoping voters won’t realize who’s responsible for rising premiums and falling coverage.

Which is why it’s important to place the blame where it belongs.

The first thing you need to understand is that Obamacare has been a highly successful program. 

When the legislation was passed, Republicans insisted it would fail to cut the number of uninsured and would blow a huge hole in the federal budget. In fact, it led to major gains in coverage, reducing the uninsured rate to its lowest level in history, at relatively low cost.

It’s true that the coverage expansion was somewhat less than originally predicted, although the shortfall was much less than you may have heard. It’s also true that after initially offering surprisingly cheap policies on the Obamacare exchanges, insurers found that the people signing up were sicker, on average, than they expected, leading to higher premiums. But as of last year, the markets appeared to have stabilized, with insurers generally profitable.

Nobody would claim that Obamacare is perfect; many Americans remain uninsured, and too many of those with coverage face troublingly high out-of-pocket expenses. Still, health reform delivered most of what its advocates promised and caused none of the disasters its opponents predicted.

Yet Republicans still want to destroy it. One reason is that much of the coverage expansion was paid for with taxes on high incomes, so repeal would be a way to cut taxes on the wealthy. More broadly, conservatives hate Obamacare precisely because it works. It shows that government actually can help tens of millions of Americans lead better, more secure lives, and in so doing it threatens their low-tax, small-government ideology.

But outright repeal failed, so now it’s time for sabotage, which is taking place on two main fronts.

One of these fronts involves the expansion of Medicaid, which probably accounted for more than half the gains in coverage under Obamacare. Now a number of Republican-controlled states are trying to make Medicaid harder to get, notably by imposing work requirements on recipients.

What is the point of these work requirements? The ostensible justification — cracking down on able-bodied Medicaid recipients who should be working but aren’t — is nonsense: There are very few people meeting that description. The real goal is simply to make getting health care harder, by imposing onerous reporting and paperwork requirements and punishing people who lose their jobs for reasons beyond their control.

The other front involves trying to reduce the number of people signing up for private coverage. Last year the Trump administration drastically reduced outreach — the effort to let Americans know when and how to get health insurance.

The administration is also promoting various dodges that would in effect let insurance companies go back to discriminating against people in poor health. And when Congress passed a huge tax cut for corporations and the wealthy, it also eliminated the individual mandate, the requirement that people sign up for insurance even if they’re currently healthy.

Preliminary evidence suggests that these efforts at sabotage have already partially reversed the coverage gains achieved under Obama, especially among lower-income Americans. (Curiously, all the coverage losses seem to have happened among self-identified Republicans.) But the worst is yet to come.

You see, G.O.P. sabotage disproportionately discourages young and healthy people from signing up, which, as one commentator put it, “drives up the cost for other folks within that market.” Who said that? Tom Price, President Trump’s first secretary of health and human services.

Sure enough, insurers are already proposing major premium hikes — and they are specifically attributing those hikes to G.O.P. actions that are driving healthy Americans out of the market, leaving a sicker, more expensive pool behind.

So here’s what’s going to happen: Soon, many Americans will suffer sticker shock from their insurance policies; federal subsidies will protect most of them, but by no means everyone. They’ll also hear news about declining insurance coverage. And Republicans will say, “See, Obamacare is failing.”

But the problem isn’t with Obamacare, it’s with the politicians who unleashed this termite infestation — who are doing all they can to take away your health coverage. And they need to be held accountable.

Wednesday, May 2, 2018

Tom Price, Somewhat Belatedly, Starts Telling the Truth About Obamacare

It took longer than expected, but disgraced former Health and Human Services Secretary Tom Price appears to have been welcomed back into polite society. Untethered from the political concerns that dictated what he could say either as a congressman or Cabinet member, Price is now able to tell certain truths about health care policy—though, in telling them now, he only confirms his own dishonesty about them when it mattered. 

Speaking at the World Health Care Congress on Tuesday morning, Price laid out the consequences of congressional Republicans’ decision to eliminate the individual mandate penalty in last year’s tax reform bill. 

“There are many, and I’m one of them, who believes that [removing the mandate] actually will harm the pool in the exchange market, because you’ll likely have individuals who are younger and healthier not participating in that market,” he said, “and consequently, that drives up the cost for other folks within that market.” 

You’ve got to love the “actually” here. Actually, the mandate—an imperfect instrument—was put into the Affordable Care Act for a policy purpose. Democrats didn’t, actually, put the mandate into the bill because they found it politically wise to irritate constituents for the sport of it, actually. No, really. They actually did it to achieve balanced risk pools. And now that it’s gone, it will actually upset the balance of risk pools and increase premiums. This is an actual thing. 

Price’s point about the mandate is actually the opposite of what he said in his capacity as the administration’s point person on health care reform during negotiations over the bill last year. 

“The individual mandate is actually one of those things that is driving up the cost for the American people in terms of coverage,” Price said in a July 2017 interview on ABC’s This Week shortly after the dramatic failure of health care reform on the Senate floor. 

With legislative repeal-and-replace seemingly dead, Price was considering what administrative relief he could bring to health care markets, and an expansion of individual mandate waivers was high on the list. He didn’t get very far. In September, he resigned under scrutiny for chartering fancy planes for lengthy flights between D.C. and Philadelphia. Good to see that he’s landed on his feet. 

Thursday, April 26, 2018

(Montana) Hospitals prep for Medicaid funding cuts

Hospitals across Montana are preparing for a decrease in Medicaid funding through layoffs and program “realignments” as the fallout from last year’s state budget shortfall continues to land on Montana’s health care providers.

The cuts are coming to Montana’s Medicaid reimbursement rate, which provides hospitals with funding to serve patients on the federal health care program. It’s part of an attempt by the Montana Department of Health and Human Services to address the $49 million in cuts assigned to the department last fall in a special state legislative session following a statewide budget shortfall of $227 million.

Medicaid — the program which combines federal and state funds to provide coverage to people who can’t afford health insurance or nursing home care — was expanded in Montana under the Affordable Care Act in 2016.

Kalispell Regional Healthcare is expected to lose $6.6 million in Medicaid funding this year, and has begun to address the funding gap through staff layoffs in recent weeks. Kalispell Regional Communications Director Mellody Sharpton did not specify the number of layoffs but said that it was “considerably less than 1 percent” of those employed by the health system and that none were involved in direct patient care. Kalispell Regional employs over 4,000 people in Northwest Montana.

That $6.6 million loss will also land, in part, on North Valley Hospital in Whitefish, which has been under the Kalispell Regional umbrella since an affiliation in 2016. North Valley Community Relations Manager Allison Linville said she had no additional information on layoffs or potential staff changes at the hospital.

Statewide, hospitals in Montana have also been strained by the reimbursement cuts. The Bozeman Daily Chronicle reported last week that Bozeman Health expects a $2.6 million cut in reimbursements and will absorb the loss without cutting services or staff. Instead, they will attempt to recoup the difference by saving money on supplies such as medications or equipment.

Community Medical Center in Missoula announced Friday that it was eliminating 16 staff positions in response to the cuts, which they said would decrease its funding by more than $6 million in 2018.
More changes could be forthcoming if Montana’s Medicaid expansion is not renewed in next year’s meeting of the state Legislature. The 2-year-old program, which expanded Medicaid under the Affordable Care Act, now enrolls over 94,000 Montanans — nearly one in 10 residents.

The program has cost $802 million during its first two years. The state of Montana has paid for 5 percent of that number, while the federal government contributed the other 95 percent.

A recent report by the Montana Healthcare Foundation predicted that the program could pay for itself by generating $350 million to $400 million of new spending in Montana’s economy between 2018 and 2020. According to the report, the Medicaid expansion injects money into Montana’s economy by supporting new health care spending, shifting the cost of Medicaid care from providers to the federal government and promoting economic activity, such as 5,000 jobs and $270 million in personal income by 2020.

As of now, the expansion is set to expire next year.

source med