The burden of cutting costs is on patients, not corporate healthcare profiteering.

With the one-year anniversary of the Supreme Court ruling upholding the Affordable Care Act near, it’s time to ask if the decision to put the burden of cutting costs on patients, not corporate healthcare profiteering, is the fatal flaw in the plan.

The law’s tepid cost control measures targeted at healthcare spending that is gobbling up an increasing percentage of the economy and pricing more people than ever out of access to care have been widely viewed as the ACA’s biggest pitfall.

But from the outset, the Obama administration dismissed the most effective means to reduce costs by a) refusing to consider a single payer alternative that combines genuine universal coverage not based on ability to pay with global budgeting, b) rejecting a proposal to authorize the federal government to negotiate bulk purchasing (a concession to the drug companies), and c) failing to regulate price gouging by hospitals, drug companies, insurers and other healthcare corporations.

Those fateful decisions left only one option for significant reduction of overall health expenditures  – saving money in the delivery of care by shifting costs to those who use health services and discouraging them from getting care even if they have insurance.

Perhaps that’s not surprising given the decision to craft the ACA in concert with pharmaceutical, insurance, hospital, and Chamber of Commerce lobbyists, and, as recently reported, top Wall Street investment firms and hedge fund executives. 

Here are several ways the ACA shifts the hardship of cost cutting to those who need care, and promotes delivery models that result in limiting care, even among those with health insurance.

1. What they’re not telling us about the exchanges

The ACA health exchanges are marketplaces set up to enable the uninsured who the law requires to buy private insurance or pay a financial penalty to choose among competing private insurance and qualify for a federal subsidy to cover some of the costs.

But premiums, deductibles, co-pays and other fees can run to thousands of dollars. Even in the cheapest plans buyers are expected to pay 40 percent of the cost. Subsides may not make these plans “affordable.” 

Many younger, healthier people are likely to select the cheapest plan, one outside the exchange with fewer covered services, or just go without coverage entirely and pay the fine.

Further, small businesses can buy coverage for employees through the exchanges, but the premium and co-pay subsidies will not cover family dependents, a huge hole that will leave many uncovered.

Insurers offering lower rates the first year in hopes of acquiring many new customers are likely to raise rates later, as has occurred in Massachusetts, the model for the ACA. A recent study in the journal Health Affairs found that 38 percent of families buying plans through the Massachusetts exchange reported a financial burden and 45 percent said costs were higher than they had expected.  

2. The high cost of taxing health benefits

For the first time, the law will tax health benefits beginning in 2018 through the misnamed “Cadillac tax” a 40 percent excise tax on comprehensive health plans. The inevitable result will be fewer employers offering good health benefits, and far more people pushed into skeletal, high deductible plans with far less coverage and much higher out-of-pocket costs. The New York Times just reported that 17 percent of employers this year are stepping up cost shifting five years before the tax goes into effect.

3. An incentive to employers to cut coverage or full-time jobs

Under the ACA employers with 50 workers or more must offer coverage to full time employees or pay a fine, but not to part-timers. Nurses and other workers are increasingly in battles with employers who are demanding elimination of coverage for part time employees, citing the ACA as their pretext. Regal Entertainment, Papa John’s and other companies are reducing workers’ hours to under 30 per week.

4. The wellness scam

“Wellness” programs that enable businesses to transfer more healthcare costs to workers with “unhealthy” factors like smoking or high blood pressure or cholesterol levels are rapidly spreading, actively encouraged by the ACA which offers premium discounts to participating employees.  However, health disorders are as likely to derive from chronic or genetic conditions as “life style choices” and economic factors which have a disproportionate impact on the poor.

The cost reductions also fall far short of the hype. The federal government apparently buried a report it mandated for the ACA from the Rand Corporation on wellness programs which showed the overall savings are, at best, modest. 

The programs make insurance unaffordable for some workers, and “keep the sickest workers from affording the care they need,” said Alan Balch, vice president of the Preventive Health Partnership, an alliance of the American Cancer Society, the American Diabetes Association, and the American Heart Association.

5. Self-rationing on the rise

With its weak controls on pricing practices by the insurers and hospitals, and encouraging cost shifting and high deductible plans, the ACA provides no relief for those who postpone needed care because of the high price tag.

A survey by the Centers for Disease Control and Prevention just released in early June found that 20 percent of Americans, or 54.2 million people in 2011 said their families had difficulty paying for health care services including physician visits, hospital procedures and medications within the prior 12 months. 

Among the effects, people delay getting care include less containment for the spread of infectious diseases and more people ending up in emergency rooms.  ER visits as the point of entry for patients to needed healthcare have been on a big upswing, a worrisome trend for the increased pain and suffering for patients and the overall health expenditures.  

6. New barriers to care

If Massachusetts is the political model of the ACA, the industry model is Kaiser Permanente by combining the roles of insurance company and medical provider with its network of hospitals and clinics.

As ACA implementation nears, Kaiser has stepped up practices once associated with the worst abuses of HMOs. These include delaying medical appointments, restricting hospital admissions, and rapid discharge of patients from the hospital care to other settings.

These include sending people home where the care burden is placed entirely on family members, or to outpatient facilities or nursing homes that have fewer regulations and fewer, typically lesser skilled, lesser paid staff where the patients receive less care than in hospitals.

Other industry giants hope to follow this path, enrolling new members who are required to buy insurance, while they are more directly able to control their expenditures for care and can more easily slash spending. The ACA encourages care cutting practices through several mechanisms, including financial penalties for hospital re-admissions, an incentive to keep people out of the hospital, and rewarding providers who divert patients to outpatient clinics.

7.      A tale of the 31 million

More than 48 million people are currently uninsured. A new study in Health Affairs estimates that even after full ACA implementation up to 31 million of those will still be without coverage. 

That starts with the 14 states and counting who have rejected the expansion of Medicaid, the single most important provision in the ACA for expanding healthcare access, (with the help of the Supreme Court ruling gutting the federal sanction for opting out). Others will lose their employer-sponsored coverage due to the ACA taxes on employers, the provision excluding dependent coverage for small businesses that enter the health exchanges, and all of those who will still find insurance far too costly to buy, especially in a recession that has never ended for millions of people.

Political posturing by those on the right opposed to any reform of our broken healthcare system and the bunker mentality of liberal allies of the Obama administration who for their own partisan reasons tend to gloss over serious flaws in the “legacy” law of the Obama years have obscured the reality that our healthcare crisis is far from over and in desperate need of more systemic overhaul.

Studies this year alone show the U.S. ranks last among 17 major industrial nations in life expectancy,  but is ahead of the others in first-day infant mortality rates. That will not end with the ACA.

Nurses will continue to make the case for joining the community of nations with a genuinely universal national or single payer healthcare system based on individual patient need, not corporate profits.

Karen Higgins is a registered nurse and co-president of National Nurses United, the largest U.S. union and professional association of nurses.

Image by Sage Ross

If there is one problem that symbolizes the ongoing national healthcare emergency, it is the rampant price gouging in the healthcare industry that continues to price too many Americans out of access to care and into financial ruin.

Not only is the problem not solved by the Affordable Care Act, but it is a likely reason many will continue to demand more effective reform, as in expanding and extending Medicare to cover everyone.

Predatory pricing practices can be found nearly everywhere in healthcare, by the drug companies, insurance companies, medical suppliers, outpatient clinics, boutique medical services, and many others as chronicled this spring in Time magazine.

U.S. hospitals are among the biggest abusers, as illuminated in recent data released by Medicare on hospital charges for a variety of common procedures as well as brand new findings by the Institute for Health and Socio-Economic Policy, the research arm of the National Nurses United, based on Medicare cost reports. (See charts here)

The nurses’ data augments the Medicare findings, and goes the next step, illustrating a trend of rising high hospital charges while providing context to a very ugly picture and the deplorable impact on anyone who needs healthcare.

Here’s the sobering numbers:

• U.S. hospitals charge on average $331 dollars for every $100 of their total costs, in statistical terms a 331 percent charge to cost ratio.

• While hospital charges over costs have been climbing steadily over the past 15 years – the charges took their biggest leap ever in 2011- a 22 point vault.

• From 2009 to 2011 (the most recent year for which the data is available), hospital charges lunged upward by 16 percent, while hospital costs only increased by 2 percent.

• U.S. hospital profits, pushed upward by the high charges, hit a record $53.2 billion, while nurses see more and more hospitals cutting patient services and limiting access to care.

• One case study is California where hospitals soared past the national average with a charge to cost ratio of 451 percent, or $451 for every $100 of costs.

That similar pricing practices occur elsewhere in the healthcare industry is hardly an excuse for the private hospitals to act more like Wall Street corporations than responsible, community based institutions. It should be no shock that the lowest charges are by government-run hospitals that operate in public, not in secret, and have far more accountability and transparency.

Hospitals ought to act as responsible providers of needed medical care, not loan sharks. Piling up profits in large part by jacking up prices is at sharp odds with the glossy feel good ads from hospitals we see so often on our TV screens, newspaper pullouts, sponsorship of sports teams, and on mass transit placards.

Hospital lobbyists have tried for years to convince us all that predatory pricing policies don’t matter. These are just “list” prices that few people actually pay, they claim, and it is a random phenomenon that two hospitals in the same city, or even on the same block, might have widely varying prices for similar patient services.

But the grotesque reality tells a different story.

We’re not the only ones who think so. As Glenn Melnick, a USC health economist, told a reporter, “If (hospital prices are) meaningless how come hospitals spend all this money on consultants to raise them? Why haven’t they stayed flat for the past 15 years? Why do hospitals keep raising them if they have no impact?”

While it is true that major payers seldom pay the list price, hospitals typically bargain with insurance companies over reimbursements. Anyone who has ever bought a car knows that the higher the list price, the more you end up paying. That’s true with hospital charges as well.

The inevitable result is insurance companies respond by ratcheting up their charges to employers and individuals. In California, for example, since 2002, premiums have risen 170% — more than five times the inflation rate, as noted in a California Healthcare Foundation survey last month.

An alarming, if predictable ripple effect follows. As the CHF survey noted, in the past decade, the percentage of California employers providing health coverage dropped from 71 to 60 percent; 21 percent said they’d increased workers’ co-insurance premiums while 17 percent said they had reduced benefits or increased other out of pocket costs. More than one-fourth of workers in small firms have deductibles of $1,000 or more on their health plan.

Then there’s the uninsured who do not have the collective clout to bargain down the list price. Hospitals say they write off a lot of those bills, but clearly not all of them. How many distressing stories have we all heard about patients staggered by $50,000 or $100,000 un-payable medical bills while being hounded by the hospitals or bill collection agencies to pay up.?

Patients and families, even those paying for insurance, have a stark choice. Use your health coverage and get socked with huge out of pocket costs that may mean choosing between medical bill or filling prescriptions and housing costs, food, or other necessities, or facing financial calamity, or forgo needed care.

As the Washington Post recently noted, the Affordable Care Act has not ended the deplorable story of medical bills accounting for more than half of all personal bankruptcies in the U.S.

Even many of those now paying for health insurance either through their employer or as individuals, or who will be required to buy insurance under the ACA, choose not to use it because of the high co-insurance, deductibles, co-pays, and all the add ins that get thrown in by the hospitals, such as professional fees, facility fees, pathology fees, anesthesia fees, and so on.

A 2011 Commonwealth Fund study found that the U.S. stands out among high income countries with as many 42 percent of Americans skipping doctors’ visits, recommended care, or not filling prescriptions due to cost. 

Consequently, people end up in emergency rooms for medical problems that should have been resolved earlier at far less cost and pain. It is also why two recent reports disclosed that the U.S. has the lowest life expectancies and the highest first day infant death rate among major industrial countries.

It’s long past time to fix this nightmare, and sadly the ACA won’t meet that test. At a minimum we need to crack down on price gouging by all the corporations that control our health, with real penalties for lack of compliance.

But a longer vision is needed. Replace our profit focused health care system with one based on patient need and quality care as all those other countries with national or single payer systems that surpass us in access, quality, and cost, have long figured out.

Written by Deborah Burger. First appeared in The Huffington Post, 5/17/13

Friday, May 06, 2011

Senate Health Committee Moves Single-Payer Bill

by David Gorn
Many dozens of single-payer supporters crammed the Senate Committee on Health chambers on Wednesday for hearing on a bill that would set up a single-payer health system in California.
The supporters were respectful and emphatic as they all stepped, one by one, up to the microphone to voice their support for such a model. After all of the advocates took their turn and returned to their seats, Senate Health Committee Chair Ed Hernandez (D-West Covina) wanted to know if there were any more speakers, so he politely asked if there was anyone else in the audience who was in favor of the bill.
And a sea of hands went up, as nearly everyone in the audience spontaneously and quietly raised their hands.

That has been the history of single-payer legislation in California, with enthusiastic, almost fervid, support of it by many citizens and organizations in the state, but a tepid, almost embarrassed, reception by many lawmakers.

For the rest of the article: http://www.californiahealthline.org/capitol-desk/2011/5/senate-health-committee-moves-singlepayer-bill.aspx#ixzz1LcMwKKNT

Here’s how Wednesday’s vote on SB 810 broke down:

YES – Ed Hernandez, Elaine Alquist, Kevin de Leon, Mark DeSaulnier, Lois Wolk

NO – Joel Anderson, Sam Blakeslee, Tony Strickland

Sen. Michael Rubio – who had said last week that he was going to vote no on the bill – curiously, abstained. Was the insurance industry breathing down his neck? Rubio’s office had said the senator believes the federal Affordable Care Act is good enough to help Californians. But this “reform” was a huge giveaway to the insurance companies and keeps them and the whole for-profit system intact. The insurers know SB 810 would spell their doom. Only Sen. Rubio knows why he didn’t show up for that vote, but abstaining is just as bad as voting against. His constituents should give him an earful.

Despite overwhelming demand from the citizens of California for single payer, it’s frustrating to see so many of our legislators have to be dragged by their hair toward doing the right thing. Never mind that the United States is hopelessly out of step with the rest of the western world when it comes to healthcare delivery. And the ACA isn’t going change that. Only a comprehensive, not-for-profit universal healthcare system can. SB 810′s near death last week shows we have to be ever vigilant against the dark forces of the health insurance industry and their minions in the California Chamber of Commerce hell bent on digging their claws into many a politician.

The liberal grassroots advocacy group, Democracy for America, has sent out an alert to its membership calling on them to flood Hernandez and Rubio’s offices with phone calls:

“On Tuesday the Vermont Senate passed a bill that puts the Green Mountain State on the path to a single-payer health care system, and next week California’s Senate Health Committee has the same opportunity on May 4th. However, two Democratic senators could keep it from passing.

We’ve come too far for this bill to fail now. Can you call them and ask them to vote yes?

The Chair of the Health Committee, Senator Ed Hernandez, who voted for the single-payer bill as an Assemblymember is undecided. Call him now and tell him that a ‘yes’ vote is a vote for California’s future. Even if you don’t live in his district the stakes are too high and he needs to hear from you. You can reach his Sacramento office at: (916) 651-4024

After your call, click here to let us know if he’s decided how he will vote.

Newly elected Senator Michael Rubio represents the same district as former State Senate Majority Leader, Dean Florez, who co-sponsored the bill the last time it was introduced, but Senator Rubio says he will oppose this legislation. Can you call Senator Rubio right now and tell him that his constituents want a single-payer system? His Sacramento office number is: (916) 651-4016

Then let us know what his office says about how he will vote.

The California Democratic Party includes a single-payer plan in its platform. We are counting on these Democrats to vote with their party. California is counting on these Senators to vote the right way — it’s a moral imperative to provide Californians with the care they need.

Thanks for everything you do.

- Kaili

Kaili Lambe, Political Campaign Manager
Democracy for America”

Hernandez’s office wouldn’t say what would make him vote “yes.” According to Rubio’s office, the Senator thinks the federal Affordable Care Act is enough to solve California’s healthcare crisis. The truth is, unlike SB 810, the federal reform law won’t cover all Californians, and it won’t do enough to control costs. The ACA leaves in place the unsustainable profit-driven healthcare system, and will continue to burden taxpayers.

Rubio represents the same district as former state Senate Majority Leader, Dean Florez, who had been a co-sponsor of the bill when it was introduced. Hernandez’s wavering and Rubio’s brush off smell a lot like the work of insurance industry meddling.

Meanwhile, SB 810 got a much needed shout out at last weekend’s California Democratic Party State Convention in Sacramento. Sunday’s general session, which I attended, featured a parade of speeches by various state party officials. Then, California Democratic Council President Henry Vandermeir got to the podium and addressed the delegates with news that a longtime party activist had recently died because he didn’t have health insurance. (The CDC is a statewide association of Democratic clubs and party county committees.) Vandermeir next proceeded to chastise Hernandez and Rubio for potentially killing SB810, and urged the delegates – several hundred strong in the auditorium – to call the lawmakers and tell them to vote in favor of SB 810.

Single payer came up in several speeches during the two-day general session – most notably from keynote speaker, Vermont Sen. Bernie Sanders, and California Insurance Commissioner Dave Jones. But the fate of SB 810 was not mentioned until Vandermeir brought it up that Sunday afternoon. I didn’t see his heartfelt endorsement coming, so what a pleasant and most welcome surprise.

Sylvia@californiaonecare.org