Consumer Power Report #442
Elisabeth Rosenthal of The New York Times reports on the growing push by providers to make up the difference from lost insurance revenue with a host of new charges:
As insurers ratchet down payments to physicians and hospitals, these providers are pushing back with a host of new charges: Ophthalmologists are increasingly levying separate “refraction fees” to assess vision acuity. Orthopedic clinics impose fees to put an arm in a cast or provide a splint, in addition to the usual bill for the office visit. On maternity wards, new mothers pay for a lactation consultant. An emergency room charges an “activation fee” in addition to its facility charges. Psychologists who have agreed to an insurer’s negotiated rate for neuropsychological testing bill patients an additional $2,000 for an “administration charge.”
In some cases, such as refraction, the services were never typically covered by health insurance but had generally been performed gratis as part of an exam. In others, the fees are novel constructs. In any case, as insurers and providers fight over revenue in an era of cost control, patients often find themselves caught in the middle, nickel-and-dimed.
Some of the charges come directly out of patients’ wallets at the time of treatment and catch patients off guard. And if they do not write a check for the refraction fee, for example, many doctors will not dispense a prescription for the glasses …
Cindy Weston of the American Medical Billing Association, an industry group, said it was up to physicians to decide what to include in their principal payment and what merited an extra charge. She said they now “may be forced to charge” for new services because the Affordable Care Act “has shifted so much responsibility for payment from insurers to patients,” and patients do not pay as reliably as insurers.
These new fees are worrisome to health advocates. At a time when the country is trying to hold down health care costs, payments from patients shift spending to a place where they cannot be readily tallied. Such fees often undercut mandates under the Affordable Care Act (ACA) that certain vital services for women’s health and preventive care be provided at no cost to patients: An intrauterine device is covered, but there is an insertion fee. An annual physical is covered, but not some of the blood work that a physician has ordered.
Now, this is just a temporary problem, right? It certainly couldn’t be that this will be an enduring challenge for Obamacare moving forward. Jayne O’Donnell at USA Today reports:
Now that many people finally have health insurance through the Affordable Care Act exchanges, some are running into a new problem: They can’t find a doctor who will take them as patients.
Because these exchange plans often have lower reimbursement rates, some doctors are limiting how many new patients they take with these policies, physician groups and other experts say.
“The exchanges have become very much like Medicaid,” said Andrew Kleinman, a plastic surgeon and president of the Medical Society of the State of New York. “Physicians who are in solo practices have to be careful to not take too many patients reimbursed at lower rates or they’re not going to be in business very long.”
Kleinman says his members complain rates can be 50% lower than commercial plans. Cigna and Aetna, however, say they pay doctors the same whether the plan is sold on an ACA network or not. United Healthcare spokeswoman Tracey Lempner says it’s up to their physicians whether they want to be in the exchange plan networks, which have “rates that are above Medicaid.” Medicaid rates are typically below those for Medicare, which in turn are generally lower than commercial insurance plans.To prevent discrimination against ACA policyholders, some insurance contracts require doctors to accept their exchange-plan patients along with those on commercial plans, unless the doctors’ practices are so full they simply can’t treat any more people. But lower reimbursement rates make some physicians reluctant to sign on to some of these plans or accept too many of the patients once they are in the plans.
If you want to know why Obamacare is so unpopular, even as it has increased insurance coverage generally, it is because that coverage lacks the level of access and the kind of coverage people have come to expect from the American health care system. The third-party-payer system has always insulated Americans from the true cost of care, but Obamacare was supposed to offer them much more than Medicaid for all.
— Benjamin Domenech
IN THIS ISSUE:
A new study in the Journal of the American Medical Association demonstrates the potential for the U.S. to contain health costs by unleashing the American consumer.
Advocates for a consumer-driven approach to health care have long traced the problem of rising medical costs to the way government policy has distorted incentives and stunted the development of a free market.
Even before Obamacare, nearly all insured Americans obtained coverage either through the government or their employers. A World War II-era provision in the tax code has allowed health insurance to be purchased tax-free if obtained through employers, but only with after-tax money if bought directly by individuals.
When consumers believe that somebody else is picking up the tab, they have much less incentive to shop around for the best deal. If the market for televisions functioned like the health care market over the past 70 years ‒ and individuals could buy new televisions for a small copayment ‒ it’s highly doubtful consumers would have seen costs fall dramatically as technology advanced.
Given this, supporters of free-market health care solutions have long pushed for changing the tax treatment of health care and encouraging Americans to move into health plans with higher deductibles, accompanied by health savings accounts (which allow individuals to make pre-tax contributions to an account that can be used to pay for qualified medical expenses).
The philosophy driving such proposals has been to give individuals more exposure to the cost of medical services so that they have more reason to shop around for the best care at the lowest price ‒ thus signaling to providers that they must drive down prices to keep customers coming.
SOURCE: Phil Klein, Washington Examiner
Last week I received nasty but not entirely unanticipated news: My insurance carrier, Anthem Blue Cross and Blue Shield, is amending my current plan effective January 1, 2015. Come the new year, I can keep my current plan ‒ a low-premium, high-deductible setup meant to cover major medical expenses and not much else ‒ except it won’t actually be my “current” plan. My premium will nearly quadruple, from $55 per month to just over $200 per month.
There are a few other options available to me. I could enroll in my employer’s health care coverage, but that too would cost me a little over $200 per month. I could seek insurance through one of the Obamacare exchanges, on which I would qualify for a tax subsidy for my plan, but ‒ so far as I can tell in the dense, unworkable digital jungle of the Affordable Care Act’s (ACA) marketplaces ‒ the cheapest plan I could find would jack my deductible up by an enormous $1,350.
This is the essence of Obamacare: delivering inferior products at higher prices. And while it’s been somewhat satisfying to watch ACA’s disastrous first year, this is a deeply distressing and worrisome sign of things to come. This is your money, your family’s health, and your liberty ‒ all sacrificed so that a bunch of inept bureaucrats could score points wheeling out “health care reform” and help you buy things you simply don’t want to buy.
SOURCE: Daniel Payne, Reason
It’s looking increasingly likely that Republicans will win the Senate in the midterm elections, which means we can look forward to at least two more years of Washington doing nothing and permanent presidential campaigning and posturing ‒ enough to make you forget that government is supposed to be about policy.
And there are important policies out there, such as Obamacare. Maybe you’ve heard of it.
You may also have heard that the Republican Party is not exactly a huge fan of Obamacare, and that the GOP really, really wants to repeal Obamacare. Not only do they want to repeal Obamacare, they want to “replace” it to boot.
But if you’re a little hazy on the details of the “replace” part, don’t feel too bad. The Republican Party has never said what this replacement ought to be.
There are understandable reasons for this and not-so-understandable reasons for this.
The understandable reason is that most conservatives (myself included) genuinely feel that Obamacare is a terrible policy and that overturning it is a valuable goal. Conservatives recognize the practical political realities: It’s a lot easier and more valuable in contemporary U.S. politics to make a case against a bad law than to make a case for a good one. If the GOP had put forward its own proposal, the Democrats would have been quick to demagogue it, changing the discussion.
The less understandable reason is that the GOP doesn’t really have a good or clear health care agenda, because it’s a topic the party just hasn’t thought too much about. Plus, any valuable proposal would risk angering one interest group or another. Many conservative ideas on health care are either pie-in-the-sky, utopian, free-market ideas that, much to my chagrin, would never become law or ideas that tinker around the edges but are essentially meaningless.
It’s time to take a stand for a real proposal, put something on the table, and have a Republican Congress pass it. Sure, Obama will veto it, but it will set the groundwork for a future Republican administration and send the message to the American people that viable alternatives exist.
SOURCE: Pascal Emmanuel-Gobry, The Week
A federal initiative to boost participation among some Medicaid doctors by increasing their pay will mostly go defunct at the end of the year as many states have chosen not to extend it with their own money.
This Affordable Care Act initiative boosted rates for primary care doctors and some specialists to Medicare levels, which are higher than Medicaid mandates, in hopes of increasing access to doctors as states expanded Medicaid. Overall, states saw $11 billion in additional federal health care funding … The increase generated a 64 percent pay increase on average, but the two-year program ends in December, which means states have to come up with funding on their own to maintain the pay bump and prevent a pay cut.
Doctors have long blamed low rates on lower levels of participation in Medicaid, which varies dramatically by state, from a low of 40 percent in New Jersey ‒ where the rates are also low ‒ to near total participation in Wyoming. But the national average is near 70 percent.
Fifteen states have said they will continue the pay raise, at least at partially higher rates or with some other modifications, according to the Kaiser Family Foundation’s annual survey of Medicaid agencies. They include more conservative states such as Alabama, Mississippi, and South Carolina, but also moderate and liberal states like Colorado, Connecticut, and Maryland.
The survey says that 12 states were still undecided about whether they’ll continue the policy. Those include Arizona, Arkansas, Georgia, Vermont, and Virginia, among others. But within the group of states that reported being undecided, many have since shifted to “no.”
Although the survey started in the summer and continued into September, some states completed it before finalizing their budgets for the current fiscal year, which began in July. Of the states that responded to requests for comment, all said they’ve now decided against extending the pay raise with state money.
SOURCE: Chris Kardish, Governing
I’m thankful that my recent post on Forbes gave Planned Parenthood the opportunity to clarify their position on over-the-counter birth control. It now appears their stance is not against over-the-counter birth control, but over-the-counter birth control coupled with repeal of the Obamacare mandate that insurers must offer first-dollar prescription contraceptive coverage.
As I wrote previously, these two policy issues need not be coupled. And it’s refreshing to find common ground: All sides of the health care debate can encourage drug makers and the FDA to take the steps necessary to make oral contraception available over-the-counter.
The remaining debate therefore centers not on birth control, or even insurance coverage for birth control, but on whether the government should mandate that all health insurance plans must include this specific coverage package. It is strange that such a proudly pro-choice organization wouldn’t recognize the irony in such efforts to limit consumers’ choices and force all women to pay for contraceptives (inefficiently) through insurance coverage.
Their stance appears to rest on some flawed logic and a failure to appreciate how the cost of such mandates manifests. First, Planned Parenthood asserts that proposals that would move to a direct-pay model for birth control are harmful because they do not include “cost reduction” for women. This ignores how market competition naturally works to control prices. Obviously, other consumer goods do not have infinitely high prices in the absence of mandates because producers have to compete for customers.
Planned Parenthood laments the high costs of many brands of oral contraception, but doesn’t consider the rationale for those high prices and how greater accessibility would bring costs down. Birth control pills were introduced more than 50 years ago, and today it is cheap and easy to manufacture. Various pharmaceutical brands produce oral contraceptives, and in an over-the-counter model, these companies would be forced to compete. This means that neither women nor insurance policy holders in general would have to pay thousands of dollars each year for what should be an inexpensive product. In fact, some consumers have already found that for certain health services or medications, they can find lower prices when they offer to pay cash instead of invoking their insurance.
The truly costly and noncompetitive model is the birth control mandate itself, where there is no price competition. Under the mandate, drug makers can charge unnecessarily high prices since those costs aren’t borne directly by their costumers, but are passed on to a third party (the insurance company) who is now required by law to pick up the tab.
SOURCE: Hadley Heath Manning, Forbes
One of the ICB’s (Information Collection Budget) main purposes is to document agency compliance with the PRA [Paperwork Reduction Act]. The American Action Forum (AAF) previously reviewed the data from the 2012 report here. An agency violates the PRA by requiring the collection of information without OMB approval or continuing to collect data when approval lapses. In terms of overall trends, it’s a mixed bag as OMB notes that, “Violations decreased by 21 ‒ from 303 to 282 ‒ relative to FY 2011 and increased by 60 ‒ from 218 to 282 ‒ relative to FY 2012.” Perhaps it’s a simple rounding issue, but the FY 2012 to FY 2013 increase is actually 64, not 60. On the individual agency level, the Department of Health and Human Services (HHS) is still the most egregious violator.
In each report, OMB rates compliance as either “good” (zero violations), “needs improvement” (1 to 25 violations), or “poor” (more than 25 violations). HHS has the distinction of being the only agency to receive a “poor” grade on both reports and the only “poor” agency in the 2014 report. The most recent report also marks HHS’s ascendance to first place among the scofflaws, including the Department of Defense that had actually been ahead of HHS in recent years.
In fact, the last time HHS did not achieve “poor” status was in FY 2008. Despite this ignominious streak, there is no specific discussion of HHS in the 2014 report’s section titled “Steps to Improve Agency Compliance.”
HHS is one of the most prodigious regulatory agencies in recent years due to its central role in implementing the Affordable Care Act (ACA). As AAF noted in the previous review, a set of ACA-related information collection requirements (ICRs) in violation of the PRA accounted for “more than 707,000 hours of paperwork and $13.6 million in costs.” The 2013 and 2014 reports detail 13 ICRs in violation that were ACA-related; these requirements account for more than 14 million hours of paperwork and $52 million in costs. The table below includes the five most significant paperwork requirements.
SOURCE: American Action Forum