Commonwealth Fund Identifies Income Divide in Health Insurance Access

Today’s Managing Health Care Costs Indicator is 35%

Click on image to enlarge.  Source 

Yesterday, I  told two stories demonstrating the danger  the current health care financing system poses to those with serious chronic illnesses – threatening them with loss of coverage and 

The Commonwealth Fund published its tracking survey yesterday, which demonstrated that the economically disadvantaged face the same type of challenges in obtaining coverage and care.  Adults who are poor (<133% of federal poverty level) are much more likely to be uninsured. The likelihood of being uninsured for the entire previous two years was 35% among those at <133%FPL, compared to only 3% of those with income >400%FPL.   Overall likelihood of being uninsured for some time over the previous two years was 26% for the entire sample – but this ranged from 57% (<133% FPL to 12% (>400% FPL).  The study included over 2100 respondents, and was adjusted to be a nationally representative sample. 

The Commonwealth Fund study also noted:

·        28% of all respondents were seen in an Emergency Department over the last year. Those who were uninsured during the year were more likely to report going to the ED because they needed a prescription (50% vs. 35%), because they did not have a regular physician (41% vs. 16%), and because they believed that other sites of care cost too much (40% vs. 20%)

·        Those who were uninsured during the year were five times less likely to have colon cancer screening (10% vs. 50%). They were twice as likely not to receive a mammogram (32% vs. 66%)

·        Those who were uninsured said they skipped colon cancer screening because it was too expensive six times more frequently than those who maintained insurance all year. (33% vs. 5%)

·        Almost 2/3 of those with income <133% FPL depended on Medicaid or SCHIP to obtain health coverage (63%), but they were still most likely to have at least one child uninsured (31%, compared to 19% overall)

Income insecurity has gone up dramatically in the United States over recent years.  Few companies continue to offer defined benefit pension plans, and companies are exiting retiree health.  It’s hard for anyone to get a job, and for those without advanced degrees it’s harder still.  Employers are eyeing the expense of their health insurance plans carefully, and considering decreasing their investment to avoid the 2018 “Cadillac tax” nationally, and because they are competing in a world market with companies located in countries where employers don’t foot the bill for healthcare.

The Commonwealth Study shows that health insecurity is a frequent complication of economic hardship.  This leads to low value patterns of health care consumption, including unnecessary ED visits and foregone preventive care. The Affordable Care Act should reduce the coverage problem substantially starting in 2014, as the federal government provides premium support, and assuming the states establish exchanges to make it easy and (relatively) cheap to purchase health insurance. Lack of access to health insurance leads to poorer medical outcomes – including cancers unnecessarily diagnosed at a late stage.   We need the Affordable Care Act and its provisions that will make it far easier for Americans to obtain health insurance coverage.

Two Stories Illustrate Why We Need the Affordable Care Act

Today’s Managing Health Care Costs Indicator is $36,000

Statistics and facts are fine –and we should have evidence-based health care policy

But sometimes we need a story to remind us what’s at stake as we debate providing access to health care to Americans.  Today, I have two stories.

I heard from a colleague last week. Her parents are retired, and her dad is eligible for Medicare. But her mom is under 65, and therefore not yet eligible for Medicare.  Her dad’s company terminated retiree health coverage, and her mom as a diabetic in her early 60s couldn’t purchase meaningful health insurance.  She went on a diet and stopped taking her diabetes medicine. She was just admitted to the hospital for slurred speech and weakness, and has progressed to have a left sided stroke.   

This is a failure on both a clinical and a financial level. Her physicians didn’t realize that she couldn’t afford the medications – and probably didn’t focus on using cost-effective generics. So she wasn’t taking her diabetes medications. Even if the high blood sugar didn’t cause the stroke, it’s a risk factor for poor outcome.   The cost of this hospitalization will likely be a terrible financial blow to her family.   I don’t know what her neurologic impairment will be.  I don’t know that if she had full health care coverage she would have had a better clinical outcome. But there is plenty of evidence that those with health insurance fare better when they have major medical problems. 

The free unregulated market simply can not and will not offer affordable health insurance to diabetics in their 60s.  It will take well-regulated health insurance exchanges to make insurance affordable for those who already have significant illness.  If she lived in Massachusetts she could have purchased a health plan through the exchange. If it were 2014 and her state had implemented an exchange she would have been able to purchase a health plan that would have cost no more than three times the cost of a plan for a younger, healthier patient.  But she lives in a state where the governor opposes the Affordable Care Act and  has frozen efforts to establish an exchange.

I’ve also heard from a physician colleague who suffers from a progressive neurologic disease.  He’ll soon have to go on disability despite his youth, and tells me his health insurance bill for a family plan will be $36,000 per year.  He and his family will spend over half of their anticipated future income on health insurance, and that doesn’t count out of pocket health care expenses (usually another 20+%).  Although he’s worked as a physician and a physician executive for his entire career, he and his family have no health security, and could be impoverished by his illness.   The bright spot for him is that if he is fully disabled he will become Medicare eligible after a waiting period – and his family can then purchase a much less expensive health plan.  Of course, the Ryan plan would replace the certainty of Medicare with the risk of vouchers likely to be of less value than the cost of private insurance – especially for those with significant illnesses.

My colleague’s comments on the state of health care access for those with significant illnesses:

Health care systems reflect the culture of the particular country – and this way of treating the poor and sick is nothing less despicable than the race and gender discrimination we officially tolerated for so long.  We now officially despicably tolerate healthcare access disparities based on wealth and sickness.  The concept of ignoring the sickest and most unfortunate in our society with regards to health care seems neither morally nor financially sustainable.

Pricing for Implantable Medical Devices

Today’s Managing Health Care Cost Indicator is $19.8 billion

Click image to enlarge. Source 

The Wall Street Journal reported Friday on a Government Accountability Office (GAO) report on hospital pricing of implantable medical devices.  These are mostly cardiac (stents for angioplasty, pacemakers and implantable defibrillators) and orthopedic (hip and knee replacements and spinal fusion devices)  There are some huge disparities in cost from facility to facility – even two facilities that purchase using the same group  purchasing organization.  The GAO suggests that a lack of transparency leads to higher prices. The GAO’s concern is only Medicare, but this report has large implications for commercial payers as well. 

Increase in cost per unit is a special issue in orthopedic implantable devices. This is especially concerning because every major manufacturer has had to enter into a consent decree for inappropriate marketing.  Also, the cost of spinal fusion devices doubled between 2004 and 2009, even though there is little evidence that spinal fusions help most patients who get these operations.   The incestuous relationship between orthopedists and implantable device makers continues to lead to higher costs and lower health care value.  An entire issue of Spine last year was devoted to a repudiation of research supporting use of a bone growth product.

Implantable medical devices have exceptionally high margins, and in the fee for service setting it’s in everyone’s interest to use more expensive devices, and use them more often.  More use means higher profits for the manufacturer, and every intermediary.  Group purchasing organizations make margin on the devices, and have a history of accepting inappropriate payments. Hospitals generally bill these devices at “cost plus, ” while rebates make it hard to determine the actual cost.  Orthopedists often are inventors – and they can make royalties as well as professional fees for implantation of these devices.  A high volume Louiseville orthopedist was paid $7million in royalty fees by Medtronic, as reported in the Wall Street Journal   

Bundled payment (either by procedure or by overall capitation) could make hospitals and their affiliated physicians more prudent purchasers.   Continued aggressive enforcement of anti-kickback rules will also help, as would more investment in comparative effectiveness research.

Dueling Statistics on High Deductible Health Plans

Today’s Managing Health Care Cost Indicator is $21.8 million.  

Or maybe it’s 40%

Click image to enlarge.  

I’ve been reviewing two related but contradictory documents over the past day. 

Aetna has released its eighth annual report on its high deductible health plan (HDHP).   Here’s a link to the press release, and here’s a link to the powerpoint slides.  Aetna says that its high deductible health plan product

o       Lowers costs by 11% (or $21.8 million per 10,000 members)

o       These savings increase year over year

o       Members

o       use more primary care and preventive services but fewer nonroutine services

o       Have fewer inpatient admissions

o       Are more engaged

o       Have fewer “gaps in care”

o       Almost three quarters of members with associated health care savings accounts do not exhaust these accounts each year.

This is an upbeat document – although the underlying data has not been subject to peer review. I've only reviewed the press release and the glossy powerpoint.  It’s likely that the high deductible plan had younger, healthier, lower risk members, and this alone could explain some of these findings. 

Click image to enlarge. 

The Journal of General Internal Medicine e-published an evaluation of foregone care in those with chronic illnesses, surveying Massachusetts families in HDHPs and traditional health plan by phone and mail. Harvard Link   This study showed that families in high deductible health plans had over three times greater likelihood of delaying or foregoing care.   This was true among low income families (<400% of federal poverty level) and higher income families, although there was far more care delayed or foregone for those with lower income and families with parents who had no college degree.  40% of those with HDHPs and income below 400% of FPL reported delayed or foregone care, compared to 15.1% of those with traditional health insurance plans.

The proof is in that HDHPs save money, and the dollar savings don’t seem to be limited to the first year or two (although there are still potential selection bias issues). It’s also clear despite the happy faces and fluorescent green graphics that members of HDHPs are less happy with their health plans, and they self-edit care. Sometimes HDHP members forego care that would have been a waste anyway –but sometimes they forego care that could help them live better quality and more productive lives.

The danger of having no health insurance at all is far greater than the danger of delayed or foregone care in a high deductible health plan.  I’ll have more on that in the next day or two.  Health care reform and the rising cost of health care has driven more and more employers to health plans that have high deductibles, and many of the future health insurance exchange programs are also likely to have high deductibles.  

We have to work harder to lower the underlying cost of health care so that we don’t have to cost-shift as much to patients, who are at serious risk of being underinsured now. That risk will continue to increase in the near future.