Tag Archive: single payer

Debate over future of ACA shifts to adequacy and affordability of coverage

Henry J. Aaron of the Brookings Institution has boiled down the future policy debate around the Patient Protection and Affordable Care Act. Now that the law is firmly in place – at least for the near term – and is meeting a primary policy goal of reducing the number of medically uninsured Americans, the next debate will be over the adequacy and affordability of coverage. Specifically, whether it’s too much, too little or just about right.

Conservatives, Aaron writes, prefer increasing the financial exposure of patients when they buy insurance and when they use care. By comparison, those of a more liberal bent prefer no insurance whatsoever to protect against financial exposure to medical bills but rather Canadian-style “single payer” where a government monopsony pays the nation’s collective health care bill.

Likely to fuel the debate are reports like this recent Kaiser Health News item. It reported that even with advance tax credit premium subsidies for coverage sold on state health benefit exchanges, premiums alone for some moderate income households approach nearly a tenth of their gross incomes and can really add up when out of pocket costs are included:

For instance, families of three earning $73,000 have to pay nearly $7,000 on premiums despite also receiving subsidies They still face deductibles, which this year averaged around $2,500 for the most common types of insurance plans, known as silver tiers. If a family required extensive medical care and reached the maximum they would be held responsible for—$13,200 this year—their total health care-related bills, including premiums, would exceed $20,000, or 28 percent of their gross incomes. “Even some of those who are eligible for financial assistance are still finding the coverage not to be affordable for them,” said Linda Blumberg, a senior fellow at the Urban Institute, Washington think tank.

All individual and small group plans that originated after the enactment of the ACA now basically operate as major medical plans of the pre-HMO days, minus the lifetime limits. They do so by virtue of calendar year maximum out of pocket limits: $6,600 for self-only coverage $13,200 for family coverage for 2015 plans (rising to $6,850 for self-only coverage $13,700 for family coverage for 2016). The annual premium is partly to cover catastrophic risk above these amounts. The amount of the premium paid by individuals and families depends on how much risk short of the calendar year OOP limits they want to assume. If they want less exposure to co-insurance, deductibles and co-pays, the premium is higher. If they’re willing to assume more, the premium is lower and lowest for “bronze” rated plans that cover 60 percent of expected annual medical utilization as well as pure catastrophic plans available to individuals under age 30 or households that would have to spend more than eight percent of their incomes to buy the lowest cost bronze plan offered in their area.

Herein is a primary element of the near term debate over the ACA: whether it provides affordable coverage regardless of whether households assume a high deductible and pay more out of pocket for non-catastrophic care or pay a higher premium in order to pay less out of pocket for these services. In a still fraught economy that has placed particular financial stress on moderate income households falling somewhat below and above the 400 percent of federal poverty cut off for advance tax credit subsidies for coverage sold on state health benefit exchanges – and those that have not or cannot easily afford to set aside money in health savings accounts to defray out of pocket costs — these costs and tradeoffs come into sharp focus.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Uwe Reinhardt on future of U.S. healthcare: No single payer, end of Medicaid

About halfway into this interview with Managed Care, Princeton University health care economist Uwe Reinhardt prognosticates where the U.S. health system is headed in the post-Patient Protection and Affordable Care Act era. And it’s not Canadian-style single payer where a government monopsony pays providers.

However, Medicaid as a public payer could go away in a three-tiered system foreseen by Reinhardt and replaced with publicly financed providers: public clinics and hospitals. Potentially accelerating Reinhardt’s prediction are significant challenges states are experiencing ensuring those eligible for Medicaid get timely, continuous coverage and have access to a sufficient pool of providers. These challenges have been heightened by expanded ACA Medicaid eligibility in some states and difficulties complying with the ACA mandate that state health benefit exchanges employ a single, electronic application process for both commercial exchange plans and state Medicaid programs.

For most people in private insurance plans, Reinhardt predicts the growth of reference pricing where payers set a standard reimbursement for common procedures or medications. Providers would not be reimbursed above reference price level but could opt to charge more and give patients the option of paying the difference out of pocket. Reinhardt sees higher relative prices charged for procedures and medications compared to other nations as the primary reason why U.S. health care costs are often double or more that of other countries for the same procedure or medication.

The third and top tier of the future U.S. health system is concierge or “boutique” medicine where those who can afford it have their own personal physician on retainer.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

New England is nation’s health care reform laboratory

New England is proving to be the nation’s health care finance reform laboratory.  In 2006, Massachusetts set up a state-run health insurance exchange and required all residents to have public or private coverage for medical expenses.  Those two essential elements of the Massachusetts legislation became the template for the federal Patient Protection and Affordable Care Act (PPACA) signed into law last year.  Barring intervention by the U.S. Supreme Court, those basic components of the Massachusetts plan will become the law of the land in 2014.

The latest New England health care finance experiment was launched this week with the signing of legislation that will put the state on a path to becoming the sole payer of all medical bills, known as “single payer.” The legislation creates Vermont’s state run insurance exchange, Green Mountain Care that opens for business on Jan. 1, 2014.  Under the legislation, three years later the state — and not private insurers and health plans — would cover health care costs of all state residents.

The legislation calls for Vermont to obtain a waiver from federal officials under a PPACA provision allowing states to offer “innovative” health plans starting Jan. 1, 2017 provided the plans provide coverage that is at least as comprehensive as required for plans offered through health benefit exchanges and provide coverage to a comparable number of state residents.

In California, legislation to create a single payer system called the California Healthcare System is stalled for the rest of this year, having failed to meet a deadline this week to pass out of a legislative committee charged with estimating the bill’s cost.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California single payer rides again — but faces uncertainty

California is once again mulling whether to effectively deprivatize its health insurance market and put in place a Canadian-style publicly funded insurance program.  SB 810 would create the California Healthcare Agency that like Canada’s Medicare program would pay all medical bills out of tax levies.  The idea is to create a market monopsony that would shift bargaining power from providers of medical coverage to purchasers — in this case making the state the 800-pound gorilla purchaser.

The legislation is a reintroduction of a bill of the same number and author that died in final days of the previous legislative session last year.  Even had the bill had passed out of the Legislature, it faced near certain death at the hands of then-Governor Arnold Schwarzenegger, a Republican who vetoed previous single payer bills that reached his desk.  Schwarzenegger instead preferred reform that aggregates purchasing power — particularly among individuals and small employers that currently have little to none — through purchasing exchanges.  That approach was pioneered in Massachusetts and ultimately adopted as the national standard in the Patient Protection and Affordable Care Act (PPACA).  The PPACA establishes the American Health Benefit Exchanges in the states; the exchanges must be ready to begin operations by January 1, 2014.

SB 810 would require California’s health and human services secretary to seek a waiver from the exchange requirement as well as the PPACA’s standards for the inclusion of “qualified health plans” in the exchanges under a PPACA provision allowing for waivers for innovative state health plans that offer coverage beginning January 1, 2017.  So even if SB 810 becomes law, California would have three years of experience with the PPACA’s benefit exchange demand aggregation approach.  While the exchanges in theory should exert enhanced market forces to hold health insurance and managed care plan premiums in check, it remains unclear as to whether they will meaningfully accomplish that goal.  As payers continue to respond to rapidly rising medical treatment costs for their insureds and members, the state exchanges could end up being nothing more than large pass through mechanisms for those higher costs.  That situation would bolster single payer advocates, who apparently hope to have their preferred alternative primed and ready to go in 2017.  Or possibly at the same time the benefit exchanges begin operations.  President Obama said on Monday, Feb. 28 he supports legislation that would amend the PPACA to allow states to start their own programs sooner then 2017 provided their plans provide the same extent and quality of coverage as under the PPACA and don’t add to the federal deficit.

Will SB 810 unlike its predecessors actually be signed into law?  During Schwarzenegger’s administration, the chances were slim to none.  Under recently installed veteran democratic Gov. Jerry Brown, it’s more likely but nevertheless still unclear.  Democrats have a solid majority in the state Legislature and with the exception of 2010 have been willing to give their blessings to single payer.  Whether Brown would be inclined to sign SB 810 into law will probably be largely influenced by the extent of voter outrage at having to pay more for less coverage as insurers raise premiums and shift more risk to their customers.  With California’s economy still in bad shape, it won’t take much to spark that anger.  Brown might also be convinced to sign the measure if it were presented to him as a backup plan in case the benefit exchange doesn’t hold down premium increases.

However, even if Brown were to support SB 810 in concept, there’s a political complication.  In order to keep his campaign pledge to allow voters to ratify tax levies, an appropriation measure to fund it (drafted as a companion measure to previous single payer proposals) would have to go before the electorate.  Minority Republicans in the Legislature wouldn’t likely provide the necessary supermajority vote to place a tax measure on the ballot.  The same issue currently threatens to stymie Brown’s budget proposal calling for extending temporary tax increases to balance the state’s deficit-plagued budget.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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