Tuesday, October 22, 2013

HCR -- Reading Links -- PPACA and Exchanges

While the media on all sides continue yammering away about glitches in the ACA Exchange, there is plenty of background reading to do. What we are witnessing now is just the second act in a drama with at least three, four or more acts. It's too soon to predict how long it will last, but here is my take on the whole picture.  Reading links follow.  Act One starts right after World War Two when the Blues were created. (Blue Cross/ Blue Shield)

  • Act One -- The Trainwreck
    Scene One opens with the creation of employer-sponsored group insurance to help employees share the costs of hospital charges. Physicians hated the idea, fearing that if hospitals became too important to health care they would be in competition with private practices, and in the aftermath of the war they feared the idea of cost controls. The political compromise was that all hospitals had to be made non-profit. Blue Cross was enacted.
    Scene Two finds the doctors discovering how group insurance enabled hospitals (a resource without which they could not work) to pay their bills more smoothly, so they opened the way for another kind of group insurance for "medical services" not provided by hospitals. Blue Shield was created.
    Scene Three takes place in the Sixties when someone discovered that for-profit hospitals could be for health care what McDonald's was to hamburgers. By then it didn't take long to get past those old non-profit notions.
    Scene Four sees medical costs getting out of hand. Too many people are demanding too much attention from too many specialties and too many drugs are hitting the market with too many marketing schemes and the insurance industry is growing like a Ponzi scheme. But industry professionals saw the handwriting on the wall. HMO's and PPO's were created.
    Scene Five -- Everybody hates HMOs so much that the tax laws had to be adjusted so that all medical premiums (which once were part of every taxpayer's itemized deductions with virtually no limit) were capped for individuals but made "pre-tax" on employer "flex-plans" while every dime of medical costs became a business expense for the employer, and "self-insured" became the order of the day.
    Everybody with insurance was happy. As long as insured people paid deductibles and copays they were like all-you-can-eat patrons at a buffet. The actual costs were no longer of any importance to the people seeking health care. All they cared about was getting plenty of bang for their buck. Companies didn't complain, since health insurance costs were just another journal entry on the balance sheets, and after COBRA came along, anyone who thought about leaving a job was terrified at the prospect of losing all their income at the same moment that their health care premiums doubled (or more). And as "benefits" don't begin until after a probationary period company health insurance became the golden handcuffs.
    Job lock was now firmly established. Medical costs were growing faster than the country's GDP could sustain.  Small companies bunched together for group insurance, but many individuals and companies had to resort to high-deductible plans for catastrophic coverage and all other medical expenses had to be paid until then. MSAs and HSAs were tossed out like MREs to a starving regiment. And to make matters worse, millions of people not fortunate enough to be with one of the companies with health insurance were not insured at all. There was more. Much more. But the total picture was one of the train wreck which was Act One. 
  • Act Two -- The Salvage Operation
    Scene One 
    takes place following the presidential election of 2008. Previous administrations had been trying with no success to slow down the speeding train. Both political parties had given it their best shot and failed, mainly because the insurance, health care, and drug companies were making so much money they didn't see any need to put on the brakes. A handful of technocrats and policy wonks knew better, and a growing number of Congressional staff and research specialists were getting alarmed. A critical mass of many people from many quarters finally concludes "We are all in the same boat and the boat is gonna sink if we don't do something to stop the costs."
    Scene Two is two years long. A historic political, professional, multi-faceted Congressional tug-o-war takes place which ends with a reconciliation between the Senate and the House of Representatives called the Patient Protection and Affordable Care Act. There was a lot of yelling and screaming because the final legislation was the result of "reconciliation" but most people forgot that is how most stuck laws get passed, including the Consolidated Omnibus Budget and Reconciliation Act of 1985. (COBRA)
    Scene Three
    is a political whiplash from opponents of the new law. Many people hated it, including health care professionals. Few took time to examine the details and most who did were looking for weaknesses rather than strengths, in much the same way that sports coaches study opponents to locate vulnerable spots. The CLASS Act portion was abandoned almost overnight. So the challenge of what to do about the costs of long-term care will have to wait for some yet to be determined time in the future. 
  • Act Three -- The Launch of PPACA
    The launch of PPACA is spread out over eight years.
    Scene One was an official celebration and presidential signing ceremony followed by a few of the least costly features --  allowing students to remain on their parents' policy til the age of 26, certain free well-care visits and screening, free contraceptives for women, and others. Almost overnight screams of religious persecution and other objections captured the headlines as powerful people in high places, political and religious alike, mounted the bandwagon.
    Scene Two involved a raft of legal challenges, including historic Supreme Court decisions which validated the overall legislation while allowing states to opt out of the Medicaid portion, thus allowing several million uninsured poor Americans to continue living without affordable health insurance.
    Scene Three was a protracted effort on the part of a minority of about thirty die-hard opponents in the House of Representatives to "defund or repeal Obamacare."  They successfully passed two or three dozen bills along those lines in the House of Representatives, knowing that none of them had a chance of passing the Senate, and all of which would have been vetoed by the president had any slipped through. Scene Three ended with a partial government shutdown coupled with a threat to cap the nation's debt limit which was averted in the final hours.
    Scene Four, now in progress, was the opening of the Exchanges on October 1, three weeks ago. Out of fifty states, several are running smoothly, a few are still working out the kinks and the federally run exchanges, operating in those states which opted not to construct their own, has been thus far a technically flawed mess. Naturally the most complaints are coming from those places that might have done the job themselves, but that would have spoiled the game for opponents who never miss a chance to throw rotten eggs and other garbage at the stage.
    Massachusetts, a model for the whole country, had already insured over ninety-five percent of it's citizens, thanks to what they call Romney-Care after the Republican candidate for the 2012 election, who was governor at the time that state put universal health care into place. 
  • Act Four -- Trials and Errors
    It's too soon to know what the remaining acts will look like or how many their might be. The Launch will not be officially completed until 2018 when a tax on "Cadillac" policies is scheduled to be officially in place. Between now and then there will be numerous attacks, adjustments, delays and modifications as with any new program. As we have learned by declaring war the future is not at all what we imagine it should be. In addition to actual wars in Iraq and Afghanistan, both of which are still in progress (Yes, Virginia, when tens of thousands are killed after we have officially left, that war is still in progress.) we speak carelessly of wars on cancer and drugs, not to mention the War on Terror. 
  • Act Five -- Adjusting to a New ParadigmIt's really too far in advance to imagine what will follow 2018. If the bare bones of PPACA survive what is now the political equivalent of confinement in a concentration camp, it should emerge with determination to replicate or surpass the cost and effectiveness outcomes of the rest of the developed world. At this point we lag far behind in both categories. But there are places in the system that has been in place for years that have been exemplary models which hopefully can be replicated across the country. A handful of selected clinics and geographical areas have been producing good medical outcomes than the rest of the country, and some are doing so at a lower cost per patient. The experimental model being shaped by PPACA is the ACO or Accountable Care Organization. What that means it not clear at this point, but the outlines are beginning to emerge. 
  • Act Six -- Private & Government Health Care with Private & Single Payer Payment Models We are well on the way to all of these goals.
    ** Most of American health care is furnished by private sector providers. But we also have a strong and experienced foundation of government health care in the VA, community clinics and the armed forces health care systems. All of these government programs deliver health care for thousands of people, including dependents, at government owned and operated facilities, staffed by government paid health care professionals drawn from the same schools and programs used by the private sector.
    **  Payment models include mostly private sector insurance plans, now operating in a more equitable and consumer-friendly format, thanks to standards now defined by the law. But we also have single-payer models in Medicare (federally) and Medicaid (states) which handle medical payments (not medical care) through government-run systems not encumbered by expenses faced by the private sector (advertising and marketing, sales commissions, facilities depreciation, loan services, etc.).
    The single payer model is less expensive but competition in the private sector appears to yield more flexibility and innovation.

Accountable Care Organizations (ACO)
Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. 
The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. 
When an ACO succeeds both in both delivering high-quality care and spending health care dollars more wisely, it willshare in the savings it achieves for the Medicare program.
Is Obamacare a ‘bonanza’ for carriers?
Critics continue to claim Obama made a 'sweet deal' with carriers, but Wall Street says for-profit insurers won't 'make out like bandits'
When Congress passed the Affordable Care Act (ACA) in 2010, critics charged that the Obama administration had “made a deal” with for-profit insurers. In return for industry support, reformers invited the insurers’ lobbyists to the table where they hammered out the details of the bill. There, they agreed to a mandate requiring that virtually all Americans purchase coverage (or pay a penalty), thus guaranteeing that carriers would gain billions in new revenues. 
“It pays to be one of the few sellers of a product the government is going to force everyone to buy and provides subsidies to help them do it,” one critic sniped.
Thinking of Joining a Private Health Insurance Exchange?  Look Before You Leap.
Employers that have not yet done so will soon have to start making decisions about whether to take advantage of the health insurance Exchanges that are being developed under the Affordable Care Act. Although the public Exchanges that are being created by the government have received most of the attention so far, private Exchanges have also been set up as alternatives to both public Exchanges and current forms of employer-sponsored health coverage. Many private Exchanges are aggressively marketing their services as they compete for business. Before employers sign on, however, they need to do their homework and learn about the various options. 
This article focuses on what employers must know in order to make informed decisions about private Exchanges, how they differ from public Exchanges and how to determine if a private Exchange is the right fit for their employees.
Big insurers avoid many state health exchanges
Some insurers pulled out of the exchanges required by the Affordable Care Act as the Oct. 1 launch approached, leaving an uneven patchwork of providers.
So few insurers offer plans on some of the new government health insurance exchanges that consumers in those states may pay too much or face large rate increases later, insurance experts say. 
An average of eight insurers compete for business in 36 states that had exchanges run or supported by the federal government last month, the Department of Health and Human Services says. (Idaho has since started its own exchange.) But just because an insurer sells in a state, it doesn't mean it sells in every area of a state so many residents have far fewer options.
Several private insurance exchanges to sell health insurance online in NC
North Carolina will soon have a pair of private insurance exchanges on which residents will be able shop online for individual health insurance plans rather than going through an insurance agent or customer service rep.
The N.C. Chamber, the state’s business lobby, and Digital Benefit Advisors, a national consulting company, both plan to launch online insurance marketplaces next month. The websites are primarily designed as an online insurance shopping mall for employees, but they will be accessible to the public as well.
Frequently Asked Questions About Private Exchanges 

Private health insurance exchanges or “private exchanges” have attracted increased attention, especially from employers who are considering new health care strategies based on a defined contribution approach. Specifically, this new strategy leverages the private market-place through private exchanges as opposed to the ACA Exchanges, which are currently not open to large employers. It is also generally combined with an employer using a defined contribution approach to fund the purchase of a health plan.

The Association [of Chief Human Resource Officers] has received several questions about the private exchange – defined contribution approach in connection with our discussion of the approach at the Washington Policy Conference and the October conference calls. Below are some answers to frequently asked questions. Please email any additional questions to Mike Peterson at mpeterson@hrpolicy.org.
These are all long reads and this just scratches the surface of what informed consumers need to know. I'm not in need of any of this information since my wife and I are both Medicare beneficiaries and nothing about the new law affects us directly. I have the luxury of reading and learning in my retirement years and I have been following the growth and development of the Affordable Care Act even before it started or had a name.

Comments and questions are welcome. I'm not interested in arguing with anyone wanting to complain but I am happy to explore questions that need to be answered. Many may still not have answers but I have time to search, and I know a few resourceful people who also know where to look.

Addendum, October, 2015
I have used the following scenario often as copy/paste comment to discussions. 
The footprint of most health care systems in America is often as big as an industrial park. There are so many clinics, labs, private practices, specialty centers, agencies, imaging centers, retail outlets selling durable equipment and disposables, pharmacies, the list is endless… And that doesn’t take in to account the ancillary non-medical businesses from window-cleaning, landscaping and waste removal to uniform sales, food service outlets and parking garages. It takes your breath away to think of it. And every dollar supporting this is in one way or another the cost of health care in America. Every dime feeding this monster begins with a charge for someone’s medical bill.
Healthcare systems should not be much bigger than a good-sized hospital. And they should be scattered far and wide, like grocery stores, in proximity to the places where health care is needed — NOT in the most affluent parts of the metroplexes where they are now concentrated. A more robust system of community health centers will be part of that picture. And that, too, is part of the vision of ACA. 
Complaining about spending is a smoke screen to distract from embedded toxic systems already in place. Ike’s military-industrial complex has not only grown, but has been amended by similar toxic tax-money-to-privatization schemes involving prisons, education, medical care and prescription drugs. This kind of argument is really tiresome.
This was part of a good discussion in the comments thread to a past at The Health Care Blog in January, 2013.  Could Wasteful Healthcare Spending Be Good for the Economy?
by John Goodman, a respected conservative analyst, was aimed at curbing government spending (don't they all?) but the conversation got out of hand in the comments. 


  1. Hootsbuddy-

    This is an excellent brief history of health care reform,

    Spot-on and something everyone under 35-40 needs to read,

    I am going to tweet it.

    Thank you --Maggie Mahar

  2. Thanks, Maggie. It means a lot to have you say that. I wish it were shorter but like the legislation the topic is just too complicated to make into a Readers Digest version. I know how Mozart felt when the Kaiser said his music had "too many notes." Traffic (page views) here took a noticeable dip when this appeared, but that's why documentaries don't sell as many tickets as fictional dramas.