Explanation of Healthcare Tax Subsidies in the USA-Medicaid-Insurance Exchanges-Group Insurance Programs-Medicare

 

Health Care is Not Free

In an election year, it is important to discern facts from fiction and this article addresses the subject of free or subsidized health care in the United States. First, there is no free health care, someone is paying for the care. For Medicaid eligible persons or families, the state and federal government do provide health care without an insurance premium to those who qualify. This does not mean there are no copayments for the Medicaid participants, but these are generally modest. Access to health care providers is not guaranteed, because many clinics and clinicians do not treat Medicaid patients or have a limit on the number they will accept. This is because of the low level of reimbursement from the government for providing care.

 Medicaid-Eligibility

Medicaid, also known as Apple Health, Medi-Cal or whatever label each state chooses, is a government run medical insurance program for low-income residents. To be eligible for Medicaid, the individual or family must meet certain criteria, for example, living within the United States for at least five years, having legal residency status, meaning a work permit, student visa, permanent resident status, or citizenship. Citizenship in the USA is based on birthright, taking the oath of citizenship, or marriage. The funding for the Affordable Care Act requires legal residency criteria, to control costs and to avoid adverse selection from potential high-medical-needs immigrants. There are exceptions to this, which are for immigrants who have refugee status for humanitarian reasons (torture), Protected Juvenile Status, Temporary Protected Status and Victims of Trafficking. Here is a complete list of the immigrant standards for qualification for Medicaid or government health care subsidies, like tax credits under the insurance exchange plans for the Affordable Care Act (Obamacare): https://www.healthcare.gov/immigrants/immigration-status/

 Finally, if someone is blind, disabled, pregnant, or caring for a child on public support (foster child) you may be eligible for Medicaid, if you meet the residency status requirements. In other words, people without means who are immigrants do NOT have unlimited access for free or subsidized health care. Wealthy people, including medical tourists with private insurance, who can pay, will be able to have carte blanche access to the US healthcare system.

 State Medicaid Eligibility Varies

Most states have now expanded their Medicaid eligibility to match the 2010 Patient Protection and Affordable Care Act standard of 133% of the federal poverty level (FPL). In 2024, this is $15,060 for a single individual and $31,200 for a family of four. So, the baseline for receiving medical insurance through a state Medicaid program which has chosen the Affordable Care Act standard and receives federal matching funds is: $20,030 for a single individual and $41,496 for a family of four. Some states, where the cost of living is very high, have more generous subsidies, like California, which offers pregnant women with incomes up to 208% of the FPL and children under 18 are covered up to 261% of the FPL.

Federal government handy interactive chart to determine your state’s Medicaid eligibility standards.

https://www.medicaid.gov/state-overviews/state-profiles/index.html

 The federal Children’s Health Insurance Plan or CHIP has been around since 1997 and was reauthorized by both Democrats and Republicans in 2009.This is a positive thing because it is good public health investment to make sure we are creating healthy children, which is after all our future work force. Investing in the health and well-being of our citizens is a public good. This is why we have parks and recreation, air and water quality standards, sanitation systems, and standards for food safety.

Tax Credits Under Affordable Care Act

All the insurance exchange enrollments require persons applying for medical insurance coverage to disclose their incomes, because the Affordable Care Act provides federal tax credits for the purchase of the insurance. The government is advancing an income tax credit, that you would be expected to receive upon filing your annual tax return. If your income varies from this declaration, the government will refund any unused tax credits or require you to pay back some of the advance credits you received. It is the onus of the insurance exchange participant to notify the agency of any material change while enrolled. The tax credits are not free, but reflect earned income federal taxes. If someone has no earned income and qualifies for some insurance subsidy, this is determined through the process.

 Tax Credits Under Employer Group Insurance Plans

The federal government provides significant tax incentives for employers to provide health insurance, by allowing a tax deduction for the entire expense which are paid by the company. Additionally, employees are often given the opportunity to use pre-tax income to pay for their covered dependents or elective benefits, through a Section 125 plan. These tax credits do not have to be repaid, as long as the programs are administered correctly.

 Medicare Eligibility

For persons reaching age 62, their eligible spouses, and certain disabled people, the federal government provides Medicare, which has components which are fully paid by the government, Part A for hospitalizations and Part B, which is for outpatient care and requires an insurance payment monthly. There is also a prescription drug program which requires an insurance premium, unless the enrollee chooses a Medicaid Advantage Plan with an integrated drug program.  And there are Medicare supplements, which cover the many deductibles and co-payments that Medicare requires.

 Obtaining age 62, 65, or 70 does not automatically mean that person is enrolled in Medicare. The individual must apply for Social Security Benefits first, and that process takes two months. During this time, the Social Security Administration will verify residency status, address, and determine the number of quarters the applicant paid the necessary payroll taxes to qualify. Social Security is NOT FREE, the applicant must have earned wages and paid payroll taxes for Social Security and Medicare for no less than ten years. Some, myself included, think this is too liberal, because what other entity, government or private provides a pension after only a decade? Social Security is financed through a trust fund and current payroll taxes from employees and the self-employed whom are still working.

 In addition to the age qualification, Social Security is eligible to persons who have end-stage renal failure (kidney) and are on dialysis and for those who are blind. It is possible for other individuals with disabilities to qualify for benefits, but this is not easy and is not guaranteed.

 Conclusion

The United States does not offer FREE HEALTH CARE, rather it provides various targeted programs for enrollment, based on eligibility. These standards require individual tax contributions at all levels, based on the Internal Revenue Service Code. Only billionaires and a few hedge funders seem to manage tax exemptions. If you earn wages in the U.S.A. you will pay into the Social Security and Medicare programs. Residents in the country may be eligible for Medicaid or Insurance Exchange subsidies based on the duration of their residency and their immigration status. Americans are raised with the ethos that we work and earn that which we acquire and utilize. Though our tax code is arcane, it does provide incentives for programs the nation is trying to encourage and those it discourages. Universal healthcare is a myth, for even in countries with national health systems (France, Germany), there are populations whom are not covered under the safety net, primarily based on residency status.  Where the US goes off the rails is in the affordability of health care, ranked as the most expensive health care in the world. And of course, there are more persons without medical insurance and access to care in the US than in other nations with national healthcare systems. That said, this bellicose nation does not appear ready to move away from its current system in the near future.

 And this is the healthpolicymaven signing off, encouraging you not to sign blanket releases when you agree on a surgical procedure or a hospitalization, do specify that for which you agree and decline. It is best to do this with an Advanced Medical Directive or a POLST agreement. Make sure your emergency contact is aware of this document and be prepared to present to healthcare administrators.

 Roberta Winter is an independent healthcare analyst and journalist who receives no money from any sector of US healthcare. She is the author of Unraveling US Healthcare-A Personal Guide, published by Rowman & Littlefield in 2013. She has been a speaker at international and national healthcare events.

https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

Infrastructure Bill Gives US Government Toehold For Drug Price Negotiations

 

Congress just passed the widely debated infrastructure bill, HR 3684, which funds much needed upgrades for the nation’s transportation and other infrastructure. One of its provisions allowed the US government to negotiate drug prices, but the entire safety net bill was stripped from the infrastructure bill. (117th US Congress, 2021) This gives big pharma a chance to cut the provision entirely from the safety net bill which provides paid family leave, childcare, and other benefits.

 The US consumes more pharmaceuticals, by a huge margin, than any other country. The government’s ability to negotiate favorable pricing for its plans, which make up 50% of all US healthcare spending, has significant potential to lower the cost of drugs across the nation over the long term. President’s Bush and Obama were not able to get any government drug negotiating power in their tenure, but the Biden Administration, thanks to Nancy Pelosi, has managed to get a toehold in one of the most abused sectors of US healthcare price gouging. This article examines those provisions and ramifications for consumers.

 Brief

HR 3684, signed by President Biden November 15, 2021 invests billions to update the roadways, railways, and digital highways of the nations. This is all good news and overdue, given that 25% of the nation’s bridges are in gross disrepair and of those, 4% are in critical condition. (American Road and Transportation Builders Association, 2021)

 *Beneficiaries of HB 3684 include Medicare recipients, who will have their prescription drug expenses capped after a $2,000 copayment maximum. (AMIRI, 2021)

 *Medicare would be able to negotiate drug prices for certain medications effective January 2023, thanks to Senator Ron Wyden of Oregon. Most drugs will have a nine-year patent limit, but biologics, because they are more expensive to produce will have twelve years. (Cochrane, 2021) There is a schedule of 50 drugs for which the government would negotiate pricing for Medicare, Medicaid, and other government programs. (O'Brien, 2021) This would commence in 2025 and result in a substantial lowering of drug costs in the US, because private sector medical insurance plans follow the government’s lead. Assuming this provision remains in tact through implementation, its effects will not be felt until 2026, when the data can be analyzed. The nation may have a new president by then, but at least reducing pharmaceutical costs is a bipartisan effort now.

 *Insulin would be capped at $35 a dose, compared to several hundred dollars

 *Waste reduction provision; drug manufacturers would be required to refund or rebate the government for any unused portion of any single-use drugs, such as injectables. There are exceptions for radiological imaging agents, biologics, and new drugs with less than 18 months approval by the Centers for Medicare and Medicaid. (Beck, 2021)

 *Health and Human Services would be authorized to conduct periodic audits and recoup up to 25% of the value of the product refunds by fines for pharmaceutical companies which are noncompliant. These rebates are to be dispersed to HHS quarterly.

 *Provision which specifies US production quotas of personal medical equipment and supplies in order to reinforce the US supply chain.

Further information on these mandates will become clear when implemented. Bipartisan efforts to reduce the astronomical cost of pharmaceutical products in the US is a welcome activity for us all.

 And this is the healthpolicymaven signing off encouraging you not to sign blanket releases when agreeing to medical procedures, do specify that for which you consent and decline. This is an independent column which accepts no payments from any sector of United States healthcare. Opinions expressed here are her own and may be freely shared with anyone to whom it may interest.

 References

117th US Congress. (2021, November 15). Transportation and Infrastructure Bill. HR 3684. Washington DC, United States of America. Retrieved November 11, 2021, from https://www.congress.gov/bill/117th-congress/house-bill/3684

American Road and Transportation Builders Association. (2021, March 23). US Bridges Need Repair Latest Analysis of Federal Data . Retrieved November 14, 2021, from https://www.artba.org/2021/03/23/over-220000-u-s-bridges-need-repair-latest-analysis-of-federal-data-finds/

AMIRI, B. L. (2021, November 3). Democrats Put Paid Family Leave, Immigration, and Tax Changes Back In Biden Bill. The Los Angeles Times. Retrieved November 14, 2021, from https://www.latimes.com/politics/story/2021-11-03/democrats-paid-family-medical-leave-back-in-bill

Beck, S. (2021, August 4). Healthcare Provisions In the Infrastructure Investment and Jobs Act. Health Industry Watch.com. Retrieved November 15, 2021, from https://www.healthindustrywashingtonwatch.com/2021/08/articles/legislative-developments/health-care-provisions-in-the-infrastructure-investment-and-jobs-act/

Cochrane, J. W. (2021, November 2). The New York Times. Retrieved November 14, 2021, from https://www.nytimes.com/2021/11/02/us/politics/prescription-drug-prices-medicare.html

O'Brien, S. (2021, August 19). Congressional Democrats want to let Medicare negotiate prices with drugmakers. Here’s what that could mean for the cost of coverage. Retrieved November 15, 2021, from CNBC.com: https://www.cnbc.com/2021/08/19/congressional-democrats-want-to-let-medicare-negotiate-with-drugmakers.html

 

 

Medicare-for-all Assessing Value And Cost At The Individual Level

This is the final article in this series comparing U.S. healthcare reforms and focuses on basic value at the consumer household level. Discussion will include how much people are paying for their health care and their health insurance in relation to actual value. Value is determined based on affordability and access to appropriate care for all residents. This article, like the others review healthcare from an individual consumer perspective not an insurance company or medical institution one.

Cost of Health Insurance

According to the 2019 Kaiser Employer Health Survey, the average cost sharing for a single employee is 18% of the cost of their group insurance, so using the $6,896 national cost per employee, this necessitates a $1,241 contribution. (Kaiser Family Foundation.org, 2019) Even though you have no family members you would still have to pay $100 per month just for the medical insurance plan. The cost sharing for employees with family members is MUCH steeper at 30% of family premiums for group medical insurance, which could be as much as $20,000 so their share is $6,000 on average. As a former insurance broker, I can tell you many employers don’t provide any premium payment assistance for family coverage, which means those workers could be on the hook for the full 20 K. This is $1,667 per month, which is the equivalent of a mortgage, except lots of people would not be able to afford a house payment after coughing up money for their medical insurance. In a generous spirit, the US government does allow employees to pay for these eye-popping costs with pre-tax dollars, which mean that wage earners with higher incomes are actually getting more of a subsidy for their medical insurance cost.

In 2018, 11.8 million people were enrolled in the insurance exchanges through the Accountability and Affordable Care Act (ACA-aka Obamacare). (CMS’ final report shows 11.8 million consumers enroll in 2018 Exchange coverage nationwide, 2018)These programs are for people who don’t have access to employer provided medical insurance or whose employer plans do not meet the minimum standards for cost and coverage under the ACA. The average out of pocket cost for an enrolled individual with family members was $1,415 after tax credits subsidies. The ACA was designed to provide affordable medical insurance for low-income and middle-class residents by paying them to obtain insurance, using federal tax credits. Essentially, this is deeply discounted insurance, because insurance companies which participate agree to accept the tax credit as a premium contribution. The main difference here is the cost sharing for family coverage is not as great under the ACA exchanges as under private sector insurance plans. However, there is a wide variety of prices in the insurance exchanges, based on the state, age of the enrollee, family status, and coverage selected. This figure was used to identify the most affordable ACA offering, which was the bronze plan. If a family wants the silver plan, the cost would increase by approximately 20%. Silver plans have lower cost sharing for services than bronze plans for participants.

Out of Pocket Costs Hitting US Consumers

Premiums or upfront contributions for the cost of medical insurance are only one aspect of healthcare costs born at the household level. Upfront expenses include co-payments for treatments, which can be quite steep, costing thousands of dollars for a single surgery.

Finally, the number one costly item for US healthcare consumers are prescription drugs, which many residents must pay completely out of pocket, while others have co-payments for generic drugs and name brand drugs. US consumers are currently spending $10,045 per capita for prescription medications, again an amount almost equal to a mortgage. According to AARP, the average retail cost for prescription medications for seniors was $30,519 in 2017.  And this picture gets bleaker, 500,000 people in the US spend over $50,000 a year on their medications, which is the average annual income of an employee! Adjusted for inflation, drug costs are nine times higher than they were in 1960.

Medicare for All Analysis

Medicare for all is on the lips of half the population today, but it is important to note that Medicare is in fact not a free healthcare program.  The Medicare program requires a substantial payment from the government to stay solvent, which is paid for by payroll taxes, of which 1.45% comes from employer’s payroll taxes and employees pay. This isn’t enough money to pay for all program expenses, so the federal government also allocates other funds as required. Medicare is the second largest expenditure for the US government at 14% of total budget. Personally, I don’t have a problem with the government spending the bulk of its funds on programs benefiting the people, but we do have an obligation to make sure these programs are reasonably sustainable. Only Social Security expenditures exceed Medicare consuming a whopping 38% of the federal budget. Medicare costs are increasing and the taxes to pay for them will also. It is difficult to see how it can remain solvent without a payroll tax increase in the near future.

Secondly, Medicare participants do contribute to the cost of their care, through monthly premiums and co-payments for services. For the fortunate enrollees who can afford good supplemental insurance plans, those co-payments are paid by private insurance companies. However, 19% of Medicare enrollees pay all of their co-payments out of pocket and another 33% of enrollees are enrolled on Medicare Advantage HMO type plans. Low income Medicare recipients are called dual eligible, meaning they are covered by Medicaid and Medicare and these represent 22% of all enrollees. That leaves only 26% of Medicare enrollees who have purchased private supplemental insurance.

This tables shows the healthcare cost factors for US households, both private sector and Medicare, and public and government spending.

Medicare for All Assessment Criteria

US healthcare expenses per person	Private insurance/non-Medicare sector	Cost for Medicare enrollees	Net Impact on non-Medicare household
Insurance premiums	6,896	2,018
Co-payments for services	2,200	5,806
Household totals	9,096	7,824	-1,272
Government cost	6,748	10,986	4,238
Estimated additional gov cost for non-Medicare enrollees			2,966 per capita

Notes

All figures are annual calculations, as true to per capita as possible.

The US government spend for private sector healthcare includes tax subsidies and comes from the GOA.

Medicare premiums are for Parts B and D as Part A is offered at no charge. Medicare supplements are not included because the price range was too great and only about half of Medicare enrollees have them. Instead the cost sharing figure for all Medicare enrollees was used.

The co-payment number is based on the private sector mean.

In conclusion it is important that we all have realistic data and expectations regarding the adoption of any national healthcare program. Based on my calculations, a 3% payroll tax, which would be born by employees and their employers would be enough to pay for the program. The US could for example adopt a national healthcare model like Australia where only hospital coverage and basic care is provided. Access to specialty care in Australia is subject to supplemental payments. However, there are many different ways to pay for national healthcare programs and examples include a VAT tax like Canada uses or a combination of income taxes and fees, like France uses. France has a tax on pharmaceutical companies to help pay for its national healthcare program, which could work in the US.

It is also vital to consider unintended consequences of pouring a lot more government money into a health system that is rife with abuses. A national healthcare program would have to curb abuses such as overcharging, eliminating incentives for unnecessary procedures, and focusing on primary health, not just geared toward making money. Reimbursements for services must be adequate, but it is to be expected that certain sectors, like insurance, pharmaceutical, medical suppliers, and some providers would be earning less.  Of concern is the fact Congress seems unable to control its spending, so this could really blow things up fiscally.  I suggest we appoint citizen representatives with knowledge of the healthcare industry for 4-year terms, with blinded voting, to avoid excessive pressures from the lobbying terrorists. Oh, and let’s overturn Citizens United and get back to the original voice of democracy in the USA.

And this is the healthpolicymaven signing off encouraging you NOT to sign blank medical release forms when you agree to procedures, to specify that for which you consent and that for which you decline.

This article was written by independent healthcare analyst and journalist, Roberta E. Winter and is not subject to any corporate approval. She is the author of a guidebook to the US healthcare system which focused on assessing quality. (Winter, 2013)

Works Cited

CMS’ final report shows 11.8 million consumers enroll in 2018 Exchange coverage nationwide. (2018, April 3). Retrieved October 27, 2019, from Centers for Medicare and Medicaid: https://www.cms.gov/newsroom/press-releases/cms-final-report-shows-118-million-consumers-enroll-2018-exchange-coverage-nationwide

Kaiser Family Foundation.org. (2019, September 25). Employer Health Benefits Survey. Retrieved October 27, 2019, from Kaiser Family Foundation State Health Facts: https://www.kff.org/report-section/ehbs-2019-summary-of-findings/

Winter, R. E. (2013, July). Unraveling US Healthcare-A Personal Guide. In R. E. Winter, Unraveling US Healthcare-A Personal Guide (p. 216). Rowman & Littlefield. Retrieved October 27, 2019, from https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

Expected Program Cuts to Affordable Care Act and Federal Budget Impact

Orthopedic surgeon, Dr. Tom Price is now in charge of Health & Human Services and here is an analysis of the laws he may try to dismantle, programs which could lose government support, and the ensuing federal budget implications. This article is based on actual facts, not “alternate facts” which are popular with the Trump Administration.

Budget Implications

The Patient Protection and Affordable Care Act has been a revenue generator, while also providing medical insurance for 20 million low income people and has helped to reduce the federal deficit. (ObamaCareFacts.com, 2017) According to the Office of Management and Budget (OMB) and the Joint Committee on Taxation (JCT), repeal of the Affordable Care Act would cause the federal deficit to grow by $137,000,000,000 by 2025. (Congressional Budget Office, 2015) That’s right, a repeal of the ACA would increase the deficit by 137 billion dollars.  Here are some of the provisions which have generated money for the government, which are likely to be repealed by the Republican Congress under the Trump Administration.

Pay or Play-Taxes generated from income tax filers who did not have an exemption to the requirement for obtaining medical insurance and are required to pay a tax penalty.

Luxury Plan Tax-This tax is applied to health insurance plans which cost more than twice the national average for an enrollee.

Insurance Company Tax-Insurance companies pay a premium tax which goes into the fund to pay for medical insurance for low-income residents and the provisions of the Affordable Care Act.

Medical Device Tax-Orthopedic and cardiac device manufacturers have been required to pay a 2.9% tax on the cost of the device, which funds provisions under the ACA including healthcare for low-income people.

Estate and Trust Tax-This tax applied to undistributed net income, which affects larger trusts, and is 3.8% of that income.  Again, the money goes toward health insurance subsidies for low income persons.

Employer Tax-Failure to offer minimum essential benefits in a health insurance plan will generate a tax, up to $3,000 per effected employee.

Medicare Payroll Tax Increase-The payroll tax used to fund Medicare, was increased by .90% (less than 1% not 90%, if Sec. of Education DeVos is quoting this). This tax is paid equally by the employee and employer and is used to pay for Medicare programs. Don’t kid yourself, Congress will never reduce your payroll tax as this is necessary to shore up Medicare.

Medicare Changes from the Affordable Care Act

Most of the Centers for Medicare and Medicaid(CMS) changes under the ACA involve improving health quality (clinical quality based on patient results) and transparency (in terms of payment and performance). Will these programs also be terminated under HHS Cabinet Secretary Price?

1.       Subsidies for Medicare Advantage (HMO) payments based on counties with a higher density of low income residents-This benefits rural areas as well as the urban poor.

2.       Health care quality rankings impact how much the facilities receive, as well as the Medicare Advantage enrollment population. This is a pay-for-performance initiative.

3.       Insurance companies selling Medicare Advantage Plans must use 85% of annual collected premiums to pay for enrollee claims and plan services, which caps opportunistic accounting charges which contribute to inflated premiums. Insurance companies should be able to administer their plans for 15% as Medicare does it for 6%.

4.       Designating medical homes for patients, is a patient management tool, and has been shown effective in care management, especially for diabetes and other chronic diseases.

5.       Mandatory 90-day review period before the government will pay for durable medical equipment, which is frequently marketed to senior citizens without regard to efficacy or best fit analysis.

6.       Fraud Detection-A special commission in Health and Human Services was established to compare tax records to aid in identification of criminals who are stealing money from our government through fraudulent claims, etc.

Medicaid Changes from the Affordable Care Act

Under the Trump Administration many programs impacting low-income Americans are likely to be modified, reduced or cut and here is the list:

1.       Expansion of Medicaid to include all low-income people, not just children. This was modified through a court order and now applies to 33 states which opted to expand their Medicaid coverage, thus reducing stress on state health systems. Will these states lose the federal matching money they are currently receiving for providing this coverage for low income residents with incomes within 138% of the federal poverty range?

2.       State employees became eligible to enroll their children on the Children’s Health Plan (CHIP) because of the Affordable Care Act, will this be repealed?

3.       Free standing birth centers, such as midwifery and other women’s health facilities, such as Planned Parenthood, became eligible to receive Medicaid funding for additional services under the ACA. Congress has already indicated a desire to defund Planned Parenthood, but what about the other facilities under this provision? This means program cuts for preventive care for women. I guess Trump expects women to build a wall around the uterus, just like Mexico.

4.       Creation of Medical Home designations for patients with at least two chronic conditions, which provides funding for better care management. Participating medical facilities received additional compensation to assume enhanced care coordination through the medical home provisions. Will community health organizations lose this funding?

5.       Hospital Safety-net Demonstration Project-This is an initiative involving several hospitals to identify vulnerabilities in hospital systems across the nation, which are primarily urban trauma centers, to prevent hospital closures. Tom Price has said he does not favor the Centers for Medicare and Medicaid Demonstration Projects. (Pear, 2016)

6.       Greater mental health treatment funding for hospitals with a significant population of indigent patients (urban trauma centers) was part of the ACA. Will there be funding cuts for vulnerable populations and will the mental health parity insurance mandate be repealed?

7.       Medicaid Waiver or Section 1115 Programs have been around a long time and they are primarily a vehicle to increase cost sharing for recipients and reduce expenses for the states which fund them. The standardization of this process will probably not go away as states continue to seek relief from spiraling Medicaid costs.

8.       Improvement of funding for state Medicaid matching for noninstitutionalized care programs-will this be torpedoed?

Improving Health Quality and Paying for Performance

Accountable Care Organizations

The Accountable Care Organization Act became effective in 2012 and is administered by the Centers for Medicare and Medicaid. This program saved CMS over 700 million in the first five years, through better monitoring of preventable health events. (David Blumenthal, 2015) At present, 15% of all Medicare enrollees are served through Accountable Care Organizations. The ACO program identifies high cost health care events, such as hospital re-admissions and links improved clinical outcomes to performance, by paying health systems more money for achieving these targets. Health systems voluntarily participate in the program. There are 480 participating health care organizations within the U.S. and nine million people benefit from accountable care provisions. (Centers for Medicare Services, 2017)The Centers for Medicare and Medicaid have indicated this program saved the government 466 million in 2015. (Centers for Medicare and Medicaid, n.d.)

Financial and Clinical Efficacy

The Accountable Care Act created the Federal Coordinated Health Care Office whose purpose is to study health programs, gauge results, and seek ways to optimize the government expenditures with patient care. Will this agency be terminated because Dr. Price, who is a member of the Tea Party coalition, thinks doctors and hospitals should have less oversight? Hospitals are now huge corporations, often controlling entire regions, dictating prices, and are not typically subject to anti-trust laws. Shouldn’t some independent government agency be reviewing their programs, the costs, and the impacts on consumers?

Clinical Effectiveness and Research

The Institute for Clinical Effectiveness, known as the Patient Centered Outcomes Research Institute (PCORI), was created to identify and promote best healthcare practices for patient safety and clinical health, based on the following criteria:

1.       Assessment of preventative, diagnostic, and health care treatment options

2.       Improving health systems

3.       Improving health care decision making and patient communications

4.       Addressing health disparities (why patients in different demographic groups have different health outcomes/services)

5.       Accelerating patient centered research to identify ways to economically and clinically improve health

Funding for the PCORI agency was provided through the American Recovery and Rehabilitation Act in 2009, which taxes insurance companies $1 to $2 per enrollee. PCORI is taxed with identifying ways to cut waste, reduce unnecessary procedures, and improve disease surveillance to improve health outcomes.  The oversight organization has put a spotlight on medical suppliers, pharmaceutical companies, insurers, and other agents in the national healthcare landscape. For more information on this, read Chapter 3, pages 27-29 in my 2013 book, Unraveling U.S. Healthcare-A Personal Guide. (Winter, 2013) https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

 Of course, medical lobbyists have been deluging Congress with appeals to remove the “onerous taxes” which impact their businesses adversely (hardly at all) resulting in higher costs for American consumers. These companies simply want more money to reward their shareholders and enrich their stock option plans. No one in Congress is exempt from the influence of healthcare industry lobbyists, because even stalwart Democrats, Elizabeth Warren (MA) and Al Franken (MN) have lobbied to get the 3% medical device tax removed, because Boston Scientific, St. Jude Medical, and Medtronic are big employers located in their respective states. Removal of this tax would not result in lower costs for any patient or health system which buys any of their devices.  Increasing pricing transparency for cardiac and orthopedic devices would potentially result in savings for health systems and patients, but you don’t hear any lobbying for that. If anything, this scenario illustrates more acutely why we need independent government agency oversight for our healthcare system.

Returning to the 1950’s model for healthcare will not lower costs across the health system and it is important for consumers to understand that your insurance premiums are but one aspect of the healthcare system. We all need to be concerned about that for which we pay for our health care, the conflicts of interest inherent in the system, and that which is negotiable. Isn’t this how we would handle any other significant purchase? Keep reading this column for up-to-date information on healthcare concerns, actions, and facts. And this is the healthpolicymaven signing off wishing you fully informed consent for your next vote, purchase, or procedure. Read the fine print and do use “actual facts” from vetted sources for decision-making.

Roberta E. Winter, MHA, MPA is a freelance journalist and consultant, with analytical experience in the insurance industry, hospital systems, regulatory analysis, healthcare research, and patient advocacy.

References

Centers for Medicare and Medicaid. (n.d.). 2016 Fact Sheets Medicare Shared Savings Program. Retrieved February 15, 2017, from Centers for Medicare and Medicaid.gov: https://www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2016-fact-sheets-items/2016-08-25.html

Centers for Medicare Services. (2017, February 15). CMS Medicare Shared Savings Programs. Retrieved from CMS.gov: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/All-Starts-MSSP-ACO.pdf

Congressional Budget Office. (2015). Budgetary and Economic Effects of Repealing the Affordable Care Act. United States Congress. Washington, D.C.: Congressional Budget Office. Retrieved February 15, 2017, from https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50252-Effects_of_ACA_Repeal.pdf

David Blumenthal, M. M. (2015, June 18). The Afforable Care Act at 5 Years. (M. Mary Beth Hamel, Ed.) The New England Journal of Medicine, 372, pp. 2451-2458. doi:10.1056/NEJMhpr1503614

ObamaCareFacts.com. (2017, February 15). ObamaCareFacts.com. Retrieved February 15, 2017, from ObamaCareFacts.com: http://obamacarefacts.com/sign-ups/obamacare-enrollment-numbers/

Pear, R. (2016, November 28). Tom Price, Obama Care Critic is Trump's Choice for Health Secretary. Retrieved from The New York Times: https://www.nytimes.com/2016/11/28/us/politics/tom-price-secretary-health-and-human-services.html

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