As Seniors Get Sicker, They're More Likely To Drop Medicare Advantage Plans
When Sol Shipotow enrolled in a new Medicare Advantage health plan earlier this year, he expected to keep the doctor who treats his serious eye condition.
"That turned out not to be so," said Shipotow, 83, who lives in Bensalem, Pa.
Shipotow said he had to scramble to get back onto a health plan that he could afford and that his longtime eye specialist would accept. "You have to really understand your policy," he said. "I thought it was the same coverage."
Boosters say that privately-run Medicare Advantage plans, which enroll about one-third of all people eligible for Medicare, offer good value. They strive to keep patients healthy by coordinating their medical care through cost-conscious networks of doctors and hospitals.
But some critics argue the plans can prove risky for seniors in poor or declining health, or those like Shipotow who need to see specialists, because they often face hurdles getting access.
A recent report by the Government Accountability Office, the auditing arm of Congress, adds new weight to criticisms that some health plans may leave sicker patients worse off.
The GAO report, released this spring, reviewed 126 Medicare Advantage plans and found that 35 of them had disproportionately high numbers of sicker people dropping out. Patients cited difficulty with access to "preferred doctors and hospitals" or other medical care as the leading reasons for leaving.
"People who are sicker are much more likely to leave [Medicare Advantage plans] than people who are healthier," James Cosgrove, director of the GAO's health care analysis, said in explaining the research.
David Lipschutz, an attorney at the Center for Medicare Advocacy, says the GAO findings were alarming and should prompt tighter government oversight.
"A Medicare Advantage plan sponsor does not have an evergreen right to participate in and profit from the Medicare program, particularly if it is providing poor care," Lipschutz says.
The GAO did not name the 35 health plans, though it urged federal health officials to consider a large exodus from a plan as a possible sign of substandard care. Most of the 35 health plans were relatively small, with 15,000 members or fewer, and had received poor scores on other government quality measures, the report said. Two dozen plans saw 1 in 5 patients leave in 2014, much higher turnover than normal, the GAO found.
Medicare Advantage plans now treat more than 19 million patients and are expected to grow as record numbers of baby boomers reach retirement age.
Kristine Grow, a spokeswoman for America's Health Insurance Plans, an industry trade group, says Medicare Advantage keeps expanding because most people who sign up are satisfied with the care they receive.
She says patients in the GAO study mostly switched from one health plan to another because they got a better deal, either through cheaper or more inclusive coverage.
Grow says many Medicare Advantage plans offer members extra benefits not covered by standard Medicare, such as fitness club memberships or vision or dental care, and do a better job of coordinating medical care to keep people active and out of hospitals.
"We have to remember these are plans working hard to deliver the best care they can," Grow says. Insurers compete vigorously for business and "want to keep members for the long term," she adds.
Some seniors, wary of problems ahead, are choosing to go with traditional Medicare coverage. Pittsburgh resident Marcy Grupp says she mulled over proposals from Medicare Advantage plans but worried she might need orthopedic or other specialized health care and wanted the freedom to go to any doctor or hospital. She decided on standard Medicare coverage and paid for a "Medigap" policy to pick up any uncovered charges.
"Everything is already in place," says Grupp, a former administrative assistant who turns 65 this month.
The GAO report on Medicare Advantage comes as federal officials are ramping up fines and other penalties against errant health plans.
In the first two months of this year, for instance, the federal Centers for Medicare and Medicaid Services fined 10 Medicare Advantage health plans a total of more than $4.1 million for alleged misconduct that "delayed or denied access" to covered benefits, mostly prescription drugs.
In some of these cases, health plans charged patients too much for drugs or failed to advise them of their right to appeal denials of medical services, according to government records. Industry watchers predict more penalties are to come.
Last month, CMS officials ended a 16-month ban on enrollment in Cigna's Medicare Advantage plans. CMS took the action after citing Cigna for "widespread and systematic failures" to provide necessary medical care and prescription drugs, policies officials called a "serious threat to enrollee health and safety."
A flurry of whistleblower lawsuits have surfaced, too. In late May, Freedom Health, a Florida Medicare Advantage insurer, agreed to pay nearly $32 million to settle allegations that it exaggerated how sick some patients were to boost profits, while getting rid of others who cost a lot to treat.
Freedom Health allegedly kept a list of some "unprofitable" patients that it discouraged from staying in the health plan, while encouraging healthier, "more profitable" members to remain, according to the whistleblower suit. Federal regulations prohibit health plans from discriminating based on a person's health.
Asked by Kaiser Health News for comment, Freedom Health corporate counsel Bijal Patel emailed a statement that read, in part: "We agreed to resolve the case so that we can continue focusing on providing excellent care."
Casey Schwarz, a lawyer with the Medicare Rights Center, a consumer service organization, notes that health plans are required to have a formal process for patients to appeal denials of medical services. She says patients should know their rights and insist on them.
"We want people to vote with their feet and leave plans not serving them," Schwarz says.
Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.
Time to face facts. Americans don't need this financial product
We cannot vote away scarcity.
Our ongoing troubles with health care stem from an unwillingness to deal with certain facts. One of those facts is scarcity. “Scarcity” is a term from economics, and it refers to the fact that there is never enough of anything to satisfy every possible desire — the universe holds only so much, and human desire has a way of outgrowing whatever we have. So we have to come up with a way of dividing up that which is scarce. We have tried many different ways of doing that — war, caste systems, central planning — though mostly we’ve relied on the fact that everybody wants lots of different things, which makes it possible to trade. But buying and selling stuff is not, to be sure, the only way to divide up that which is scarce. Medical care is scarce: There are only so many doctors and hospital rooms; the pill factories can make only so many pills, and there are real limitations on the raw materials used to make those pills; heart stents don’t grow on trees, but, even if they did, they would be scarce, like apples and oranges and pears and avocados. An example: A few years ago, a friend of mine was deathly sick with a chronic cardiac condition. He learned that a doctor in another country — on another continent — had developed an experimental treatment for his condition. The chances of its working were not very high, but it had worked on others. The problem was, there were something like three doctors in the world who did that procedure, and approximately one who had done it with a great deal of success. His insurance would not pay for it, and the public-health system in his country would not even think of paying for it. But my friend was vastly wealthy, so he called up that doctor, offered him what I assume was a very large sum of money, put him on an airplane, and rented out space in the finest private hospital money could buy. Unhappily, the procedure was not successful, and he died.
(Scarcity is an economic reality. It is a fact. But the example used here, an experimental treatment known only to three physicians in the entire world, is not a fact. It is not even a theory. Clinical science is not created just because someone somewhere can dream up possible treatments for serious human conditions. A dying man grasping at straws is an existential crisis not an illustration of scarcity in health care delivery. Known clinical science can be delivered, routinely, to most if not all members of the same society. We do not require that health care financing pay for interventions that do not work. If people want copper bracelets to treat arthritis, they should have to pay for them on their own. Public dollars would be wasted on useless gestures, such as described in this example of desparationl)
We cannot offer the same level of care to everybody with the same condition. They number in the millions, and the doctors who can perform that procedure number about three. (Or, at least they did ten years ago.) Even if they worked 16-hour shifts, seven days a week — even if we pressed them into slavery — they could see only so many patients and perform so many procedures, and those would amount to a tiny fraction of the number of people who might benefit from their attention. Because of scarcity, medical care eventually reaches the point where one of three things happens: Somebody puts out his hand and says “Pay me,” an officer of the government or an insurance company refuses to approve some treatment, or you die. Because we are a largely cooperative species, we do not like that very much. It seems unfair and unkind. So we try to make an end run around scarcity with things such as health insurance and government medical plans, both of which are based on the same economic principle: Someone else pays. But scarcity does not care who is paying: Scarcity is scarcity. In the most monopolistic public-health systems (e.g., the ones in the United Kingdom and Canada), there is a lot of saying “No,” though it is what we might call a “Japanese no” — saying “no” without actually saying it. They put you on a waiting list and hope you die before they actually have to say “No,” or they simply expect you to accept that some services and treatments are categorically unavailable. There is a reason New York City’s hospitals are full of rich Canadians who cannot afford the free health care at home. But a polite, indirect “No” is still a “No.” No means no. Insurance companies say “No” all the time, and we hate them for it. That is because of another fact that we refuse to deal with like mature, responsible adults: Insurance is not a medical product — it is a financial product.
(Agree-health insurance is a financial product, one that has been extraordinarily profitable. No one needs this financial product. People do need healthcare. And therefore people need a way to finance healthcare. Among the various ways to finance healthcare ever invented, health insurance is the most wasteful and useless. Since this article in National Review is allegedly about facts concerning health care delivery that need to be faced, let's face this fact: Americans waste $400 billion per year paying for the wasteful administrative practices of the health insurance business model. How much actual health care scarcity could that $400 billion each year pay for? Another fact: rich Canadians are not filling up New York City hospitals. There is zero evidence that that is the case. Another fact: at least Canadians seeking health care have a line that they can queu into. Millions of Americans can not even get into a line despite the fact that we outspend Canadians two to one for health care. Really, we spend twice as much on health care as do Canadians. And yet they have greater satisfaction with their health care system than do we and they have better results than do we. It is a fact that we Americans would be better off spending half as much on health care and getting better care than we are now. So let's get rid of the useless financial product that we don't need that is costing so much and killing us. Let's get rid of the health insurance business model.)
Most of us do not need to spend a great deal of money on health care during any given year for most of our lives. I myself pay for most of my medical expenses out-of-pocket, and, in any given year, they rarely add up to what my health-insurance premiums cost. But I do not have health insurance, and pay premiums for that health insurance, in order to have somebody else pay for my annual check-up or routine dental work. I have insurance because I might get hit by a bus or cancer or a heart attack, and, secondarily, because one day I will be old, if I am lucky, and old people have lots of medical expenses. Scarcity exists because of the nature of the physical universe, not because insurance executives are big meanies. Scarcity exists because of the nature of the physical universe, not because insurance executives are big meanies. (It’s okay to hate insurance executives — everybody hates insurance executives.) Insurance companies have to say “No” a great deal, whether they are run by nice people or by the sort of people who ordinarily run insurance companies. The Canadian government health-care system is in essence a big, generous insurance company owned by its customers and perfectly happy to run large losses indefinitely, and it still has to say “No” pretty often. Putting mandates on insurance companies is not a cure for scarcity. Sometimes, it makes things worse. Insurance companies operate by making a very careful study of actuarial information, which allows them to make remarkably accurate predictions about the medical needs of large populations with known demographic characteristics. Nobody knows whether any given 60-year-old man will have a heart attack this year, but stack up 10 million of them, and the pointy-headed actuarial nerds can tell you with a high degree of accuracy how many of them will. But we want insurance to be something different: We want it to be the conqueror of scarcity. So we do things like mandate coverage of preexisting medical conditions, which is to say, we demand that they place bets against things that already have happened. The usual metaphor here is offering fire insurance after the house already has burned down, and that is apt. We are asking them to bet against the Patriots in the 2017 Super Bowl after the fact, in 2018, in 2019, 2020, etc.
(No, I don't want health insurers at all. The bets they place and the machinations that they put us through are expensive and wasteful. It costs money, my money, for pointy headed actuarial nerds and the mean insurance executives to come up with their numbers and rules and impose them on me. For what? To put it bluntly, that nerdiness and meanness is only useful to make health insurance profitable, because, remember, it is a financial product, not a health product. I want my public dollars to go for something we actually need, like health care, not a financial product. Health insurance as the massive, principle health financing business model in the US would not exist at all if it had not been propped up for 75 years by US tax policy. We Americans have been giving away $500 billion per year in the form of tax credits to employers who purchase health insurance for their employees. And health insurers take that half trillion and waste it on a business model that is useless.)
What might a health-care program that deals with reality look like? We could probably lower the cost of prescription drugs significantly by making the approval process less cumbrous and expensive, and maybe by tweaking a few intellectual-property procedures. We could do the same with medical devices and the like, though the so-called Affordable Care Act took the opposite approach, taxing those devices and making them scarcer. If we want more doctors, there are probably 1 million top-shelf physicians from around the world who would immigrate to the United States yesterday if we gave them the go-ahead. (Yes, that probably would lower the incomes of native-born doctors; we are going to be adults for the moment, and this is a question of trade-offs.) We could reduce the regulatory burden on insurance companies in an effort to lure more of them into the market, whereas the ACA added to their burdens and drove many of them from the marketplace. We could try to make ordinary, non-emergency medical care more of an ordinary product, one that people pay for the way they pay for food and housing and cars and World of Warcraft expansion packs and the other necessities of modern life, allowing insurance to be insurance: a financial product that helps to mitigate certain risks related to unexpected health-care costs. This would allow for the emergence of robust, competitive, consumer-oriented markets like we have in cellphones and pornography and other innovative markets where choices abound and prices keep going down because the consumer is king. But there will be scarcity. Somebody will put his hand out and say, “Pay me.” This brings up something economists call “elasticity of demand.” That is a fancy way of saying that when you roll into the local BMW dealer and find out that that i8 costs $150,000, you say, “No, thanks,” and you get a Honda Civic instead, but when you are rolled into the emergency room with a broken leg or a non-functioning heart, you don’t talk about prices at all, and, even if you did, you aren’t normally going to say “No” to any price when the alternative is sickness and pain and death. But not every medical procedure is a life-and-death matter, and, even in the matter of serial chronic conditions such as diabetes, there is opportunity for comparison shopping and negotiating. The other kind of medical problem is why you have insurance. We have perfectly functional markets in all sorts of life-and-death goods. They expect you to pay up at the grocery store, too, but poor people are not starving in the American streets, because we came up with this so-crazy-it-just-might-work idea of giving poor people money and money analogues (such as food stamps) to pay for food. It is not a perfect system, but it is preferable, as we know from unhappy experiences abroad, to having the government try to run the farms, as government did in the Soviet Union, or the grocery stores, as government does in hungry, miserable Venezuela. The Apple Store has its shortcomings, to be sure, but I’d rather have a health-care system that looks like the Apple Store than one that looks like a Venezuelan grocery store. There is a certain libertarian tendency to look at messes such as the Affordable Care Act and the American Health Care Act and throw up one’s hands, exclaiming: “Just let markets work!” We should certainly let markets work, but not “just.” We aren’t going to let children with congenital birth defects suffer just because they might have stupid and irresponsible parents, and we are not going to let old people who have outlived their retirement savings die of pneumonia because we don’t want to spend a couple of thousand bucks treating them. But we also do not have a society in which everybody is on Section 8 and food stamps, nor do we want one. Developing sensible, intelligently run, reasonably generous welfare programs for those who cannot or simply have not done it for themselves is a relatively small project, but trying to have government impose some kind of political discipline on the entirety of the health-care system — which is as explicit a part of the current daft Republican health-care program as it is of Obamacare — is a different kind of project entirely. Scarcity is not an economic theory. You can experience it for yourself any time you like, on a desert island or the streets of New York City. It is an aspect of reality, and the health-care reformers eventually will have to get around to taking reality into consideration.
(Now we get to something that is almost like a fact: elasticity of demand does not apply to health care. Demand for cars truly is elastic--a higher priced car will have a lower demand because fewer people can afford the high price. Not so in health care. Demand for open heart surgery remains the same no matter its price because no one wants open heart surgery unless they need it and when they need it, no price is too much. Demand for health care is driven not by price, but by epidemiology. People don't have appendectomies because they are on sale (low price today), they have them because they have abdominal pain and a doctor tells them that their appendicitis will kill them unless they submit to surgery. Health care is not a commodity. Market forces don't work in health care. Patients are not shoppers like patrons in an Apple Store. Most developed nations pay for health care publicly and their hospitals do not look like a Venezuelan grocery store. The false dichotomy presented here is foolish nonsense. Nor can we handle medical welfare as if it is like Section 8 housing or food stamps, given only to the unlucky few. We already fund health care principally by taxation. $2 trillion of our $3 trillion a year health economy is paid for by taxation. That is not a marginal operation, that is how we principally fund health care. That will provide for every American to have medically necessary care. As long as we don't waste that tax money on the useless wasteful business practices of a financial product.)
Is the Federal Government In Charge of Health Policy in the United States?
It sure feels like the federal government has the reins of health policy in our country.
Medicare, the government program financing health care for people over 65, is run entirely by the federal government and federal taxation is used to provide the funding for that program. Medicaid and CHIP are both federal programs but with administration and partial funding coming from the individual states. The Indian Health Service and the VA health system are both federal programs with hospitals and clinics owned and operated by the federal government. Additionally, there are many federal health programs funding a wide variety of medical services (AIDS, tuberculosis, vaccine preventable disease, sexually transmitted disease, contraception, newborn care, primary care, etc.) which are generally administered by state or local governments.
However, the US Constitution does not specifically give authority over health policy to the federal government and the 10th amendment states that where authority is not specifically granted by the Constitution to the federal government the presumption should be that the states have primary authority. Thus, the practice of the federal government has been to incrementally expand its authority over health policy, often by appropriating federal tax money for the myriad of health care services and then using the promise of that funding to lure the states into accepting administrative responsibility, and sometimes partial funding responsibility, for the growing number of health care programs. But the Constitution would have the states making the principle decisions in health policy.
What to do?
I suggest that the earthquake political moment which happened this past Nov. 8 creates a time and space for substantially shifting health policy making from Washington DC to the fifty state capitols. Mr. Trump proposes to repeal the Affordable Care Act and has apparent agreement with the Republican controlled Congress. However, Mr. Trump has proposed no cogent replacement health policy and the Republicans in Congress seem very divided about how to go about filling the gaping hole that would be left by the ObamaCare repeal.
The Affordable Care Act, itself, contains a provision for state experimentation beginning in the present calendar year, 2017. This is, in effect, what is being proposed by four Republican Senators, as discussed in the attached New York Times article. However, both the provision of the ACA and the currently proposed legislation do not go far enough in allowing states leeway in the making of health policy. Let's really open up the laboratories of democracy and allow all of the states a very free hand in determining how best to meet the health care needs of their citizens. What works in Massachusetts (the state with the highest per capita health care costs in the nation) will likely be quite different from what works in Utah (the state with the lowest per capita health care costs in the nation). Put all federal funding for health care, including Medicare, CHIP, Medicaid, and everything else, into play with legislation that could allow each state to fashion its own health care system, or do nothing at all.
If Health system reform is not about getting 'coverage' for more people, then what should it be about?
Answer: real health system reform will improve health system quality and efficiency. Poor quality in American hospitals, clinics, and other institutions occurs when health care is rendered that is clinically inappropriate (i.e., unnecessary surgeries or defensive medicine), or when patients are injured during the process of care (untended patients fall, bedsores, wrong sided surgery, etc), or when a clinically proven intervention does not routinely happen (an aspirin tablet for the patient with chest pain in the ER). These failures are all too common and lead to hundreds of thousands of excess deaths and hundreds of billions of water dollars. The financial inefficiencies of the health insurance business model are well documented and also lead to hundreds of billions of waste each year. Taken together, deficiencies of quality and efficiency in American health care business as usual leads to a loss of about 1 trillion dollars per year. That is the target of real health system reform.
Put simply, American health care costs so much because it is poor quality care and it is inefficiently administered. Poor quality care comes in three general categories: a) delivering clinically inappropriate care; b) preventable injury to patients while hospitalized; and c) failing to deliver known clinically effective care. Taken together, these various kinds of poor quality care cost more than $700 billion per year. American health care financing, largely delivered through private health insurers, is inefficiently administered relative to other first world countries. Excess administrative costs in the US health care system are approximately $400 billion per year. In summary, with health system reform that improves quality and efficiency, Americans could save $1 trillion per year.
Question: Where does all the money come from that is spent on healthcare in America?
Answer: Almost two thirds of the more than $3 trillion spent annually on health care in the US comes from taxpayers.
Americans pay higher health care taxes than do the citizens of any other country. These taxes support all kinds of federal, state, and local governmental healthcare programs like Medicare (federal program for the elderly), Medicaid (state/federal program for the poor), CHIP (state/federal program for children); VA (federal program for military veterans), IHS (federal program for Native Americans), and many many many other federal programs and a few state programs.
All government employees have health care benefits paid for by the taxpayers. And tax credits are given to large employers who provide a health benefit to their employees.
It is a painful irony that tens of millions of American taxpayers, who pay the world’s highest health care taxes, find themselves without health care financing when they need it, or with inadequate health care financing leaving them vulnerable to bankruptcy even if they have ‘coverage’.
The most common cause of personal bankruptcy in the United States is the cost of health care after illness or injury.
In no other first world country are citizens bankrupted by the care they need to treat illness or injury.
Question: Americans spend more on health care, isn’t that because Americans have the world’s best (highest quality) health care?
Answer: Well, no, not really. In fact, the best measure for health care system productivity (or quality) that I have been able to find is international comparisons on reducing death which is amenable (or preventable) to health system interventions. Some deaths are not preventable even if the best possible health care were consistently available across an entire population. For instance, death in the very aged population will not be amenable to health system interventions; old people will simply die at some point no matter how much health care is applied. So, if you study deaths in a population that good quality health care could prevent, and compare those rates across all first world nations, you will find that Americans are least likely in the first world to prevent death which should be amenable to high quality health care. We pay the most for health care by far, but our health care system is least able to do the job that medical care is supposed to handle.
