Category Archives: Health Care

The Doctor Is In. And He Wants to Expand Medicaid.

Ralph Northam as physician

With a near 50/50 balance of power between Republicans and Democrats in the General Assembly, Governor-elect Ralph Northam will be in a much better position than his predecessor Terry McAuliffe to enact Democratic priorities. And what are those priorities? As he told NBC 4, Medicaid expansion tops the list.

Said Northam: “No family in Virginia should be one medical illness away from financial demise so, Medicaid expansion is very important and I will do everything I can to make that happen.”

We can all agree on the desirability of making health care affordable and accessible for all Virginians. It’s not so clear that expanding Medicaid is the best way to accomplish that goal. I have blogged in the past about the inadequacies of the Medicaid model, which has not demonstrated an ability to substantially improve medical outcomes. Among the more obvious problems: While Medicaid expansion provides coverage to the uninsured, it does not increase the supply of primary care physicians willing to take on Medicaid patients for whom they are paid 30% to 60% less than privately insured patients.

Despite below-market reimbursement rates, the cost of Medicaid expansion is considerably higher per patient than anticipated when the Affordable Care Act was enacted several years ago. The table below, taken from an article in the “Handbook on Healthcare Reform” published by the Thomas Jefferson Institute for Public Policy (TJI) last month, shows how Medicaid actuaries have consistently revised upward their cost projections since FY 2013.

The 2013 report projected that newly eligible adult Medicaid patients would cost $3,625 on average. By 2016, the figure had risen to $5,926 — a 63% jump. If Medicaid expansion was unaffordable four years ago, it’s even more unaffordable now. Despite their political setbacks, Republicans are highly unlikely to roll over on this issue.

It’s not as if states have no other options to improve affordability and access. The TJI report discusses several. They include eliminating mandated benefits so insurance companies can offer bare bones policies; removing barriers to healthcare technology innovation; rolling back onerous Maintenance of Certification requirements that encourage physicians to retire early; reforming the medical liability system that prompts physicians to practice defensive medicine; encouraging transparency in pricing so consumers can push back against expensive providers; abolishing the Certificate of Public Need process so physicians can provide high-quality, lower-cost outpatient surgery; promoting telemedicine; enabling Direct Primary Care that strips out third-party-payer middlemen and administrative costs; and repairing the broken Medicaid delivery model.

Most of the TJI essays were generic, not specific to the Old Dominion. As it happens, Virginia has taken limited steps toward implementing some of the ideas in the report, but much remains to be done.

The health care sector is a dense jungle of special interests, however. Hospitals, insurers, pharmaceutical companies, employers, physicians, and a welter of allied health professionals work doggedly to shape legislation to their benefit. Sadly, ordinary patients have no organized group representing their interests.

As a physician, Northam has a keener understanding of the issues confronting the health care sector than most lawmakers. He enjoys a unique opportunity to reshape Virginia’s health care sector in a way that lowers costs and improves outcomes for all Virginians. It would be a shame if he expends all his political capital to capture the dubious benefit of Medicaid expansion when so many alternatives lie fallow.

Before Expanding Medicaid, Examine the Program’s Outcomes

When Virginia lawmakers start cranking up the old Medicaid-expansion jalopy in January, they would be well advised to pay attention to a new study out of California — not exactly your reddest of red states, so this is not Republican propaganda.

The study, published in the Journal of the American Medical Association Oncology, used a California data registry to compare cancer survival outcomes of insurance over two decades (1997–2014). Summarizes the Federalist: “Improvements in survival rates during the time period the survey examined came almost exclusively from individuals with private insurance or Medicare. “[F]or patients with other public [i.e., Medicaid] or no insurance, survival was often stubbornly unchanged, or, in some cancers, declining.”

While survival falls short of that achieved by patients with private insurance, public insurance such as Medicaid does confer a survival benefit over no insurance for breast, prostate, and lung cancer. However, there was little or no benefit of public insurance over no insurance for colorectal cancer or melanoma, and the lack of improvement in survival is a concern. These findings suggest that the health care provided to publically [sic] insured patients with cancer in California is not adequately meeting their needs.

Got that? Medicaid is somewhat better than zero insurance for some cancers but no better for others. And in some cases, the study implies, it’s worse.

Meanwhile, debates are raging over whether Medicaid expansion has led to an increase in opioid addiction, and whether or not emergency-room usage has declined, as envisioned by the architects of the Affordable Care Act.

The assumption behind Medicaid expansion is that any health coverage, no matter how crappy, is better than none at all. But Medicaid reimburses physicians far less than private insurance and Medicare do, with the result that (a) many physicians don’t take Medicaid patients, and (b) some physicians may not provide the same quality of treatment. Also, one must consider the nature of Medicaid patients. By definition, they are poor, and poor people may interact with the health care system differently than the non-poor.

The California study inevitably will be cited by Virginia opponents to Medicaid expansion. And just as inevitably, supporters will find reasons to criticize it. Here’s how it works in early 21st-century America: Pick your desired political outcome, choose the study to justify it, and then shoot holes in opposing studies. Medical science becomes politicized just like everything else in our society that is mediated by the political class — but, of course, it’s all the other side’s fault.

Albemarle County’s Unfortunate Distinction

Image credit: Wall Street Journal

So much to blog about. I don’t know if I can get to it all this morning. Let’s start with this…

Albemarle County will have the distinction of having the highest cost in the nation in 2018 for people on the Affordable Care Act exchange. The Wall Street Journal cites the plight of Ian Dixon, as 38-year-old app developer, whose premiums for a family of four will jump from $988 a month to $3,158 a month. The article did not mention the size of the policy’s deductible, but in my observation of other health plans, it could be significant.

Insane. Just insane.

As the WSJ notes, other health plans have fled the ACA market in Charlottesville and Albemarle. The sole remaining provider, Optima Health, wanted out as well, but decided to stay in the market rather than leave citizens with zero alternatives.

Bacon’s bottom line: The company says the uncertainty created by the GOP push to repeal Obamacare and a Trump administration decision to end subsidies to insurers contributed to the rise in premiums. That uncertainty undoubtedly has accelerated the ACA market meltdown, but the health exchanges were in a downward spiral before Trump took office. The system is collapsing next year instead of two or three years from now.

This is what happens when a country is locked in 50-50 gridlock, neither has the political power to fully implement its healthcare vision. We get total dysfunction, and people like Ian Dixon are paying the price. Adding insult to injury, unless Congress repeals the mandate requiring people to purchase health insurance, Dixon will be dunned a tax (really a penalty, but the Supreme Court called it a tax) if he refuses to sign up for a plan that could soak up 100% of an average person’s income.

Medicaid Reforms Could Save Tens of Millions

Massey Whorley, policy adviser to Governor McAuliffe

A new forecast of Virginia’s $10 billion Medicaid program supposes that the implementation of managed-care reforms will slow runaway costs, reducing growth in spending to 2.5% in the first year and 3.4% the second year, down from an 7.8% increase in the current fiscal year. While the program still will cost an additional $670.6 million over three years, that’s a lot less than it would have been, reports the Richmond Times-Dispatch.

The McAuliffe administration is expanding the number of people, primarily elderly and disabled, who will receive services through managed-care contracts with private insurers.

“A huge part of [the reduction] is the effect of reforms and the amount of money being moved from fee-for-service to managed care,” said McAuliffe policy adviser Massey S.J. Whorley. The number will swell from about 30,000 people under managed care to almost 200,000. Explains the T-D:

Fee-for-service has been the traditional way of reimbursing providers for services to Medicaid patients in an uncoordinated fashion. Managed care allows the state to shift the risks of serving patients to insurers who are paid a fixed amount per person, per month to coordinate their care. 

“The plans are taking a very substantial risk,” said Doug Gray, executive director of the Virginia Association of Health Plans, which includes five of the six companies that are providing managed care to more than 216,000 elderly and disabled Virginians. “These are very sick people who could have very high costs. The commonwealth has protected themselves from costs over and above the contract amount.”

The attraction for insurers is the potential to lower the cost of care and keep the difference, while saving the state money, but Gray cautioned against expecting an immediate windfall as the state expands managed care to riskier populations. “We are hopeful and optimistic there will be savings, but I wouldn’t want to be overly aggressive about promising,” he said.

House Appropriations Chairman S. Chris Jones, R-Suffolk, said the reforms are working, but he would hesitate to read too much into the initial forecast. “This is the right step to have taken. … There is no doubt the reforms are starting to have an impact.”

Bacon’s bottom line: Everybody cross your fingers and hope this works. Out-of-control Medicaid spending has soaked up a disproportionate share of new tax dollars generated by the state, forcing legislators to under-fund other critical priorities like K-12 schools and higher-ed. The shift to managed care may ease the fiscal pain for the next biennial budget.

Bringing Data Analytics to Virginia Healthcare

Beth Bortz, CEO of the Virginia Center for Health Innovation

A big reason the healthcare debate in Washington has gone nowhere is that it’s all about who pays for healthcare, not how to create better outcomes at lower cost. For every winner, there’s a loser, and that’s a recipe for gridlock. Meanwhile, medical costs continue climbing. Ultimately, everyone loses.

The business of figuring out how to improve outcomes and reduce costs gets a tiny fraction of the media attention, but if there’s ever going to be a solution to the healthcare crisis, it will come from stretching healthcare dollars, not redistributing them. As it happens, Virginia is taking the lead in an initiative that may help “bend the cost curve.”

Five Virginia health plans are taking part in a pilot program funded by private foundations and led by the Catalyst for Payment Reform (CPR), a nonprofit group that seeks to measure “which strategies are having the desired impact in the market,” reports Virginia Business magazine. Virginia will be one of only three states selected to participate, says Beth Bortz, CEO of the Virginia Center for Health Innovation, which coaxed Virginia’s five insurance companies into sharing their data. (Two other insurers have yet to commit.)

Each of the participating companies — Aetna, Anthem, Optima, UnitedHealthcare and Virginia Premier — possesses vast quantities of data on healthcare expenditures and outcomes. But data residing in five silos isn’t as valuable for analytical purposes as a database encompassing all five. Reports Virginia Business:

The key goal is to identify health-care payments in commercial and Medicaid sectors that are “value oriented,” which CPR defines as effective treatments combined with a reduction in unnecessary spending. That means the project’s intent isn’t just to find effective treatment. “We’ve been about advancing value,” Bortz says. “It’s not quality at any cost.” …

Involvement with CPR will help a project VHCI has already begun. It is a data-based measurement of health care called the Virginia Health Value Dashboard. Its purpose “is to prompt action for improving the value of health-care services,” says VHCI.

Examples of “low-value” care that the dashboard project is targeting include: avoidable emergency-room visits, hospital readmissions and the use of high-cost service sites when less expensive options are available. The “high-value” care examples include: up-to-date vaccinations, smoking cessation programs, better screening for cancer and improved management of chronic conditions such as diabetes.

The goal is to have in place by January a dashboard tool for groups that provide, buy or fund health-care services to use in evaluating various costs. Being part of the CPR’s project is a big step toward that goal. “It costs money to get good data,” Bortz says.

Bacon’s bottom line: It would be great if Virginia could bend the cost curve. Households could find some relief from the relentless squeeze on their pocketbooks. More people could afford afford insurance coverage. And, to the extent that healthcare is a big chunk of employee compensation, Virginia businesses could gain a competitive advantage.

There is a gap, however, between knowing what the best practices are and actually putting them into place. The political economy of healthcare in Virginia is riddled with special interests that benefit from laws and regulations that stifle change. Many regulations — mandated benefits, medical licensure, the Certificate of Public Need process — create incentives for perverse behavior. The best data in the world won’t do much good if health care providers don’t do anything with it. So, while the CPR initiative is a positive development, Virginia has much work ahead to create the conditions where healthcare insights will be acted upon.

How Medicaid Is Cannibalizing Virginia’s Budget

Source: JLARC

Three big trends are worth noting from the Joint Legislative Audit and Review Commission 2017 state spending update, a review of state spending over the previous 10 years.

First, General Fund spending has been constrained by limited revenue growth resulting from Virginia’s weak economy. The increase in spending has averaged 2.0% per year. Adjusted for inflation and population growth, General Fund spending actually declined 1% over the decade.

Second, the Medicaid program has crowded out spending for other priorities. Medicaid hogged 60% of all General Fund revenue growth over the decade. Medicaid’s share of the General Fund pie increased by 73%.

Third, the healthy growth in non-General Fund spending was driven in large part by tuition increases at Virginia’s colleges and universities. In other words, when faced by stagnant revenue and untouchable Medicaid spending increases, legislators cut what was cuttable. They reduced state support for higher education knowing that colleges and universities could fall back upon the expedient of raising tuition.

Cheerful thought of the day: As Virginia’s population ages, Medicaid spending will go one way — up — and it will continue to squeeze other spending categories. Here’s the spin that Republican legislators put on the JLARC report:

House Speaker William J. Howell, R-Stafford: “Once again, this annual report from JLARC shows that the increasing cost of Virginia’s current Medicaid program is crowding out needed funding for our public schools, colleges and universities, roads, and law enforcement officers. We consistently argued that Virginia can barely afford its existing Medicaid program, let alone the massive cost of expansion, and this report vindicates that position.”

Speaker-designee Kirk Cox, R-Colonial Heights: “It’s a simple proposition: if you cannot afford your mortgage payment, you don’t build a new addition to your house. Virginia’s current Medicaid program covers around 1 in every 8 Virginians, and as this report shows, the costs are staggering and continue to climb, despite ongoing reform efforts. It would be financially irresponsible to ask taxpayers to fund the massive expansion contemplated under the Affordable Care Act.”

Del. S. Chris Jones, R-Suffolk: “Even as we instituted major reforms aimed at bending the cost curve, and controlled spending growth in other areas of state government, Medicaid costs continue to increase dramatically. This growth eats into funding that could be used for our teachers, law enforcement officers, and hard working state employees.”

Bacon’s bottom line: Yeah, the Republican leaders are stingy bastards for not expanding Medicaid. But the alternative is worse. Latest news on the Boomergeddon front: The state of Illinois, which expanded its Medicaid program in 2013, incidentally, and now has to cover 10% of the expanded costs not funded by the federal government, has $16.5 billion in unpaid bills. The state also has $200 billion in total liabilities, including pension debt. Meanwhile, pundits are asking if debt-ridden Chicago will become the next Detroit. One good recession, and it will be.

To see what it’s like to operate a government bordering on insolvency, watch Puerto Rico flail as it tries to recover from Hurricane Maria. It’s not a pretty picture. It’s easy to be compassionate when you’re paying with other peoples’ money. When other peoples’ money runs out, everything goes all to hell.

Uh, Oh, Optima Retracting Its Obamacare Coverage

First Aetna pulled out of Virginia’s Affordable Care Act insurance exchange. Then United Health did. Then Anthem cut back. Now Optima, a division of the Sentara Health Care system, is retracting to core markets in Hampton Roads plus the Harrisonburg, Charlottesville and Halifax-Mecklenburg areas. Oh, and it’s increasing rates on average by 81.8%.

“For now,” sums up the Daily Press, “it appears as if 48 Virginia counties and 15 cities have no insurer offering Obamacare coverage through the federal health care exchange. … The three insurers’ cuts leave 350,000 Virginians needing to find new coverage.”

While the health exchanges implode, a dysfunctional government in Washington, D.C., appears unable to devise either a patch to Obamacare or an alternative to it. Republicans are saying, in effect, “See, we told you that Obamacare was melting down.” Democrats are responding, “It’s melting down because you sabotaged it.”

As the system collapses, the issue of whom to blame will dominate the public discourse. It seems clear to me that Obamacare was melting down on its own, but the political uncertainty created by Washington dysfunction has accelerated the downward spiral. There’s so much flak and so much smoke, however, that Americans have no idea what to believe. In the meantime, Virginians will suffer.

Carilion Wants It Both Ways

by Michael W. Thompson

The Roanoke region needs more health care availability according to Carilion, the area’s mega hospital. It now recognizes a problem that other health care providers have long known – the Roanoke area is under-served and has inadequate access to many important health care services. And, of course, Carilion wants to fill this need.

Yet, for years Carilion has fought against allowing competing health care providers to expand or add services. It has lobbied against reforming current Certificate of Public Need (COPN) laws that favor hospital monopolies and have it has used this outdated law to stifle competition. These COPN laws require state approval for additional health care facilities and services and hospitals have an undue influence in stopping competition. The Federal Trade Commission has urged states to get rid of these anti-competitive laws.

Carilion’s approach to blocking competition even garnered the attention of the Federal Trade Commission (FTC). Several years ago, the FTC challenged Carilion’s acquisition of two competing outpatient clinics in the Roanoke area – the Center for Surgical Excellence (CSE) and the Center for Advanced Imaging (CAI), stating in a unanimously-passed administrative complaint on July 24, 2009 that this acquisition would result in a “violation of federal antitrust laws,” higher health care costs, and reduce incentives for those facilities to maintain quality care.

Ironically, before Carilion tried to buy these two competing clinics, it worked to block their COPN applications. Carilion’s eventual acquisition of CAI occurred five years after that competitor opened an advanced imaging center offering services similar to Carilion, but at a lower price. CAI’s quality, convenience, and low cost presented a serious threat to Carilion’s business. The mega-hospital recognized this threat when opposing CAI’s application for additional MRI equipment, noting that “CAI’s introduction of a second scanner threatens the viability of our [hospital] system.”

After success with its first facility, CAI sought to open an independent outpatient surgical center that it subsequently named CSE. The facility was finally awarded a highly-contested Certificate of Public Need (COPN), an outpatient surgical hospital license from the Commonwealth of Virginia, and an ambulatory service center (ASC) certification from Medicare. But despite the clear need for this facility, Carilion opposed this expansion.

The FTC concluded in 2009, that “Carilion acknowledged that it would increase post-acquisition prices for CAI and CSE services” and “the acquisition will directly and substantially harm patients by increasing their out-of-pocket costs.” They cited Carilion’s plan to increase out-of-pocket costs for a brain MRI as high as 900% – from $40 to $350. Carilion eventually agreed to divest from the clinics that restored them as viable, independent competitors to settle the FTC charges.

Another example of the results of Carilion’s use of the COPN law is the 2012 tragedy where a mother, 24 weeks pregnant, went to a hospital in Salem after she experienced a placental eruption. Much to her shock, doctors informed her that they were unable to treat her because they lacked a neonatal intensive care unit (NICU). They quickly called a special ambulance to transport her six miles away to the nearest NICU at Carilion Medical Center.

However, the ambulance to take her to Carilion was out on another trip and, as a result, her child died.

The hospital in Salem had tried twice for approval to build a NICU and had garnered widespread community support. But, they were denied each time in large part, according to those who are familiar with this case, due to Carilion’s opposition. In fact, this writer is told that Carilion was the only voice to oppose this needed NICU during public hearings.

Now Carilion wants to expand Roanoke Memorial because they’re currently turning away patients. Could this be because it has, for years, blocked serious competition in its own back yard? A strong case can be made for exactly that.

Luckily, reform of our COPN laws is gaining steam and could happen next year. One bill, House Bill 2337 sponsored by Dr. John O’Bannon of the Richmond area, would eliminate the burdensome COPN process for operating rooms, NICUs and other important facilities and services. As noted by the FTC, that would mean quality care at lower out-of-pocket costs.

Let’s hope our state legislators get serious about COPN reform and remember that a supposedly nonprofit system like Carilion shouldn’t be able to fight against patients and other health care providers by using COPN laws to stifle competition and then want to expand services that are needed in the area.

Michael W. Thompson is the President of the Thomas Jefferson Institute for Public Policy. The opinions expressed here are his and do not necessarily reflect those of the organization or its Board of Directors. Mr. Thompson can be reached at [email protected]

Rural Virginians Will be Really Old by 2040

Image credit: StatChat. Click for more legible image.

Like every other state in the union, Virginia’s population is getting older. The trend is particularly pronounced in rural jurisdictions, as seen in these maps compiled by Shonel Sen with the Demographics Research Group at the University of Virginia and published in the StatChat blog.

Everyone seems so focused on immediate problems that localities have given little attention to what things will be like in 23 years when the 65+ demographic comprises more than 20% of the population across most of the state. Given the inability of most Baby Boomers to accumulate much wealth, how many of these elders be poor? Given the tendency of young people to move away, will the rural elderly have caretakers? Given the pressures on rural hospitals and the increasingly acute shortage of doctors, will the elderly have adequate access to health care?

I suppose it’s human nature to ignore distant problems until they become immediate problems, so I’m guessing nothing will be done until these issues reach crisis proportions. This is America. That’s how we roll.

The Terrifying Power of the Media to Shape Opinion

Only 18% of Americans support the U.S. Senate healthcare bill to replace Obamacare, says one poll. Only 12%, says another, and only 8% says yet another. Given the slow-motion collapse of Obamacare, that’s remarkably low. With numbers that low, even a majority of Republicans must oppose the bill.

Could the public’s negative opinion be shaped by the fact that the media has overwhelmingly portrayed the bill in overwhelmingly negative, even apocalyptic, terms?

A big drawback of the bill is that health care insurance would be more expensive for older Americans. I Googled the phrase, “Senate healthcare bill more expensive for older adults.” Every article cited on the opening page stressed the harm that the bill would do to seniors. Seventy-five percent of Googlers never go past the first page of results. To find countervailing analysis, searchers would have to dive way deeper into the results.

An offsetting benefit is that the bill would make health care insurance cheaper for young adults and free them from the Obamacare mandate of purchasing insurance. So, I Googled the phrase, “Senate healthcare bill cheaper for young adults.” The opening page was a mixed bag. Some results were balanced and some negative. None were positive. Here are the headlines:

9 Things To Know About The Senate Health Care Bill (NPR). The article notes, “The oldest people under 65 can be charged five times more than the youngest, and maybe more depending on state rules.” It says nothing about young adults paying less.

How the Senate’s Health-Care Bill Would Cause Financial Ruin for People with Preexisting Conditions (Atlantic). The headline speaks for itself. The article doesn’t even address the issue of how young people are impacted.

Winners and Losers of the Senate’s Health-Care Bill (CNBC). This article does acknowledge that young adults would benefit: “The Senate plan, like the House bill, would give insurers greater flexibility to charge younger enrollees much lower premiums and to offer skinnier plans in states that opt out of ACA’s essential health benefit requirements.”

The Senate health care bill: What’s in it and what to watch for in the CBO report (Politifact). This article provides a balanced statement: “Today, companies can’t charge older customers more than three times what young adults pay. The Senate bill increases that to five to one. This change reduces premiums for the young and increases them for those in their 50s and early 60s.”

Senate health plan falls short of promise for cheaper care, experts say (New York Times). The Times article presents a uniformly dismal view of the bill, noting no positives of any kind.

Senate Health Bill Includes Deep Cuts to Medicaid (New York Times). This Times article tells how older Americans would be disadvantaged under the bill but ignores the offsetting advantages to younger Americans. “Older people could be disproportionately hurt because they pay more for insurance in general. Both chambers’ bills would allow insurers to charge older people five times as much as younger ones; the limit is now three times.”

The Senate health bill is brutal on older Americans (Slate). The first paragraph in this Slate article is as balanced as it gets: “One of the expressed intentions of Republicans’ efforts to repeal and replace Obamacare is to undo some of the age-related distribution inherent in the system. Today, healthy young people pay more so that older, less-healthy people don’t have to pay quite as much.” Then Slate goes relentlessly negative for the rest of the article.

Comparing the Senate health care bill to Obamacare and the House proposal (CNN). This CNN article does note that the Senate bill will repeal the mandate for adults to obtain health insurance or pay a penalty.

Senate health care bill would lower deficit, increase number of insured, estimate says (FOX). The Fox article addresses pros and cons of the bill, but nowhere does it mention how the bill would lower premiums for young adults.

The Senate health-care bill’s subsidy cuts hurt low-income, older Americans (Washington Post). While the headline is negative, the article itself is more balanced, acknowledging that young people would benefit from allowing insurers to base rates on age. “Both [the House and Senate] bills include changes that would mean older people pay more and younger people pay less.”

Summary: The results on a search inquiring about a negative aspect of the bill brings up uniformly negative and critical articles. The results on a search inquiring about a positive aspect of the bill brings up a mix of negative and balanced articles — but no positive articles. Continue reading