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Virginia opposition given standing in federal district court

by Linda Beale
Excerpt from Ataxingmatter

The post in its entirety can be found at Linda’s Ataxingmatter Health Care Reform: the Virginia opposition given standing in federal district court:

The judge states that the “central issue” in the case is Virginia’s interest in upholding it’s “health care freedom act”–a declaration that Viriginia citizens do not have to buy insurance (in spite of the federal mandate). As Jack Balkin so ably comments (see link below), the judge’s acceptance of this argument opens the way for states to challenge anything in the Internal Revenue Code by passing a declaratory resolution indicating that they don’t think it should be treated as constitutional or that conflicts with the particular provision in question.

As for the commerce clause power, the court also treats Wickard v. Fillburn (the Supreme Court case that held that growing wheat for one’s own use is subject to the commerce clause power) as not decisive on this issue. Virginia claims that the decision not to purchase is not an economic act, compared to the decision to purchase or the decision to grow one’s own as a substitute for purchase. That distinction does not appear to have any merit. The decision not to purchase insurance and the decision not to purchase wheat are surely similar decisions to try to avoid the commercial flow by managing on one’s own. Yet surely one’s interaction with the health care system is much more clearly a question of interstate commerce even than one’s ability to grow wheat at home and avoid the purchase of wheat–even people who pretend to provide their own health care at home will at one time or another impinge on the health care system in all likelihood, whether because they are in a transportation accident, an accident outside their home, a work injury or illness, or taking advantage of free medical care such as vaccinations, etc. The judge however, concludes that the precedent is inconclusive and that the government has failed to show that the state has not stated a valid commerce clause claim.

Finally, the judge follows Virginia in conflating the Commerce Clause and Taxation Power arguments. It accepts the idea that if “economic inactivity” (which is a misnomer, since it is clearly economic activity to provide one’s own care, just as imputed income from providing one’s own home is real economic activity) is not accessible under the commerce clause, then it shouldn’t be reachable under the tax power. This is an extraordinarily poorly reasoned section of the opinion.

For a thoughtful and articulate analysis of the standing issues, see Jack Balkin’s blog, Judge Preserves Constitutional Challenge to Individual Mandate (Aug. 2, 2010) [hat tip Ellen Aprill and the Tax Prof discussion group].

Allowing this case to go forward leaves health reform in turmoil. It could take years for the different cases to wend their way through the courts, and ultimately the Supreme Court will likely have to rule.

Linda Beale
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Beverly Mann, whose expertise is in certain areas of constitutional law and federal-court jurisdiction at the Annarborist, and who guests at Angry Bear, notes on the same topic (lifted from an e-mail to me):

Yeah. I read Lyle Denniston’s article about that opinion on Scotusblog a couple hours ago, and this sentence really strikes me: “‘While this case raises a host of complex constitutional issues,’ the judge wrote, ‘all seem to distill to the single question of whether or not Congress has the power to regulate — and tax — a citizen’s decision not to participate in interstate commerce’ — that is, a private decision not to buy health insurance.”

Actually, the argument that that part of the legislation is within Congress’s purview under the Commerce Clause is that a citizen’s decision not to participate in interstate commerce—that is, a private decision not to buy health insurance—actually is not a decision not to participate in interstate commerce but instead (for many people at least) a decision to participate in interstate commerce by having others pay their emergency medical bills. If they are, say, injured in a car accident and treated at a hospital and then cannot pay their medical bills, the public pays those bills.

The problem with the judge’s argument is that people do not decide whether to have a serious medical emergency. When they do have one, and they receive major medical treatment, there is a bill for that.

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The Maine Chance

Robert Waldmann

One strange thing about the health care reform debate is that insurance companies claim to support reform. I have tended to suspect that they are just playing possum.

Now I find positive proof that WellPoint is willing to do what it takes to make sure health care reform passes — they sued the state of Maine claiming they have a constitutional right to make a profit !?!

In fact they seem to support a public option. It will be a bit hard for Sens Snowe and Collins to explain why they think no public option is needed after this.

I have a challenge. Can anyone think of anything anyone could do which is better for the public option that this ?

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Quote of the Day

Health Affairs tells the truth and shames…well

Unlike for-profit firms, a public plan has no incentive to cut corners and prevent providers from giving their patients quality evidence-based care, because its ultimate goal is public health, not private profit. Nor does it have any interest in sideswiping regulations and shortchanging consumers. Free market proponents argue that private health insurers should be lightly regulated to give Americans the best value. We have seen the results of that sort of regulatory neglect in many industries in the past eight years; the harm to all Americans, businesses and the overall economy could not be more profound.

Read the Whole Thing, since you probably won’t find it being cited at The Atlantic.

UPDATE: Bonus quote, since it gets to the core of the matter:

[Health insurance is an] oligopoly [market] with high entry barriers in which prices and profits have escalated rapidly.

Traditional economic theory holds that there are no economic profits in a true market.* That the Health Insurance industry has realised higher profits while spending a lower portion of each dollar received on claims over the past twenty years is, economics tells us, an indication of market failure. Strangely, the mass of economists don’t seem to be saying this. Which is a market failure of another type.

*There is, of course, a fair Return on Investment embedded in the equation, but that is assumed to be the stable risk-adjusted return, not increasing in an equilibrium state.

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What about me!

by divorced one like Bush

So I’ve been thinking: What, since the passage of Medicare has the federal government implemented that actually reduced the risk of living for the US citizen?

No, tax cuts do not count. They do not reduce risk. We have reduced risk for business all over the place. NAFTA, CAFTA, exemption of HMO’s from anti-trust, removal of banking regulation, reduction of oversight, allowing payment in the form of stock options, all of these promoted ever larger and thus less competition and thus less risk. All of them allowed a bigger piece of the income pie, thus reduced risk by increasing income. Tax reductions do not increase income, just decrease expense and ultimately reduce services that people relied on to reduce the risk of living in the US. We protected Harley Davidson, we financially backed bad business results. We reduced the 5 mph bumper to 2.5 for the auto industry. None of this has reduced the risk of living, and have actually increased the risk of living in the US.

Katrina? Lead paint in Asian products, contaminated food. Cut’s in education, medical, civil services, infrastructure failure. Privatization may have reduced some costs, deregulation may have decreased some costs (the supposed Walmart benefit), but all of it shifted cost to the individual removing it from the collective. It has resulted in a greater risk of financial ruin in an environment that has decreased the share of income to the 99%. Not having a corresponding rise in income with a rise in productivity only served to increase risk to US.

I want to know of a piece of legislation that actually removed or significantly reduced the risk of living life in the US such that the US citizen was that much closer to succeeding in their pursuit of happiness. I’m not interested in some little piece for a sector of the citizenry. I want to know if anyone can name a piece of legislation such as Social Security, 40 hr work week, Civil Rights, Medicare that has passed since Medicare that actually reduce risk for US such that We the People felt that much more secure in our individual lives in that fear has been reduced.

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Re-tooling the Medicare/medicaid model

rdan

I read the Op-Ed in the Boston Globe and asked Doug to write a piece or pieces in a more detailed fashion. There have been allusions to this issue as a cost factor, but no policy consideration here to date.

Post by Doug Brown

Due to the complexity of organizations today, there is commonly a “silo mentality” that develops where one department often doesn’t know what another is doing. Employees are good at looking at the “trees” within their silo, but very few are seeing the forest. We have all seen it. The result is usually organizational dysfunction. Nowhere is this more pronounced than at one of our largest government agencies – the Centers for Medicare and Medicaid Services (CMS). What’s worse, this dysfunction has enormous consequences for the cost and quality of health care that is delivered in this country. And yet, as we embark on the most significant reform to our health care system in over forty years, no one is talking about this issue.

In a July 20 Op Ed in the Boston Globe entitled Retooling the Medicare/Medicaid Model, I explored this issue. Specifically, I highlighted a program in Massachusetts that successfully breaks down the silos between these two programs to do what’s best for patients.

This care delivery model, called Senior Care Options, pools funding from Medicare and Medicaid to allow private organization to integrate care for dually eligible individuals (those eligible for both Medicare and Medicaid, and some of the most costly individuals on our public programs) to provide truly coordinated care that is patient centered and cost effective. The model has been very successful in keeping seniors out of expensive nursing homes and making them happy and satisfied. So the question is: in light of what seems to me to be such an obvious opportunity, why aren’t more states doing something about it and why aren’t more people talking about it?

I received a number of interesting responses to my Op Ed, some of which speculate on this question. One was from Renee Markus Hodin of Community Catalyst, a well respected consumer advocacy organization. She reported that her organization has been trying to make headway on this issue for years. They even got a provision inserted into the original House health reform bill to specially protect and encourage more SCO programs. But the provision was eliminated, apparently due to a misunderstanding. I am told it was opposed by some beneficiary groups “who were wary of the provision being abused by states that want to dump their duals into private plans and/or by plans that were not committed to providing the kind of care delivery system that we see under the SCO program.” That has not been the experience of SCO at all. But unfortunately, it seems that some of the new “Special Needs Plans” (SNPs) that were created recently by Congress to try to address dual eligibles are not working as intended and do not fully integrate care like SCO does.

The beauty of the SCO program is that there is a three-way contract; between the state Medicaid agency, Medicare and the SCO. This is critical to ensure full integration among both programs. Renee tells me they are trying again and hoping to garner more support.

I received another response from Jennifer Baron, a senior researcher at the Harvard Business School. She too has been working on this issue for a number of years. Here was her post to the online version of my Op Ed:

In April 2008, Harvard Business School Professor Michael Porter and I published a case study profiling Commonwealth Care Alliance (CCA), one of the three organizations offering a SCO plan. This case is one of the few examples we’ve found of a high-value approach to insurance coupled with an innovative care delivery model. Invariably when the case study is taught, students approach us after class to inquire how they can become involved with CCA or SCO.

We’ve found it particularly inspiring that under the pooled Medicare/Medicaid payment model, CCA managed to successfully serve one of the most complex and costly patient populations on the planet. In 2006-7, the only patient population for which CCA’s costs exceeded average premiums was the institutionalized population. Average premiums for the frail elderly patients who remained outside of institutional settings all exceeded costs. Talk about aligning financial and patient incentives!

My understanding is that once SCO graduated from a demonstration to a Special Needs Plan in 2009, the single three-way contract with Medicare and Medicaid – one of the most innovative aspects of the reimbursement model – disappeared. Though both Medicare and Medicaid continue to fund the plan as a SNP, I believe they must now contract separately with participating organizations.

For additional information, the CCA case study abstract is posted on the Institute for Strategy & Competitiveness website.

My best judgment of why this is not getting better traction is twofold: first, Medicare and Medicaid are incredibly complex and few inside and outside of healthcare really understand either one, let alone the way they intersect (that is why I tried hard to make my Op Ed explain the issue as simply as possible; you can let me know whether I succeeded). Second, we have lacked leadership and focus at the federal level. CMS has become such a large bureaucracy that it is overwhelming to even think about how one might reorganize it so that it better serves patients. But in my view it must be done. I remain very hopeful that with a new administration and a new focus on health reform, we have a unique opportunity to finally address this issue. I would love to hear your thoughts and ideas on the subject, including ways we might try to help make this happen.
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by Doug Brown

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Will catastrophic only health insurance be rescinded in the end?

rdan

Taunter explains how the .5% rescission rate figure discussed in the hearings on health insurance premiums and coverage is used to dismiss Congressional concerns as inconsequential and actually is a good business practice that will not change. It is worth going to the post to accurately follow the train of thought. Taunter concludes that the chances for rescission for a serious illness is:

If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population). If you take the LA Times estimate that $300mm was saved by abrogating 20,000 policies in California ($15,000/policy), you are somewhere in the 15% zone, depending on the convexity of the top section of population. If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%, the folks with over $35,000 of annual claims who could never be profitable for the carrier – then the probability of having your policy torn up given a massively expensive condition is pushing 50%. One in two.

Rescission definition practice can be found here and unfair examples here. Here is why door number two is NOT 50/50.

It is suggested that application forms are formed to allow for inaccuracies and that some criterion used to cancel policies is easily avoidable at the time of the application, the implication being future use for the inaccuracy makes it worthwhile to allow ambiguity and not vet information, mainly for those who wind up claiming over $35,000 and who have severe, chronic conditions that make premiums from that person irrelevant to profit.

This may have not been the intent long long ago, and certainly fraud occurs, but rescission having a basis purely monetary and not legal (from a common consumer point of view on what fraud is), is the policy today if testimony is to be believed.

The first notion, that it is a small problem except for the person involved, is discussed in the first post. The key to amended %’s lies in the fact that Medicare takes care of the 65/over group of chronically ill and elderly clients, so the privately covered population is smaller than the per centages indicate as well, a major oversight. The second and third part of the problem will be in Part 2 and 3 (clever, huh?)

StatsGuy wrote in comments to the Taunter Media post:

StatsGuy
The same light bulb went off when I read the 0.5%, but I could not have explained it _nearly_ as well. Very nice post.

I still wonder, though, whether it might be slightly worse than even this picture.

1) I believe your data is for the US population as a whole. (If I’m wrong, then this comment is meaningless – apologies.) But, in fact, much of the sickest part of the population receives health care via Medicare because older people are (to use your technical term) sicker.

So the % of people in the top tier AMONG PEOPLE NOT ON MEDICARE is much lower, which means that the conditional probability of suffering rescission given that you need treatment is much higher. Roughly, if the % of people among under-65 (and not on Medicaid) in the top bracket was half of what it is for the entire population, then the probability of suffering rescission given that you have a large claim is double even your current estimates.

2) The probability of losing the policy given that you really need it may be X% in any given year. But there’s a cumulative effect – over time, you build up a reservoir of uninsurable who lost insurance due to rescission, and now cannot get it back because they have a chronic condition.

on July 29, 2009 at 10:03 am | Reply Taunter
You are absolutely correct about #1, and this is a huge error factor. 10% of Medicare costs take place in the last month of life alone, and Medicare is roughly 45% of the national health care spend. So all of those patients are clogging up the top end of national distribution and not on private insurance in the first place. Unfortunately, I can’t find a private-only, or individual-pay-only distribution, and of course if I did find an individual-pay-only distribution it would be skewed on the top with denied claims (some people should be spending a lot, but actually spend much less, because their policy was pulled). The Reuters article says Medicare spends 30% of its outlay on the top 5% of its population, which means it has a flatter curve than non-Medicare (I would assume, without evidence, that fewer Medicare beneficiaries have negligible health expenses). This implies non-Medicare spending is even more highly concentrated with a few very high spenders.

On #2, I’m a little less confident, and it was one of the reasons I may have misunderstood James’ original post. There is a cumulative effect, but that effect is blunted to some degree by the fact that the people who account for the very high medical expenditures do not necessarily change much from year-to-year (with the obvious exception of the end-of-life expenses typically borne by Medicare). In fact, one of the reasons I suspect rescission became such a powerful phenomenon is that if Sally has breast cancer at a young age, she is going to be in the 99th percentile several times; the carrier is weighing years of such expenses against her premium. So it might not be the case that in a forty year career an average person has a 33% chance of ending up at some point in the top percentile (1-(.99^40)); it is probably the case that most people have a tiny chance of ever getting an expensive chronic condition (or at least an expensive, chronic condition before turning 65), and some people have a large chance of repeatedly being in the top percent.

Keep the discussion going. It is clear a profit motive has serious impact for some people…how would you bet even catastropohic only insurance premium money?

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FYI on National Health Insurance

Science Friday aired a show on 12/14/07 discussing national health insurance.

Guests were:
Uwe Reinhardt James Madison Professor of Political Economy,
Princeton, New JerseyJ.
Fred Ralston, Jr Chair, Health and Public Policy
Committee American College of Physicians, Fayetteville, Tennessee
Donald Berwick President and Chief Executive OfficerInstitue for Healthcare Improvement, Cambridge, Massachusetts
Here is a real example (as of 12/17/07) of just how convoluted the payment system has become:

Just got an EOB back from Humana. I am out of network with Humana but in-network with Multiplan (b/c they bought PHCS). Humana discounted my services stating that “I am not in-network with Humana but I have accepted a discount because of another contract”. Then after this discount they applied the out of network deductible and out of network co-insurance (60%). Had front desk call Humana to find out what contract they were discounting from. Humana told us Multiplan. Called Multiplan, they said that Humana is using Multiplans fee edits but they shouldn’t be applied to this patient b/c it is not a Multiplan member. Confused? Me too. Last I heard from my Front desk was that “they” will correct it if we send: new HCFA, invoices, insurance card, and EOBs

EOB = explanation of benefits

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Reader Dan: Medical Care, Part 3

Reader Dan, part 3 on medical care.

Hat tip to Angry Bear reader Buffpilot for joining voices in a liberal/conservative plea for doing the right thing. Please refer to this post for context on PTSD, healthcare, and Therapist1 comments. Clearly there is great need to increase funding for cognitive sciences and occupational therapy needed for our soldiers and their families in Tricare.

Next a post on medical care and cognitive science reimbursements in a scholarly piece by Dr. Jerome Groopman is useful to further thoughts on our next step to thinking about our health system, cognitive sciences, and other medical fields. Hat tip to Angry Bear reader Coberly.

Another piece in the New England Journal of Medicine that I found of interest was a series of letters about medical education. I feel strongly that it is time to integrate cognitive psychology into the curriculum. Physicians are making decisions all the time under conditions of uncertainty, with limited data. The human mind is wired to take shortcuts, and our biases and emotions can strongly color our reasoning. Scant attention is paid to this critical cognitive dimension which underlies misdiagnosis.

Changing behavior is difficult, but, in my experience, most likely succeeds when there is time allotted to the discussion, a close bond between the patient and doctor, and continuing encouragement. It boils down to words and positive feelings, and the health benefits can be extraordinary. Much of what primary care physicians do involves preventive medicine. Unfortunately, the system, based on its payments, is telling us that this has meager value.

As Ginsburg and Berenson point out (in the New England Journal of Medicine), there are powerful lobbying forces against changing payment schedules, and even though a bone is thrown on occasion to increase payment for a certain cognitive practice, at the same time, payments are reduced for other kinds of thinking medicine. It ends up as a wash, if not a reduction in rewards for those doctors who are trying to prevent disease or make a thoughtful diagnosis that takes time.

The question remains, who is a good doctor, and, moreover, who is the right doctor for any individual? The best answer that I have found for myself and my family is a doctor who thinks with us, explains clearly what is in her mind, how she arrived at her working diagnosis, and why the offered treatment makes sense for us as individuals. She may refer to guidelines and “best practices,” but clearly takes into account the spectrum of human biology and customizes our care to fit both our clinical needs as well as our emotional, social, and psychological dimensions.

We currently have a system that costs too much but appears to have professionals leaving in significant numbers because the pay is too low. It was developed as a cost containment structure based on metrics and evidenced based best practice as developed by insurance companies. The question then is to ask who gets rewarded, and what kinds of procedures are rewarded. Clearly it is not cognitive sciences. Who else?

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