Category: Health insurance Page 1 of 2

Drug Insurers Reap $9 billion Windfall from Overestimates

On January 7, 2019

In Corporate Reform, Drug Companies, Drug Pricing, Health insurance, Medicare, Uncategorized

Major drug insurers like United Health Group, CVS Health, and Humana make estimate bids to Medicare for reimbursement for the cost of Part D prescription drug benefits. From 2006 until 2015 the Wall Street Journal examined industry records and found that insurers reaped an additional $9 billion from overestimates of drug insurance costs.

Sources: Centers for Medicare and Medicaid Services, The Wall Street Journal – 1/4/19

From 2010 to 2017 overall Part D spending rose faster than all other Medicare components by 49 %. The bids from insurers include their profit margins and administrative costs. Medicare reimburses the firms monthly. When the year ends, Medicare audits the estimate totals versus the actuals and requests the overpayments be returned. However, the way the payment terms are setup the insurers are not required by pay the full amount of the overestimate. In 2015 insurers overestimated their Part D costs by $2.2 billion and were allowed to keep $1.06 billion.

The size and continuous overestimate pattern seems unusual. The overestimates are extraordinary to the tune of a million to one according to Memorial Sloan Kettering analysts who completed record examinations for The Wall Street Journal. Peter Bach, director of Sloan Kettering’s Center for Health Policy and Outcomes, noted, “Insurance companies use heaps of data to predict future spending. If truly unpredictable events were blowing up their statistical models, the proportion of overestimates to underestimates would be closer to 50/50.” Dr. Bach concluded, “If they start missing in one particular direction over and over they are doing it on purpose.”

The chronic overestimates are particularly a problem in the direct subsidy part of the program as the following chart shows versus the reinsurance program where estimates are far more accurate.

Sources: Medicare, The Wall Street Journal – 1/4/19

Congress designed the program in 2003 where the federal government and seniors would pay for drug insurance while the program would be operated by private companies. Legislators were concerned that insurers would not want to participate so they allowed for companies to hold back overestimated reimbursement funds. The private companies bear all the risk in the direct subsidy program, yet in the reinsurance program for high cost drugs Medicare bears the risk on underestimates causing losses.

Insurers can gain major benefits by overestimating on the routine drug costs they cover. Companies can keep any overestimated funds up to 5 % of their guess. In some cases they can keep more than 5 % based on a Medicare formula. Medicare steps in if the insurers experience a greater than 5 % loss in their estimate.

Next Steps:

From 2006 to 2015 Medicare spent $652 billion on the Part D program, with its cost increasing by 49 % over that period. Costs must be controlled by private insurers to keep premiums low for seniors and cost overruns limited for the federal government. There is too much reward built into the present direct subsidy program. Why not do as many corporations do for contracts that estimate costs and then must be reconciled at the end of the year? Return all the funds that are overestimated. Chronic overestimating companies would be hit with a penalty for overestimating reimbursement based on the opportunity cost of funds over reimbursed monthly payments. Medicare should reward the accurate estimating companies with positive ratings on their prices, and make clear who the violators are. Making the programs more competitive would bring down costs and require that companies be more accurate in their drug reimbursement estimates.

We see the pricing of drugs via insurers and pharmacy benefit companies as being too opaque to clearly design a fair pricing system. Congress needs to pass a ‘simple pricing’ sunshine bill to make drug pricing clear and accurate for all consumers and the government. Medicare should be able to use its leverage covering millions of seniors to negotiate a reduction in drug and insurance costs. California announced today a policy just signed by the newly installed governor, Gavin Newson, authorizing the California Medicaid administration to negotiate drug prices for all 13 million patients enrolled as a block and invites private employers to join the block. Drug companies and insurers need to shift their focus to make pricing programs more equitable for patients and payers or the face increased calls for price regulation.

Administration Drug Price Reduction Plan – Good Start

By Patrick Hill

On October 30, 2018

In Drug Companies, Drug Pricing, Health, Health insurance, Low Income Finance, Medicaid, Medicare, Social Responsibility

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: blog.medicareright.org

The GOP Administration has announced a new drug price reduction program that will use a basket of prices that 16 nations pay for certain drugs in the Medicare Part B Plan (hospital and health services plans) to determine the price the federal government will pay. Biotech drugs which are extremely expensive, yet have high efficacy are to be targeted. The price reductions will be phased in over a 5 year period.

The difference between what the U.S. pays for many often prescribed medicines is huge as the following chart shows:

Sources: Bloomberg, The Washington Post – 10/26/18

How did U.S. prices get so much higher than other nations? Simply, the other countries negotiated tougher than we did. The pharma industry lobby in Washington spends tens of millions of dollars every year to persuade lawmakers and the White House to give drug makers complete pricing freedom. In effect, Americans are paying for the low prices other countries receive where the drugs are being sold with low margins or below margin. Pharma companies do not have a problem with this inequitable situation as long as they make money.

For example, in the U.S. Genentech, a division of Roche, prices a single dose macular degeneration drug Lucentis at $1000 while the same exact bio medicine – Avastin costs 10 times less. The firm says that the extra testing for the eye version requires a higher price. This premise disputed by scientists who worked in the Lucentis division and left in part due to the greed of management.

The administration is also planning on developing ways to give the private sector more leverage in negotiating prices with drug makers. Plus, HHS wants to create new policies that would reduce incentives for doctors to prescribe expensive drugs.

Next Steps:

We applaud the GOP Administration for taking on the drug companies and their money making over all else approach to drug pricing. The pharma companies most affected are stung by the plan and charged it with ‘socializing medicine’. We don’t see their gouging prices to Americans as fair and equitable, so controlling prices to reasonable margins is common sense not a value shift of the health industry.

A good place to start cutting costs is to end prescription drug TV advertising like over 100 countries worldwide ban – that would allow the firms to cut billions off prices each year. Next, they need to end stock buybacks which take shares off the market to increase share price.

Sources: Leerink Group, Market Watch – 10/30/18

These are the top 6 of all pharma firms wasting money on goosing their stock price with stock buybacks to increase stock compensation to executives while patients get hit with soaring drug prices. Nearly $100 billion dollars spent in the last year would go a long way to bringing down the price of drugs. When the industry cries it does not have funding for research it needs to start here and drug advertising if they tried harder to find the money they could. The executives just don’ want to take a pay cut and run their firm with reasonable margins, yet are fine with driving patients into bankruptcy or adding thousands of dollars of debt to patient accounts.

The GOP plan does not go far enough, all medicines purchased by Medicare and HHS should be negotiated. The negotiating authorization for HHS has been in numerous bills in Congress repeatedly defeated in by the drug lobby. Congress needs to pass the bill, and get moving with a fair drug pricing model, with complete transparency from insurers and pharmacies to patients. The federal government can learn from the assertive approaches many states are taking by looking a efficacy based pricing to bring prices within reason as well.

It is time the pharma industry took a hard look at its financial engineering and redesign a more equitable pricing and reasonable profit model for patients, hospitals and suppliers.

Millennials Demand Virtual Health Services – Upending the Present System

By Patrick Hill

On October 23, 2018

In Health, Health insurance, Internet, Millennials

Image: meddeviceonline.com

By 2020 there will be 83 million millennials in our country becoming the largest generational group. As they take ever more powerful positions in our society their demands on the healthcare system will focus on virtual services. They grew up using the Internet, with its culture of immediate access, virtual relationships and convenience. Millennials expect their healthcare services to provide the same types of services as they regularly use on the Internet – Internet healthcare. For them the baseline is using technology as the platform for accessing, using and paying for services.

Harris Survey for Salesforce – 2015

The millennial generation want to use as their framework for health services all the Internet services they enjoy now: patient reviews, online appointments (including specialists), using mobile phones for services, use apps to manage their wellness, use wearables for monitoring health, 3D printing of devices ie hearing aids, teleservices like video chat with a doctor, and pills that monitor internal organs that are swallowed.

The present system is organized around a primary care physician (PCP) who is the gatekeeper and co-manager of the patient’s health program. All patient records are with the PCP and the healthcare provider, records are not accessible from anywhere in the ‘cloud’. The core guiding principle being that all medical services need to be integrated, not disconnected for increased efficiency, effectiveness and safety.

Artificial Intelligence adds another innovation level to delivery of health services. The AI industry is looking to serve the needs of millennials in healthcare by offering ‘neural network’ based medicine of expert databases and access to the ‘right treatments’ at the click of a button or the swipe of a phone app.

Next Steps:

The implications for changing the present PCP, doctor oriented system toward an on-demand patient based system are revolutionary. One challenge will be how to maintain continuity of care when the patient is using virtual services from multiple providers, while ensuring effective care and safety. The human body is one complex entity made up of multiple systems, all integrated tightly to work together. If one system is off balance or damaged other systems maybe impacted, which is why the PCP based system was established. Doctors, not patients are trained to see the interactions of various human body systems, and to know when and how to bring in a specialist to treat a condition. Yet, how will placing tests, treatments and services at the touch of an app by a patient change the doctor – patient relationship? Will quality of care be maintained? Will high quality care only go to the technology savvy patient who knows how access all the health services to obtain a complete health solution? Are we going to be comfortable with AI – a physician advisor robot prescribing medications, treatments, surgery? In this virtual world of services who is responsible for maintaining continuity in care?

The virtual world of medicine does offer ways for reducing the cost of healthcare dramatically to thousands of patients. The U.S. spends 41 % more as a percentage of GDP than OECD countries while life expectancy is 4 years less. Yet how will the present system of layered providers, drug – pharmacy managers and hospitals respond to Internet based healthcare? Will they just use this myriad of disconnected services to charge even more because it will be difficult for the patient to manage costs the same way a health care provider does today. Do we want to place the patient in the center of healthcare delivery of services? The economic dislocation of every health care service provider will be profound and huge. How will we make sure that all our citizens are included and not just those with Internet access? So, what will our health sector plan be?

A few salient points need to be kept in mind in developing a sound policy. The patient does not have the expertise of a physician who has attended years of training, internship and practice before treating patients. Replacing the physicians role in the delivery of healthcare needs to be done carefully and in some cases certain conditions are off limits. Ensuring the safety of medicines, treatments and invasive procedures needs to be paramount in any system change. Patients need to be given options, for example the patient may not want a robo physician advisor and wants a human doctor of his or her choice.

The other major point is our political processes are way behind what technology innovators are creating today, dramatically impacting what our healthcare choices will be tomorrow. Our political processes need to be brought up to date, and forward looking if we are to have any chance at making intelligent decisions about our healthcare delivery system. We need to take this opportunity of a shift to Internet based health care to ensure that everyone receives good quality health care, at a reasonable price and will not go bankrupt in the process.

U.S. Healthcare Spending 41 % More Than OECD Countries

By Patrick Hill

On October 1, 2018

In Corporate Power, Corporate Reform, Drug Companies, Drug Pricing, Health, Health insurance

Image: consumersunion.org

The United States healthcare system is an expensive healthcare system compared to the OECD countries that spend 41 % less per person as a percent of GDP with a 4 year higher life expectancy rate.

Sources: The Daily Shot, The Wall Street Journal – 10/1/18

As U.S. spending continues to increase life expectancy rates are stagnant, simply not improving. Note that while OECD spending continues to grow at a much slower pace the life expectancy rate continues to climb. Americans are not getting the health care system performance that our European sister countries are achieving.

Sources: OECD, CMS – US, Moody’s Investors Services, The Daily Shot, The Wall Street Journal – 10/1/18

Even when looking at similar income level countries the cost difference is highly apparent in cost per capita.

What are OECD countries doing that the U.S. is not doing? For starters they do not have a private health insurance system which adds a profit motive to treatment, triages services to the higher income people and increases drug prices to consumers. Administrative costs in the U.S. are 8 % of the total healthcare spending versus the OECD countries which range from 1 to 3 %. One reason for the high administrative burden is administrative hiring was 650 % more than hiring of health services workers since 1970. Generalist physician salaries are significantly higher in the U.S. by 50% compared to developed countries. Drugs in America cost twice the average prices in comparable developed countries. The drug costs are distorted in the U.S. largely due to price controls in European countries so drug manufacturers charge as much as they can to U.S. providers and patients to make up the difference. Finally, another key reason is about 10 % of the U.S. patients are not covered by insurance. Which means they do not receive care from birth, let medical issues fester and go to emergency rooms for all their care (as U.S. law requires hospitals to serve all who come regardless of insurance). A study of the healthcare delivery system in Philadelphia showed that overall healthcare costs in the city could be reduced by 20 % if patients that needed care had services offered in doctor offices covered by insurance.

Next Steps:

We have recommended in previous posts that we have one insurance system in the U.S. as other developed countries. Administered by the Health and Human Services department, a health account would start as soon as a baby was born. Contributions by individuals, their employer and the government would go into one account. Private insurance could continue in those years where a worker is on the payroll of a company with benefits. In the event the worker is between jobs he or she would be covered by the government supported part of the plan. There would be only one formulary for drugs, and schedule for treatments and procedures. The administrative overhead could be cut to the 1 to 3 % range that other countries enjoy. Staffs in providers offices dealing with insurance idiosyncrasies and byzantine rules could be cut by 75 %. Drug companies would be prohibited from implementing stock buybacks which would make billions of dollars available to cut prices and innovate new medicines instead of lining the pockets of executives.

Hospitals Cut Non-Compete Deals With Insurers

By Patrick Hill

On September 19, 2018

In Anti Trust, Corporate Power, Corporate Reform, Health, Health insurance, Restraint of Trade, Teacher Wages

Image: wbur.org

Hospitals are the number one cost in health care nationwide at $1 trillion per year. Healthcare is close to 20 % of the U.S. annual GDP. Physician and clinical services are second followed by prescription drugs.

Sources: Centers for Medicare and Medicaid Services, The Wall Street Journal – 9/19/18

Hospitals are at the center of the most intense and high care treatments for surgeries, interventions, procedures and emergency care. Most must take Medicare payments if they are to have a wide enough patient population to support their business. Yet, Medicare reimbursements often don’t cover the actual costs of treatment. Hospitals look to employer – insurer plans and cash customers to make up the difference.

The Wall Street Journal investigated a number of hospital – insurer contracts and found in some cases the hospitals and insurers were cutting contracts which included non-compete clauses. Thus, if a hospital had a dominant position in a patient market, it would require that the insurer not insure patients of their competitor. Clearly, a restraint of trade, causing employer plans to pick up the balance, and in some cases where doctors were affiliated with hospitals employees were having to pick up the extra cost. Employers have seen premiums from insurers going up to handle the extra cost of these sweetheart deals.

These close partnership deals between hospitals and insurers create higher costs where services are much cheaper outside of the hospital in a doctor’s office.

Sources: Health Care Cost Institute, The Wall Street Journal – 9/19/18

Instead of hospitals steering patients to their doctors for many services, they provide the services on an outpatient basis at a much more expensive price. Insurers pick up the outpatient cost and then charge employers and patients higher premiums than necessary.

Next Steps:

We have supported the Affordable Health Care Act provisions requiring insurers to insure all patients with existing conditions, and other patient oriented options. However, this law is only the first step in reforming the healthcare industry, rigorous enforcement of anti-trust laws needs to take place to eliminate practices like these non-compete agreements. We call for transparency in pricing of all drugs, and the relationship between drug manufacturers and pharmacies. We recommended in earlier posts that all Americans should have access to good quality health care, beginning with a healthcare account at birth. Then, as the patient takes a job, employer plans can be used, but always between jobs or disability the patient is covered. Medicare should be the first line of insurance for all from birth with employer plans supplementing the main plan. Medicare should have complete negotiating rights with drug manufacturers to get the best price for all patients. All health care for profit companies should be barred from buying back stock and wasting money on executives which is better spent reducing prices and increasing the quality of care.

Driver Connects Patients with Cancer Treatments

By Patrick Hill

On September 6, 2018

In Health, Health insurance, Heartland Economics, Life Expectancy

Image: wahospitality.org

Cancer treatment in the U.S. cost $87.8 billion in 2014, with 1.7 million new cases being diagnosed each year. In a analysis by the American Cancer Society, patients paid $3.8 billion in out of pocket expenses for their care in 2014.

Source: American Cancer Society – 4/2017

One of the major problems in cancer care is the physician centric model the U.S. has today, which can create major delays in treatment and sometimes mismatches the patient with a specific type of cancer with the correct care program.

Driver, a startup with over $100 million in venture backing has developed an application on the Internet to help patients correctly identify the type of cancer they have and match them to clinical trials and treatment programs. The software allows the patient to be proactive about managing the course of treatment without being totally dependent the treatment processes of their healthcare provider. Driver has partnered with the National Cancer Institute (NCI) to provide access to the latest information on cancer treatment trials. NCI has also validated the matching process that Driver employs.

“There is an air gap between knowledge and patients that has existed in cancer care since the 1850s,” said Driver co-founder Will Polkinghorn. “We want to close that space, “ in a recent Bloomberg interview.

The Driver app puts the patient in the driver’s seat so they are empowered to take command of their care. As time is of the essence in cancer care, educating patients and giving them access to the information to initiate their care is crucial. While the target is to provide the application and cancer identification workup at low cost, the initial trial starting this month in the U.S. and China will cost patients $3,000.

We have been an advocate of innovative ways to provide health care to patients. Empowering patients to take direct management of their care instead of being dependent on a bureaucracy in a health provider network is an interesting approach. Providing updated information, access to clinical trials with direct identification of the specific cancer the patient has, will possibly ensure greater accuracy and speed in the treatment process, thus saving more lives and reducing costs. Innovative solutions that disrupt the present status quo of extremely expensive health insurance, provider, drug manufacturers and federal government complex need to shift if we are to see a lower cost, higher quality healthcare system. In particular, our Heartland healthcare providers are falling behind in providing standard health care to our people. We need to turn this spiraling down in care with soaring prices, now.

57M Gig Economy Workers Hit Benefit Limits

By Patrick Hill

On September 5, 2018

In Corporate Reform, Gig Economy, Health insurance, Retirement, Social Responsibility, Wages

Image: thcceomagazine.com

Gig workers create millions of dollars of goods and services for the U.S. economy yet remain frustrated at not picking off a benefits stream for themselves. While, gig economy workers enjoy ‘lifestyle benefits’ they are lacking in good health insurance, retirement plans, stock options and addons like commute cost compensation, discounts at restaurants, staff lunches, evening taxi service, onsite laundry and company cafeteria. Income is irregular and unpredictable for contractors whether the gig is a project or a longer term assignment with an agency.

In Silicon Valley and many high growth regions jobs in security, food concession, facilities management, IT, accounting, travel, web design, and HR have been outsourced, contracted or shifted to independent contractor roles working in their home. While independent contractors have autonomy and work flexibility they are missing key benefits. Contingent workers like Uber drivers using the Uber app to find riders and handle billing are essentially working for the company yet not enjoying full time worker benefits.

So, how widespread in our economy is the contractor workforce? Gallup completed a recent survey and found about 36 % of the workforce is engaged in some type of gig work.

Sources: Gallup, The Wall Street Journal, The Daily Shot – 9/5/18

Seven percent of workers had one traditional job and a gig job while 3 % had two gig type jobs for a total of 10 % with two jobs. Workers in the bottom 80 % in income have seen their wages actually decline over the past 10 years. So, it is no surprise they need to hold at least two jobs to maintain their standard of living. The number of workers holding multiple jobs has skyrocketed in the past few years.

Sources: Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/5/18

Note the high during the Great Recession of multiple job holders, and yet today in a strong economy we see a similar peak in workers with multiple jobs. Is this economy really working for the majority of the labor force?

Next Steps:

The economy has not ‘lifted all boats’, we know that the top 10 % in income received 90 % of the income gains since 2008. The most recent Tax Bill from Congress benefited the top 1 % and corporations to the tune of a $1 trillion deficit to be paid by all taxpayers who are seeing their incomes and benefits decline. The gig economy has been a mechanism for corporate executives and their wealthy shareholders to cut costs, pass along retirement benefits responsibility to employees and shut many workers out of profit sharing programs.

We have proposed in previous posts that in addition to raising worker wages, gig economy works would be well served if they received health insurance from birth, a retirement program in tandem with Social Security at the time of a worker’s first job and other income protections.

It is time we recognize that the gig economy is here to stay, it is a key component of the dynamism and flexibility in the workforce to drive growth and innovation – we need to plan for the just needs of workers to make the economy work for all.

Health Providers Not Paying Care Workers Enough, Administrators Too Much

By Patrick Hill

On August 27, 2018

In Drug Companies, Drug Pricing, Health, Health insurance, Medicaid, Medicare, Uncategorized

Photo: aarp.org

There are 3.5 million direct health care workers in the workforce today. The Bureau of Labor Statistics estimates that another 1 million direct health care workers will be hired by 2024. Direct healthcare workers include mostly all the assistant positions except a registered nurse: personal care workers, home health aides, and nursing assistants.

Sources: Bureau of Labor Statistics, Vox – 7/3/2017

Direct care workers often receive a wage below $15.00@hr. About 90 % of personal assistants receive $30,000 or less per year in income. One reason wages are so low is that 70 % of all long term care costs are paid by Medicare and Medicaid. These agencies reimburse care providers on a fixed cost basis. There is another reason. A high number of administrators are being hired rather than physicians, nurses or direct care workers.

Sources: Bureau of Labor Statistics, National Center for Health Statistics – 2010

When viewed from the perspective of healthcare spending per capita, administrator hiring was about 650 % more than overall per capita services. Healthcare is a lucrative sector for business, so they focus on hiring more administrators and managers rather than nurses and direct care workers. Healthcare providers can take the wages they pay too many administrators and give caregivers the wages they need to take are of themselves and their families. The byzantine way the healthcare industry is structured with insurance companies between the providers and workers when we only need one government agency to manage insurance is a good example. Most providers have who departments devoted to interacting with insurers and Medicare staff, which expensive to staff with specialized expertise due the idiosyncrasies of insurance policies.

Next Steps:

We clearly need to use computer systems and software to reduce the number of administrators and overhead in the system to the norm of per capita costs. End the use of private insurers except as contractors to a single government agency, use a standard reimbursement procedure with no middle layers of pharmacy benefit managers and end go to middle managers for insurance companies.

In previous posts we have recommended:

“The core need is to provide low cost effective health insurance for all people (like all developed countries do), so when illness strikes patients receive high quality care and become healthy again. Why do we need multiple insurance payers – private and the federal government? If we were running a corporation we would not have two accounts payable departments? We need to transition to individual health accounts that stay with the patient regardless of employment status beginning at birth. Here are ideas on how this transition could work.

Complete Analysis of ACA – We need to learn from the public exchanges that work – California’s public exchange has been quite successful covering new patients, and keeping costs reasonable for low income patients. Yet, we also need to look at why those exchanges like Oregon are not working well and expensive. Let’s summarize the analysis and publish the results so we can build a consensus around the solution, extending what works and recommendations for changes.

Priority One Cover the 9 Million Uninsured – those not covered by insurance need insurance now, we need to figure out how to cover 100 % of our citizens immediately. Offering a public option on the exchanges for basic health services and drug coverage would be a good start.

End State by State Coverage – state pools not large enough to make insurance work for all. With 360 million people in the US we can make our health insurance pool work to reduce costs. Plus, legislation needs to be passed to reverse the Supreme Court decision to allow states to opt out of subsidies. For example, Texas opted out on $10 billion subsidies leaving many low income families without insurance or very high premiums they cannot afford. Interestingly, a few months ago I talked with a small business office manager in Texas, she complained that ACA was not working (her firm did not offer health insurance), for her hourly staff. Obviously, one reason is that Texas opted out of the subsidy program. Using a national pool would help to spread out the disparities between regions in terms of the rising cost of insurance versus stagnant wage increases.

Create Individual Health Accounts – funding can be setup via a payroll tax, accrued to a personal national health insurance account when working (if they don’t have employer options – to be transitioned later). For individuals or families below the regional poverty level they would pay no health payroll tax. For those individuals who are not contributing to their health account, the federal government would fund a basic health and drug account by progressive taxes on wealthy individuals over $250k and the increase taxes on corporate profits. Corporations can offset the increased tax, by offering lower cost insurance, medigap plans or encouraging their employees to move to the basic national health insurance program.

End COBRA – by setting up health accounts regardless of being employed, there is no need for COBRA plans. Otherwise, for those unemployed to continue coverage often they have to pay soaring COBRA premiums up to 400 % of their employed premium rate. For this author, two major illnesses occurred when I was unemployed, often with the stress of being unemployed is the time we need health insurance. COBRA is another example where health insurers are charging outrageous rates to those who need the insurance badly but can least afford it. For the unemployed they could rely on basic health coverage in their individual health account.

Transition Employer Plans – convert employer plans over 4 years into a national personal health care account. Rollovers can be accomplished in a similar way to 401K to IRA rollovers (without the penalty for early withdrawal). Ending employer programs will cut a layer of administration in benefits departments that more rightly belongs to the individual regardless of employment status.

End Penalties For No Insurance – we want to to tax behavior we don’t want and support or subsidize behavior we do want. All Americans who have Social Security numbers should be able to enroll in a personal health insurance account, if they do not have a employer sponsored program. Parents can apply for a SSN for their child to be covered. A public insurance option should be offered to all those families not in employer sponsored programs. The public option run by Medicare is a basic health insurance program run similar to basic Medicare for seniors with medigap plans to cover the other 80 % of coverage needed.

Use the Medicare Drug Formulary – we don’t need multiple formularies and tiers of drug coverage. Medicare already provides one formulary which should be used as the industry formulary. We need to empower Medicare to negotiate all drug prices and health procedures with providers with provision for regional differences on procedures. A critical medication list can be created by Medicare for life threatening (Epipens) or serious chronic conditions (diabetes) capped at 5% profit for drug manufacturers.

End Stock Buybacks by Insurers – insurers need to end stock manipulation and the waste of stock buybacks. Companies like Aetna have spent billions of dollars on stock buybacks which would go a long way to reducing premiums and costs to patients.

Pricing needs to be transparent – similar to a mortgage disclosure statement. The explanation of benefits and drug claim form needs to be clear about the provider or drug price, any discounts and rebates, the price the insurer is paying, the price the provider is actually requiring, the price the pharmacy is paying and the exact out of pocket cost to the patient, with patient accruals in out of pocket and co pays toward insurance coverage.

Do it Without Waiting – let’s get progressive investors to back drug manufacturers that adhere to drug cost reasonable, critical med list, transparent pricing innovative insurance, publicize get more investors on board. Work with Wall Street to setup an ETF stock to focus on companies adhering to the progressive national health programs demonstrating good returns.

Awareness of What Works – A media campaign with surrogates, leadership in Congress, interest groups like the AMA, and the insurers to bring the American people along on the solution journey and to put pressure on Congress to pass the necessary legislation.

Health insurers would focus on medigap plans, taking risk out of innovative drugs to help speed them to market, vision and integrative medicine, personalized medicine, telemedicine – taking their layer out with reduce costs dramatically. They can be contractors to Medicare for transition to health accts. Or insurers can be contract administrators to Medicare, keeping costs low and utilizing their expertise.

Lets establish a lifetime health insurance program that provides good quality care, and low cost medications for all Americans.”

Families Are the Place to Start Building the Common Good

By Patrick Hill

On August 17, 2018

In Common Good, Consumer Squeeze, Corporate Power, Corporate Reform, Families, Health insurance, Millennials, Public Interest, Stock Buybacks, Wages

Image: sleepingshouldbeeasy.com

We all have a mother and father, and may have brothers and sisters. We come into the world born of our mother with a bonding to her, and if all goes well the father is there to raise us too. We can all agree that families are a priority – when things get tough our families come first.

Bo Lotzoff, philosopher and counselor helping many prisoners and poor people turnaround their lives, observed about American society that we ‘love things and use people’. It should be the other way around, ‘love people and use things’. Think about this insight. When we look objectively at what has happened to family life in the past 30 years, the slice of time devoted to family versus work has progressed in reality to not much time, or invested engagement by the working parent.

In Silicon Valley, the heart of technology innovation world-wide, it is the standard expectation for most workers at top companies to be at work until 8 or 9pm, just leaving barely enough time for fathers or mothers to read a story and tuck their children into bed. Management expects knowledge workers to check for text messages at least 19 hours a day and email before coming into the office, responding to work requests on weekends too. Even, on vacations, if project reviews are planned workers are expected to phone in for the key meetings and ‘stay on top’ of what is happening. When global conference calls are involved, the calls may start at 6am to Germany and continue to 7 or 8 pm to Japan or China. What all this connectedness means is that the company owns the mind and emotions of the worker 24 by 7. At one startup ‘all hands’ meeting just prior to the Christmas holiday the CEO thanked everyone for their hard work over the past year and declared, “have a fun Christmas or holiday rest for a day, then let’s make our numbers!” He made the statement kind of in just but half serious, the workers got his point, see your families and friends but stay connected 24 by 7.

Corporate life is destroying family life and our connectedness as a community. Being totally connected to the corporation is more important if we want to maintain our standard of living is the message. Corporations are using people and loving things (sounds like high tech).

Nourishing, sustaining and building stronger families would do a lot for solving our societal and economic issues. Crime would go down as young men who are left to live on the streets would be learning skills, playing a team sport or having a family supporting his life, and where after school programs were funded and staffed well. Groups like Thread, in Baltimore actually use the family structure with Parents and Grandparent surrogates to support youth in poor parts of the city where there may be only one parent and that parent is not home much of the time working two or three jobs to support the family. Today we are missing millions of our youth to crime, opioids and dead end jobs that could be active productive members of our labor force. Our labor force is declining with the aging of baby boomers, we need all the paycheck workers we can to support our aging population and for young workers to save for their futures.

So, let’s look at the policies of our federal government using the family yardstick which most people right or left, Republican or Democrat agree:

Family Separation – recently we saw that there was consensus that children should be kept with their parents – even immigrant children
Health Insurance – a Pew Research survey showed that 58 % of all Americans believed that every person should have affordable health insurance for which the government is responsible
Childhood Health Insurance Program (CHIP) – most Senator and Congressmen agreed and renewed the CHIP bill to protect children caught between Medicaid and being too poor to afford an individual health insurance plan in this past December’s spending bill.
Flexible Job Definition – more social and family counselors see a need for men and women to have flexible time jobs meaning that when a family emergency comes up like an illness or doctor appointment the worker can take time off and make the appointment without repercussions in job performance, salary or benefits.
Parental Leave – Federal law of 1997 requires private employers to provide maternity leave up to 12 weeks of unpaid job-protected parental leave to bond with a new child within one year of birth, adoption, or foster care placement (parental leave). The US is the only country in the developed world that does not have paid leave for parents.
Wages – real wages (after inflation) for the 80 % of workers in the U.S. have basically been stagnant for the last 30 years. Instead, corporate executives use excess profits to juice their stock prices with stock buybacks instead of raising wages. They are wasting nearly $810 billion that Goldman Sachs estimates is being spent in 2018 on stock buy backs. That $810 billion could go a long way to providing decent wages for workers. Analysts estimate the S & P 500 index is at least 20 % higher from what the prices of company stocks would be without stock buybacks. The reality is that workers and their families suffer having to work two or three jobs because of the greed of executive management.

We could add to the list, our point is made, when we have a consensus that families need to be placed as the first priority, not the second or third or thirty-fifth, then our legislative priorities are clear. Other countries seem to make a thriving economy and support of families work. Germany has paid parental leave, a net export economy, good wages, employee councils and at least 4 weeks of paid vacation for most employees. Most German families feel secure. This author asked a co-worker from Germany if he considered working in the U.S., he noted, “I would get sharper, get closer to engineering and innovation, yet, there is no real recognition of families, In Germany, I have paid leave for a new child, four weeks of vacation every year, a good guaranteed retirement program, health insurance and I participate in our employee council…I don’t want to live under constant stress in America.”

Families are the basic economic building block of our country. When corporations take control of our government and run our families into oblivion we all are hurt as a country. In the end corporate executives need to wake up and support family sustaining policies in their company, their management culture, wages and in Washington to build strong families. Otherwise, someday corporations will discover as is beginning to happen today, that young women having the fewest babies ever since WW II, the lowest level of family formations ever and lowest number of millennials buying homes will lead to shrinking markets, falling margins and reduced sales. We need to monitor what is happening to the health of our families to know if our societal values, economic values, government policies and corporate behavior are strengthening or weakening families.

States Move Ahead of Fed To Reduce New Drug Prices

By Patrick Hill

On July 5, 2018

In Drug Pricing, Health, Health insurance, Medicaid, Medicare, Solution

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Photo: healtheconomics.com

Several states including New York, Vermont, Massachusetts and California have begun initiatives to take on drug companies for the their exorbitant prices of new drugs. New York is taking a price versus effectiveness approach with a new drug called Orkambi for cystic fibrosis. The New York state Medicaid department is demanding a lower price as it is not clear the drug helps patients with the disease better than existing treatments. Vertex, the manufacturer of Orkambi made $1.3 billion in sales from the drug which is a high sales level for a drug that is marketed to only 26,000 eligible patients. Vertex prices Orkambi at $272,000 for one year of doses. The drug costs so much that some insurers pass on the high costs to patients in some cases $3000 per month.

Dr. Steven D. Pearson, President of the Institute for Clinical and Economic Review is working with New York officials on a state board case against Vertex to bring the price down. The state board found that Orkambi did not meet the effectiveness claims by the manufacturer so New York should receive a 77 % discount. Dr. Pearson said his evaluation of the costs indicated that the drug could be discounted by 77 %.

Major states like New York and California are taking on the drug companies with renewed interest as their Medicaid costs soar in part from new drugs where companies like Vertex price the medication at extreme multiples of a fair cost. While the GOP Administration has promoted some ideas to bring the cost of new drugs down, nothing to date has been done.

The U.S. is alone of all major developed countries in not directly regulating drug prices. In Europe health services officials do not accept high prices for drug with marginal value and negotiate using their purchasing power to bring the price down. Congress has consistently bowed to the drug lobby by not speeding generic drugs to the market and not including in any drug bill the power for Health and Human Services to directly negotiate the price of all the medications it covers for U.S. patients.

Source: Bloomberg – 5/11/18

In 2014, U.S. patients paid the most of ten developed countries at $1,100 per year out of pocket and for many patients with difficult treatment diseases the costs per year are significantly more.

Next Steps:

Time is up for the drug companies and insurers gouging patients with soaring prices while they make hefty profits and executives pocket huge compensation packages. Drug companies need to stop buying back their stock, wasting the money that could be used to bring the price of their drugs by billions of dollars. Congress needs to give HHS the power to negotiate prices and effectiveness limits on drugs of dubious value the way most developed countries in the world do today. Over the past decade pharmaceutical companies have found that their exorbitant prices have not stuck in Europe or other developed country market, so they jack up the price of the medication in the U.S. where there is little regulatory constraint.