Few observers have commented on how older Americans will fare under the amended Senate health reform legislation, but as things stand, many could be priced out of the health care market. The Senate bill lets insurers in the Exchange charge an elderly person up to three times as much as they would charge a younger customer. Thus many middle-class and upper-middle class Americans in their late 50s or early 60s who don’t have employer-based insurance could find themselves locked out of health care reform.
Under the bill that passed the House, insurers could only double premiums for the elderly. In the past, I had assumed that the House bill would prevail on this point. I also thought that the public plan might be more generous. After all, it would be hard to argue that a government plan that made insurance unaffordable for middle-class, unemployed and self-employed Americans in their late 50s and early 60s was serving the public good. Surely some in Congress would protest, and the public plan would find a way to keep a lid on premiums, probably by incorporating Medicare reforms that lower costs. If private insurers wanted to complete for customers in that 55-64-year old market, they would have to follow suit.
Now, however, it seems unlikely that any major provisions from the House bill will be added to the final legislation. This was part of the deal that the Senate struck with Ben Nelson in order to secure his vote. Meanwhile, the public option is no longer part of the reform bill. As a result, it is quite possible that the comprehensive insurance that older Americans need will be too expensive for many, just as it is in Massachusetts.
Meanwhile commentators such as Ruth Marcus argue that charging elderly customers more makes sense: “older people cost more money to insure than younger Americans — and more than three times as much. Is it fair to require younger people to shoulder all the extra cost?”
But what Marcus doesn’t do is take a hard look at the numbers. Whether or not you think younger Americans should help foot the bill for their elders, the fact is that if this provision stands, the majority of customers in this older cohort simply won’t be able to afford good coverage.
As I noted in an earlier post, households in the 55-64 age group report average joint income of just $55,400. Only 25 percent enjoy joint income over $100,000. In other words, fully one quarter of earn somewhere between $55,400 and $100,000—too much for a couple to qualify for much of a subsidy, too little to able to afford pricey insurance.
Remember, couples earning more than $58,280 will not be eligible for subsidies. A middle-class couple earning $50,000 would receive only a small premium credit. How can they afford to pay three times what a younger person pays? They can’t.
Yet middle-aged Americans need full, comprehensive coverage. A 20-something might feel comfortable with a Bronze plan that covers only 60 percent of the cost of “essential care”—after all, he doesn’t plan to use the insurance very often. But most 60-somethings need to go to doctors regularly to control chronic diseases and address the many problems that come with age. And if they are middle-class, they probably cannot afford to shell out 40% of the charge for each visit to a specialist. Granted, their out-of-pocket payments would be capped at $11,900, but for a household earning just $59,000 before taxes, that’s more than 20 percent of their after-tax income. Even for a couple earning $75,000, $11,900 is a hefty sum. No doubt many would simply put off going to the doctor.
Just how much would a couple have to scrape together to buy a better plan? Judging by prices for Federal Employees’ Plans, a top-of-the line Platinum policy which covers 90% of medical bills is likely to cost a younger couple at least $10,000—probably closer to $12,000 in today’s group market. That means that even if an insurer charged the older couple only twice as much, the premiums would run $20,000-$24,000 annually, rendering insurance unaffordable for both the middle-class and most of the upper-middle-class.
If it seems impossible that a 60-year-old couple earning $59,000 a year would be expected to pay that much, consider this: In Massachusetts, where insurers are allowed to double premiums based on age, a 64-year-old adult living in Boston is asked to shell out between $830 a month and $1,000 a month—or up to $12,000 a year for one person–for a policy with low co-pays and deductibles. For an older couple in Boston, an identical policy runs between $1,740/mo. and $2,000/month.—or $24,000 a year. In the end, everything may turn on what state you live in. States will have an opportunity to protect their older citizens. While the amended version of the legislation sticks with the 3:1 ratio, it adds that if a “qualified health plan is offered in a State with age rating requirements that are lower than 3:1, the State may require that . . . plans comply with the State’s more protective age rating requirements.”
This provision is enormously important, but I am afraid it will only create tension between generations. If insurers are not allowed to triple premiums for older customers, younger customers in that state will wind up paying more. And of course insurers want the younger customers.
Assuming that a state does not shield its older citizens, the legislation offers one alternative: if the cheapest insurance available costs more than 8% of a person’s income, he or she can be exempted from the mandate.
As I have suggested in the past, “universal coverage” that exempts those who cannot afford it takes us back to square one: rationing care based on ability to pay.
The Only Solution: Cut the Cost of Care
The only way insurance will be affordable for many families at the upper end of the middle-class—or for older American–is if the cost of health care itself falls. This means squeezing out the waste; refusing to be gouged by drug-makers; trimming fees for some specialists’ services; and refusing to pay hospitals extra for inefficiencies and errors that lengthen hospital stays and threaten patient safety.
Otherwise, the amount that private insurers pay out in reimbursements to hospitals, doctors and patients will continue to climb by 8% a year, just as they have for the past ten years. And premiums will rise in tandem.
But do you really think private insurers will suddenly get tough when negotiating with drug-makers, device-makers, hospitals and specialists?
Not likely. In order to win market share, insurers need to keep brand-name drugs in their formularies; they want marquee hospitals and popular, brand-name specialists in their networks. This means that they will continue to pay whatever suppliers and providers demand, and hike premiums to cover the costs.
Meanwhile, competition for the well-heeled customers who can afford ever-more expensive insurance will heat up. Insurance companies who cannot attract those customers will drop out of the market, as will middle-class and many upper-middle-class older Americans–unless the government intervenes
As I explained in part 2 of this post, the Senate bill still calls for an Independent Medicare Commission made up of physicians and other medical experts who would oversee Medicare spending—hiking some fees, while reducing others. (Already, Medicare itself has proposed raising reimbursements for primary care by 4% next year, while lowering payments to cardiologists by 6%.)
The Commission would bundle its recommendations in a package, and Congress would have to vote “yea” or “nay” on the entire package within a fairly short period of time. It could not edit the changes. This would protect the Commission from Congressional meddling, and pressure from lobbyists.
Unfortunately, when the Senate’s two health care bills were merged, the Commission lost some of its clout. For example, hospitals were exempted from cost-cutting for ten years. But, as I noted in part 2, Senators Joe Lieberman, Jay Rockefeller and Sheldon Whitehouse have now introduced an amendment that would strengthen the Commission, and let it use financial carrots and sticks to insist that hospitals begin providing better value for Medicare dollars.
Keep an eye on this amendment.
Under the Senate Bill, Medicare Could Pave the Way
There is just one way that private insurers might begin to address the waste in our bloated health care system: if Medicare provides political cover, by cutting costs and simultaneously embarking on a campaign to demonstrate to the public that it is possible to trim spending while lifting the quality of care.
The medical establishment has begun to acknowledge that unnecessary tests can be hazardous to your health. Just this week the Archives of Internal Medicine reported on two new studies estimating that the radiation exposure from the 72 million CT scans ordered in 2007 alone will result in 15,000 additional cancer deaths twenty to thirty years down the road. An editorial in the Archives pointed out that there is an eight-fold difference in CT scan use around the country, with no better outcomes where more scans are done. (For details and some pointed commentary on what needs to be done,see GoozNews)
Around the nation, responsible physicians are conveying this information to patients, medical students, interns and residents. They also are talking about the pros and cons of mammograms. A great many women read past the politically- motivated fear-mongering, and are beginning to ask questions.
This all helps to prepare the public for the upcoming Medicare cuts that will try to wring some of the hazardous waste out of the system. Seniors need to understand that that the goal is to protect patients from unnecessary procedures. No one will be denied needed care. No one will be told that they can’t have a mammogram. No one will be told that Medicare no longer covers CT-scans.
But by lowering the fees that it lays out for CT-scans, Medicare hopes to make the procedure less attractive to physicians who are paid fee-for-service. For example, we know that when doctors lease or buy diagnostic testing equipment and begin using it in their offices, they recommend twice as many tests for their patients. Next year, Medicare plans to reduce reimbursements for these in-office tests.
Mammograms, by contrast, are not terribly expensive. It is unlikely that Medicare—or anyone—would cut fees. But there is “shared-decision-making” legislation under consideration that would pay health care professionals for the time it takes to give patients a full understanding of the risks and benefits of mammograms, as well as other elective tests and treatments. We know that when patients are fully informed, they decide against elective procedures 20 % to 30% of the time.
Meanwhile, doctors like Boston surgeon Atul Gawande are calling attention to the fact that complications following surgery kill more Americans each year than car accidents. Prudent physicians who share decision-making with their patients explain the dangers.
In the film, Money-Driven Medicine, Dr. Jim Weinstein, who spent the first half of his career as an extremely successful orthopedic surgeon, explains that often he just didn’t feel that his patients were “getting a fair shake.”
"When it came to risk," he says, "I knew that many of my patients were thinking, 'I trust my doctor. He is so good that nothing bad will happen to me.' I wanted to say, 'Wait. Stop. This is important. You could die. You could get an infection.'". Ultimately, Weinstein devoted the second half of his career to spear-heading the shared-decision-making movement at Dartmouth.
As care becomes more patient-centered, wise physicians are urging patients to consider their options. Try medication, physical therapy, or change of diet first. Don’t rush into anything. Sometimes back pain disappears. In many cases, outcomes are better for patients diagnosed with early-stage prostate cancer who choose “watchful waiting” rather than radiation. Breast cancer patients who choose lumpectomies over mastectomies are just as likely to survive, though in the worst-case scenarios, they may have to return for additional treatment.
Recently I quoted Dr. Donald Berwick, president of the Institute for Health Care Improvement: “The best health care is the very, very least healthcare that we need. The best hospital bed is empty not full. . . The best CT-scan, the one we don’t need.” This is the lesson that Americans need to learn—as quickly as possible. If they don’t, health care reform will sink under its own weight, wrecked by over-treatment and over-spending.