Monday, December 19, 2022

"Non-profit" hospital chains join for-profits in destroying our health system

The New York Times’ latest exposé on the despicable actions of large, ostensibly “non-profit” health systems, ‘How a Sprawling Hospital Chain Ignited Its Own Staffing Crisis’, examines Ascension Health, one of the largest such systems in the US. It is definitely worth reading, although you may want to try deep breathing first. Ascension owns hospitals over a wide area of the US, mainly in the Midwest, and took a bow in 2019 when it “was trumpeting its success at reducing its number of employees per occupied bed, a common industry staffing metric”, saving $500M! Unfortunately, cutting the number of employees to bare bones limited the quality of care available to patients. And when the COVID pandemic hit, and occupancy rates skyrocketed, they were woefully understaffed – except that the woe was experienced by the patients who sought, and to one degree or another, received care in those hospitals. It was and remains a disaster. Among the impacts cited in the article: at one hospital “there were so few nurses that psychiatric patients with Covid were left waiting a full day for beds, and a single aide was on hand to assist with 32 infected patients”; at another “Chronic understaffing meant that patients languished in dried feces, while robots replaced nursing assistants who would normally sit with mentally impaired patients.” Think about that patient being your parent! Disgusting? Upsetting? Dangerous? How about downright evil?

But, you might think, the cost cutting was necessary. After all we read about hospitals that are on the brink, are barely surviving, needing government bailouts to keep serving their communities. Oh, wait, those are different hospitals. Those are rural safety net hospitals. Ascension has $18 Billion in the bank. $18 Billion! In a “non-profit” hospital system! Boy, I’m sure that those C-suite execs who oversaw that got big 7-figure bonuses! And now? With that much in the bank, I doubt they are going to suffer much just because people are getting terrible care and dying in their hospitals.

So how are these systems non-profit? The Times does a good summary:

In exchange for avoiding taxes, the Internal Revenue Service requires them to offer services, such as free health care for low-income patients, that help their communities.


The Times this year has documented how large chains of nonprofit hospitals have moved away from their charitable missions. Some have skimped on free care for the poor, illegally saddling tens of thousands of patients with debts. Others have plowed resources into affluent suburbs while siphoning money from poorer areas. And many have cut staff to skeletal levels, often at the expense of patient safety.

Oh. That doesn’t sound so good. And, to be sure, Ascension is far from the only “non-profit” hospital chain to behave in this manner; most of the big and “successful” ones do so. The West’s Providence Health System, the focus of a previous Times exposé and post on this blog ("Non-profit" hospital systems behaving worse than for-profits: No end to the scams”, October 1, 2022), ironically started by a group of nuns to care for the poor and underserved, also gets coverage in this article.

There is so much evil here it is hard to know where to start. Certainly, a key part is running networks of institutions ostensibly created to heal the sick and injured (“hospitals”) as if they were manufacturing businesses and employing au courant management strategies designed for manufacturing, such as “just in time” supply chains and cutting staff down to the bone. This is absurd; hospitals, to be effective, to be able to meet regular seasonal changes, not to mention disasters or pandemics, need to have excess capacity at all times. Running “lean and mean” is wrong on many levels. It is exploitive of the staff, and indeed puts staff in the position of providing poor-quality care to their patients, compromising their professionalism and commitment; the testimonies of the nurses at Ascension are the most damning part of the report. It makes it difficult to impossible to gear up in times of need. And it um, kills people. You cannot have a potential staff of on-again-off-again health care workers to be employed just when needed “just in time”. If you could, if such excess capacity existed in the society, it would be yet another sign of perversion, of oppressing people and their families and communities to make more money – profit for “non-profits”.

Another way that this is, to put it gently, inequitable, is described in the Times article: cutting back on services in high-need-but-low-income communities and reallocating them to wealthier neighborhoods. And, of course, emphasizing and marketing high profit-margin services (cancer care, orthopedics, neurosurgery, cardiac interventions). Again, a  morally bankrupt strategy to meet not the health needs of our country but rather the dollar desires of a board of directors!

So what do I have to add to the excellent coverage given to this issue by the NY Times? They even call it “Profits over Patients”, which it is. I think I can give the problem a name that the Times will not: Capitalism. Capitalism is the problem. And it is not just any capitalism, it is not the capitalism of mom-and-pop stores or small businesses or making a reasonable profit, it is the capitalism-run-amok, it is the capitalism of anything-for-a-buck, full-speed-ahead, don’t-care-who-gets-hurt, bigger-is-better, I-want-to-be-a-billionaire-too that we have seen increasingly over the last decades. It is the capitalism that Noam Chomsky calls “gangster capitalism”, but in many ways what these folks do worse than what gangsters do, because it threatens not only people but all of our society. Sure, a gangster may threaten or even kill you. These systems are designed in a way that will kill thousands! But you know what? That is capitalism, that is the end point of capitalism. That is the Gordon Gekko, greed-is-good, result of capitalism that is not only unfettered by government regulation (especially with the elimination of many of the best parts of the New Deal) but that is actively enabled by a government that is willing to let private companies take all the profits when they make them and bail them out when they lose. And it is arguably even more evil that the hospitals described in the Times article are large “non-profits” which behave exactly like for-profits except that they don’t pay taxes! Who would have thought I’d be arguing for for-profits? Well, I’m not; they actually providing even worse care for the community because there are almost no regulations governing what they do. But at least they pay taxes.

So what can be done? A great deal actually.

  •  Ban for profit corporations, or any entity controlled by private equity, from health care delivery. Yes, hospitals, but also clinics, urgent care centers, nursing homes, etc.
  • Require not-for-profit entities to behave like non-profits are supposed to, with community benefit being the SOLE criterion by which they are judged. Do not allow building of facilities, expansion, or the dissolution of “product lines” except when it can be demonstrated that this will benefit the health of the overall community. Not allow “we’re moving into/building into this prosperous expanding suburb because, you know, they will need health care” if it means there will be inadequate resources to serve the people in the most needy, sickest, and poorest communities. No cannibalizing inner-cities to feed wealthier suburbs. And while it may not be possible to directly regulate the income (salary and bonuses) of C-suite executives of non-profits, the requirements should ensure that they cannot make loads of money and build huge reserves ($18 billion! Come  on!) If they won’t do this, tax them
  • ·Ensure that the communities most in need, especially in rural areas, have their needs met on a case by case basis. The absurd Hobson’s Choice the federal government is offering rural hospitals, crystallized in the headline of the article cited in the second paragraph, “A Rural Hospital’s Excruciating Choice: $3.2 Million a Year or Inpatient Care?” must be changed so that each hospital, and the larger community it serves (sometimes geographically enormous) gets support for what it needs, inpatient care, outpatient care, and usually both.

Even better, while eliminating private for-profit ownership, discourage misbehavior by non-profit owners by creating and implementing a single payer health system, such as Medicare for All, which as the sole payer would be able to with and regulate these health systems for the benefit of the health care of the people of our country.

Tuesday, December 13, 2022

Medicare Part D: Learn from my mistakes

Following up on my piece on Medicare Advantage programs (Medicare Advantage: OK, it's bad for the country, but what about for me?, Dec 6, 2022), I wanted to add a piece on the Medicare Part D Prescription drug program. While others may be smart enough to not make the mistakes I have, I believe that the structure of the program and the behavior of many or most of the insurance companies involved in it encourage people to make decisions which are often not to  the person’s benefit (of course, they benefit the insurance companies!), so maybe others can learn from mine.

First, some clarifications about the last post, based upon comments I have received. Not all Medicare Advantage plans are equally bad or equally predatory. The for-profit ones run by insurance companies are the worst. Several not-for-profits are descendants of the original HMOs (from the time before they were called HMOs), which were real consumer cooperatives based upon the idea that if they could cut out the middleperson (the insurance companies) they could deliver more healthcare to members for the same money or at least the same healthcare for less money (these included HIP in NY, Group Health in Seattle, Ross-Loos in LA). Kaiser was not a consumer cooperative -- it was originally begun by Henry Kaiser for employees of his steel company -- but did function in a similar way as a nonprofit. Many of these were, however, bought out by insurance companies, venture capital (private equity) companies, and other profit-making organizations, and of course most of the Medicare Advantage plans that now exist were always for profit.

It should go without saying that when the “middleperson” (insurance companies) that you were going to cut out to benefit the consumer members takes over ownership, things change.  And, while many of the non-profits are less egregious in their exploitation than the for-profits, they share many of the same characteristics. So it is still “caveat emptor”, let the purchaser beware. Consider the idea that a non-profit Medicare Advantage plan may be better for you than a for profit, but it may still be a bad choice compared to traditional Medicare (TM). And certainly compared to what we should have – an improved and expanded Medicare for All.

Which brings me to Part D. Originally, Medicare was designed primarily to cover hospital care, then the most costly part of healthcare, and this, now called Part A, is the only portion covered by the Medicare Trust Fund from the money deducted from paychecks. Part B, the portion that covers outpatient care, is funded by general revenue plus monthly premiums paid by Medicare recipients to the government, which in 2023 will begin at about $164/month (for incomes below $97,000/year) and go up with higher incomes. Medicare Part C is what is now called Medicare Advantage, the substitute for TM (Parts A, B and D). Part D is the prescription drug plan. It became apparent in the decades since Medicare was created that prescription drugs were an increasing portion of the annual medical costs for Medicare recipients and that they were not covered was a problem for many people. So, eventually, under the presidency of George W. Bush, Part D was passed to cover them. But, of course, it was a “compromise”, which, as usual in government, means a compromise between meeting the needs of the American people and making a lot of money for the private corporations that ‘lobby’ (read: give money to) Congress. So, rather than covering drugs under the Medicare program, which would have done it pretty much at cost (traditional Medicare’s overhead is approximately 2%), it was farmed out to private insurers, some non-profit but mostly for-profit companies. Their overhead is a lot more, and they make a lot of money on this, as every Medicare recipient is required to have a part D plan (unless they are still working and covered by an employer plan or have a Part C, Medicare Advantage, plan that covers prescription drugs). Private for profit drug manufacturers also won another huge concession from Congress and the administration in the form of a prohibition on Medicare negotiating the prices of the drugs. As the largest purchaser of these drugs in the country, they would have great leverage and get great prices, and as a result the pharmaceutical companies would make less money. We wouldn’t want that, after having carved in profit for the insurance companies, so we don’t have it.

So let’s talk about me. When I retired and had to get a Part D plan I also needed a Medicare Supplement plan, to cover the 20% that TM doesn’t pay and other costs. I got the latter through my insurance company, USAA, and got a good policy for a reasonable fee. One thing Medicare does regulate are Medicare Supplement plans, which are identified by letters: A, K, F, G, N, etc. All plans offered by any insurer have to meet the standards – that is, the benefits for all type F or type K plans have to be the same-- so the competition is on price and service, which is absolutely the way it should be (but rarely is). However, USAA does not offer a Part D plan; they contract with Humana to offer their plans to their customers, so I chose a Humana plan. Unfortunately, the standardization that characterizes Medicare Supplements is NOT true for Part D; the different plans have all kinds of complicating and confusing characteristics. Both Medicare and the insurers offer “calculators” where you can put in the drugs you take and it calculates what they would cost you on each of their plans, adds the premium, and voilà, tells you the best deal for you. Maybe. If you trust them. But there turn out to be some hidden factors.

I chose the Humana plan with the cheapest premium, Humana Wal-Mart, not because I expected to buy my drugs at Wal-Mart but because it was the cheapest. My drugs, you see (I take 3 prescription drugs) are all available generically. They are (relatively) cheap. And so Humana does not cover them. So I pay out of pocket. Until and unless I meet my deductible; then they pay, maybe. But what I discovered in the first year is that any drug I get that is a lower price that the supposed retail price doesn’t count toward my deductible. Humana’s justification is that they have negotiated lower prices, and I am benefiting. It sounds possibly plausible, except all  insurers have pretty much the same lower prices. And usually more than you’d pay with GoodRx®. But it means that I can never meet my deductible and thus they never pay anything. But I pay them a monthly premium. That is a good deal – for them. Sounds an awful lot like a protection racket!

Because I just kept the same plan in my second year, I thought I’d do the same in my third, and didn’t go online to choose a plan during open enrollment. I then got my bills and my premiums went up from about $17/mo to $57/mo! When I inquired (irate) they said I didn’t elect a plan, and the exact plan I had had (the cheapest) was no longer available, so they decided for me that I’d be best off in their most expensive plan! Two things to note: 1) while my premiums went up (and I had to keep this plan for a year), they still paid nothing, so I just contributed more to Humana, and 2) they did have a cheap plan, which cost even less than I had been paying ($14/mo) but of course they didn’t think I’d want that.

The next year, I took it, and have had it for a few years. The premium has crept up, from $14, to $17, to $22. Last year I paid $272 for drugs and they paid $21. That, I think, was for a vaccine. This year the premium is going up to $30, nearly a 50% increase. But I didn’t notice that until they sent the payment book. It took me two days to look, call Humana and discover from them that the increase was just, well, an increase, no reason other than they want more money and can do it, and that when I went to there were companies offering plans for as little as $7.40/mo. I would probably get no benefit from them either, but a lot lower premium. Sadly, for me, I found this out December 8, and December 7 was the end of the open enrollment period.

I won’t forget next year. I have no loyalty to Humana, and think they are unscrupulous predatory profiteers. Of course, most all of them are, but Humana seems to be worse than many. Luckily, the premium difference won’t break me, but since I will get no benefit, there are about a thousand different charities I’d rather donate the money to than the Make Humana More Profit Fund.

US government programs should exist to help the American people. Some good reforms would include allowing Medicare to negotiate drug prices and standardizing Part D plans the way Medicare Supplements are. Real reform would be to have a single universal program covering all health care (inpatient, outpatient, drugs, mental health, vision, dental, etc.) and eliminate profit from healthcare.

Sorry it is too late for this year. Be careful during open enrollment next year. I will be.



Tuesday, December 6, 2022

Medicare Advantage: OK, it's bad for the country, but what about for me?

Among others (see a recent discussion by Dr. Donald Frey), I have written about the problems with Medicare Advantage, also known as Medicare “Part C”  ("Private Equity": Profiteers in nursing homes, Medicare Advantage, DCEs, and all of healthcare, Sept 16, 2022 and Medicare Advantage plans, CMS, and providing high-quality care to -- and care for -- all people, Nov 21, 2015.) We have all observed that while such plans might benefit some individuals, they are a bad thing societally and in terms of overall cost. They are over-subsidized by the government, with that subsidy going to profit, not to you. Essentially, they are based upon the idea that privatization is a good thing, a concept often based on the erroneous idea that privatization is efficient and saves money. Well, in general, it does make money. For the private contractor.

However, lately I have spoken with several friends and relatives, some of whom have read these blogs, who are wondering if they might be people for whom a Medicare Advantage (MA) plan could be good. So I thought I would write about some of the considerations in making a decision about initially enrolling in or changing to or from MA or Traditional Medicare (TM). 

The first thing to remember is that most MA plans are run by profit-making insurance companies (some are still non-profits, although they often act much like for-profits). This informs all the rest of it. They take your (or usually the government’s, thus also yours) money and enroll you in a plan that is basically an HMO, with many of the same advantages and disadvantages.  The advantages including covering most or all of the cost of your care (TM only covers 80%) -- when the MA plan decided that it will it cover it at all. MA plans also come with extra perks or benefits that TM does not, e.g., dental, vision, hearing – sometimes, although these benefits are usually quite minimal. The disadvantages to the individual are mainly two: limited networks and discretionary coverage. Limited networks mean that only some doctors and hospitals are covered fully, and if you use others (“out-of-network”) they cover less (and you pay more); in some cases, they cover nothing. It can also lead to “surprise medical bills” when you go to a hospital in your network, and receive care from a doctor in your network, but also receive care from doctors not in your network. They can be from an ER or anesthesiology or radiology group with which the hospital contracts, or the assistant surgeon who is not in network even though your primary surgeon is. Politicians talk a lot about addressing this. (They talk about a lot of things.) Also, of course, such networks are usually geographical, and you may not be covered if your are in a different area except for (what they, not you, define as) an emergency.

Even if politicians actually get it together to make such surprise medical bills prohibited, it leaves the main disadvantage with MA – that they are mostly run by insurance companies and don’t always cover what you think they should or even what you thought that they said they would. They may cover a procedure sometimes, but not now, or for you. They might argue that it is not medically necessary (and maybe it isn’t) but it can also often be denied on a technicality (you didn’t tell us you had hay fever as a child!). Like health insurance companies always do, MA can also routinely issue denials. Even if they may eventually cover the bill, it can take a lot of appeals, and cost time and effort, and they (correctly) think that a lot of folks won’t go to all that trouble. They often require prior authorization – your doctor has to ask their permission to do something -- and it may take a long time for that approval to come, if it ever does. And you may be getting sicker. The things that are most often denied or delayed are, unsurprisingly, the most expensive things. Among those expensive things are surgery and cancer treatment. Delays in receiving those can be damaging to your health.

In contrast, TM covers what it covers, for everyone who has it, wherever they are (as long as the doctors and hospitals accept Medicare, which the vast majority do). It does not underwrite, and does not make decisions about which TM recipients can get a treatment. It has a schedule for what it pays, not based on what the hospital charges, and it pays 80% of that for inpatients. So, for example, a hospital might bill $10,000 for a certain procedure but the Medicare schedule says it pays $5,000. It pays 80% of that ($4,000) and you are on the hook for the other $1,000 (which is why TM recipients should have Medicare Supplemental Insurance)  but the hospital cannot bill you or anyone for anything above the Medicare-approved $5,000.

So what are questions you might ask yourself in deciding between TM and MA? The first one is “am I sick or might I need medical care?”. The answer is YES. Even if you have “never been sick a day in your life” and your forebears all lived until 105, you might. If you are on Medicare you are old (or disabled). Even if you eat healthful food and take lots of natural supplements and run marathons or ride your bike 100 miles a week, things happen. You can be hit by a car (lots of cyclists and pedestrians are). Or be in a car wreck. Or have your first heart attack, or be diagnosed with cancer, or need surgery. This is WHY there is Medicare in the first place! Then think about whether you want the ability to choose where and from whom you get your care. Are the local doctors and hospitals in the network the ones you would prefer? Do you think you might ever want to go out of town for treatment at a place that has (or you think, or have been told, has) the best treatment for your disease? Do you travel a lot, or even more important, spend a significant period of the year at a second residence, outside the geographic area of the MA network?

How much risk do you want to take that an insurance company will deny diagnostic tests or treatment? How much time and energy do you want to spend fighting with them (especially when you are sick)? What if they continue to say no? Lawsuit? Is that how you wish to spend your time and money? And they could win (see: fine print). How much are the additional perks worth to you? Glasses? Gym memberships? Others? How do they weigh against the potential costs of treatment for major diseases? And what about mental or behavioral health coverage?

It is important to note that TM is far from perfect. As noted above, it only covers 80% of what it decides is the appropriate payment. Maybe not too bad for a $100 procedure (if you can find one), but can certainly be a problem if it is a $5,000 or $50,000 or $100,000 bill. So you probably will need that Medicare Supplement policy. Plus it doesn’t cover glasses, or hearing aids, or nursing homes, or much mental health (or gym memberships). And there may be some other things that you want that it doesn’t cover. But it does cover you anywhere and with almost any provider.

MA plans often cover some of the things that TM doesn’t, and can include no co-pays. Indeed, the reason they offer things like gym memberships is that they want HEALTHY seniors, for whom they get paid by the government and for whom they don’t have to lay out a lot of money (which insurance companies call the medical loss ratio). In fact, when you do get really sick and need a lot of surgery or cancer drugs they may urge you to consider going back to TM, as you have become a “cost center” instead of a “profit center”.

Traditional Medicare should be improved. It should cover 100%, not 80%, of hospital costs. It should cover all healthcare needs, including vision, hearing, dental, mental health. It should cost you nothing additional out of pocket. The reason this is unlikely to happen, however, is that would make it clearly more attractive than MA, and insurance companies would make less money.

In any case, you can think about what the risks and benefits of an MA plan vs TM are for you as you make your decision.

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