Health Care Crisis by the Numbers: Data Update from the PNHP Newsletter Editors

Health Letter, November 2019

By David U. Himmelstein, M.D., and Steffie Woolhandler, M.D., M.P.H.

The following excerpts are reprinted from an article with the above title published in the Physicians for a National Health Program (PNHP) Summer 2019 Newsletter with permission from the editors.

Costs and access to care

Americans borrowed $88 billion in 2018 to pay for needed health care, according to a recent Gallup survey. The survey also found that 26% of Americans deferred treatment, 15 million went without medications for serious health conditions, 23% cut back household spending, and 41% avoided emergency care; 45% say they are concerned or extremely concerned that a major health event in their household could lead to bankruptcy. When asked about the reason for rising health care costs, 47% cited insurance company profits as the chief culprit, with 21% blaming better care, and 16% higher prices. (“The U.S. health care cost crisis,” Westhealth – Gallup, 1/14 – 2/20/2019)

The burden of premiums and deductibles on workers has increased sharply in recent years. In 2017, employees’ share of premiums averaged 6.9% of median income, up from 5.1% in 2008. During that same period, the average single-person deductible for employer-sponsored coverage increased to 4.8% of employees’ median income, up from 2.7%. Disturbingly, the biggest increases occurred in the most recent year. (Collins and Radley, “The cost of employer insurance is a growing burden for middle-income families,” Commonwealth Fund, December 2018)

Many patients forego needed medications due to soaring drug costs and inadequate drug coverage. Nearly 20% of Medicare patients failed to fill a new prescription within 30 days to treat a chronic disease. Among patients who faced out-of-pocket medication costs of more than $50 who were not previously taking any medication, more than half failed to fill a new prescription within 30 days. (Franklin et al., “Time to filling of new prescriptions for chronic disease medications among a cohort of elderly patients in the USA,” Journal of General Internal Medicine, November 2018)

In states that accepted the ACA Medicaid expansion, many more patients starting dialysis were enrolled in Medicaid, fewer were uninsured, more had an AV fistula rather than a venous catheter for dialysis access (an AV fistula is the preferred access method, but the fistula graft takes time to mature, requiring planning months before the start of dialysis), and the one-year mortality rate for new dialysis patients fell faster (to 6.1% from 6.9%) than in non-expansion states (to 6.8% from 7.0%). Mortality reductions were largest for black patients and those age 19-44 years. (Swaminathan et al., “Association of Medicaid expansion with one-year mortality among patients with end-stage renal disease,” JAMA, December 2018)

Medicaid expansion in Michigan was associated with large improvements in financial health among Medicaid enrollees, including reductions in all unpaid bills, medical bills, over-limit credit card spending, delinquencies, and adverse public records such as evictions, court judgments, and bankruptcies. Medical bills in collection fell by an average of $515, bankruptcies declined 10%, and individuals were 16% less likely to overdraw credit cards. Those with greater medical needs experienced the largest improvements. (Mills et al., “The ACA Medicaid expansion in Michigan and financial health,” NBER Working Paper No. 25053, September 2018)

Health insurance deductibles have increased sharply in recent years. A new study finds that diabetics whose employer forced them into health plans with a high deductible (more than $1,000) delayed getting care for macrovascular complications of diabetes like angina, transient ischemic attacks, and lower-limb ulcers. Compared to persons whose deductibles didn’t increase, the high-deductible group delayed seeking care for an extra 1.5 months for the first major symptom of their macrovascular disease, 1.9 months for the first diagnostic test, and 3.1 months for the first procedure. (Wharam et al., “High-deductible insurance and delay in care for macrovascular complications of diabetes,” Annals of Internal Medicine, 12/18/2018)

Even small copays discourage some patients from getting needed medications. Among people who received approval from their insurer for a prescription for a PCSK9 inhibitor to lower cholesterol, more than one-third abandoned the prescription at the pharmacy. Almost none of those with a $0 copay failed to fill the prescription, but the abandonment rate was about 27% for those with a copay between $10 and $19, and much higher for those facing copays of $20 or more. (Navar et al., “Association of prior authorization and out-of-pocket costs with a patient access to PCSK9 inhibitor therapy,” JAMA Cardiology, November 2017)

Soaring copayments and deductibles, as well as employees’ increasing share of premiums, exact a heavy toll on low-income adults (income less than 250% of the federal poverty line) with employer-sponsored private insurance. Health care costs (premiums plus out-of-pocket payments) consumed more than 20% of disposable income for 46.9% of persons with two or more chronic conditions covered by a high-deductible plan, and for 36.9% of those covered by a low-deductible plan. Even among those with no chronic conditions, health care costs consumed more than 20% of disposable income for 20.6% of persons with high-deductible coverage and 17.5% covered by a low-deductible plan. The findings underline the importance of upgrading the coverage of the millions of Americans who currently have private insurance. (Abdus and Keenan, “Financial burden of employer-sponsored high-deductible health plans for low-income adults with chronic health conditions,” JAMA Internal Medicine, December 2018)

More than one quarter (26.5%) of people with diagnoses of cerebrovascular or coronary disease say medical bills caused financial hardship, although they were able to pay the medical bills. An additional 18.9% say they were completely unable to pay their medical bills. Even among those with insurance, 27.0% reported financial hardship from paying medical bills, and 16.4% were unable to pay at all. After adjustment for family income and insurance, individuals unable to pay medical bills had three-fold higher odds of cost-related medication non-adherence (odds ratio 3.39) and food insecurity (odds ratio 2.89) compared to those without financial hardship from medical bills. (Valero-Elizondo et al., “Financial hardship from medical bills among nonelderly U.S. adults with atherosclerotic cardiovascular disease,” Journal of the American College of Cardiology, 2/19/2019)

High-deductible coverage causes delays in care for women with breast cancer. Compared to a matched group with low (less than $500) deductibles, low-income women with breast cancer facing deductibles of more than $1,000 experienced delays averaging 1.6 months to breast imaging, 2.7 months to first biopsy, 6.6 months to early-stage cancer diagnosis, and 8.7 months to the start of chemotherapy. Delays for higher-income women were only slightly shorter. (Wharam et al., “Vulnerable and less vulnerable women in high-deductible health plans experienced delayed breast cancer care,” Health Affairs, March 2019)

Each year, more than 250,000 appeals for donations to pay medical bills appear on GoFundMe.com, accounting for about one-third of all funds donated through GoFundMe. (Bluth, “GoFundMe CEO: ‘Gigantic gaps’ in health system showing up in crowdfunding,” Kaiser Health News, 1/16/2019)

Insurers, billing, and paying

Medicare Advantage (MA) plans can also profit from “lemon dropping” and a new study confirms that the practice is common. Among 1.3 million high-needs Medicare enrollees, 14.8% of dual eligibles (persons covered by both Medicare and Medicaid) switched out of MA plans to traditional Medicare, while only 3.3% of non-high needs patients switched into MA plans. The switch-out rate was highest (42.8%) among low-quality plans (as indicated by a low Medicare star rating). But even in high-rated plans, the switch-out rate for high-needs enrollees was higher compared to less needy (and more profitable) enrollees (4.9% vs. 1.8%). In contrast, high-needs persons enrolled in traditional Medicare were slightly less likely than less-needy persons to switch to an MA plan. The findings confirm several previous studies showing that MA plans have profited — at the taxpayers’ expense — by avoiding expensively ill patients and shunting them to traditional Medicare. (Meyers et al., “Analysis of drivers of disenrollment and plan switching among Medicare Advantage beneficiaries,” JAMA Internal Medicine, 2/25/2019)

Insurers denied coverage of newer, highly effective hepatitis C medications to 35.5% of 9,025 patients prescribed such medications. Denials were more frequent among persons covered by commercial insurers (52.4%) than among those covered by Medicaid (34.5%) or Medicare (14.7%). The denial rate increased during the period covered by the study, to 43.8% in April 2017 from 27.7% in January 2016. (Gowda et al., “Absolute insurer denial of direct-acting antiviral therapy for hepatitis C: A national specialty pharmacy cohort study,” Open Forum Infectious Disease, June 2018)

Commercial insurers and private MA plans pay 13% to 14% less for in-network mental health services than fee-for-service Medicare pays for the identical services. In contrast, private insurers’ fees are 12% more than Medicare’s for other services. In addition, commercial and MA patients more frequently go out-of-network for mental health than for other services, increasing their out-of-pocket costs. (Pelech and Hayford, “Medicare Advantage and commercial prices for mental health services,” Health Affairs, February 2019)

Patients with private insurance or managed Medicaid coverage are increasingly restricted to narrow provider networks, saddling some patients hospitalized at an in-network hospital with surprise bills for out-of-network care. A recent study of 620,000 in-network admissions found that 14.5% of people hospitalized at an in-network hospital received a surprise bill for out-of-network services from a physician or other health care provider involved in their care. Anesthesiology professionals were responsible for the largest share of surprise bills (16.5%), followed by primary care (12.6%), and emergency medicine (11.0%). Surprise bills from independent labs were also common. (Kennedy et al., “Surprise out-of-network medical bills during in-network hospital admissions varied by state and medical specialty, 2016,” Health Care Cost Institute, 3/28/2019)

When nonprofit Blue Cross and Blue Shield plans in markets where they have substantial market share convert to for-profit status, not only do their premiums increase (by 13%) but the premiums of their competitors increase as well, according to a study from Harvard Business School. Moreover, Medicaid enrollment rises, suggesting that families are “crowded out” of the private insurance market by the rising prices. Additionally, the rise in medical spending by rival plans following the Blues’ conversion suggests that the post-conversion for-profit Blue plans intensify risk-selection efforts, shifting high-risk patients to other plans. (Dafny, “Does it matter if your health insurer is for-profit? Effects of ownership on premiums, insurance coverage, and medical spending,” American Economic journal: Economic Policy, February 2019)

Polls & public support for Medicare for All

A March 2019 Kaiser survey found continuing strong support for single-payer health reform. Overall, 35% of respondents strongly favor such reform and 21% somewhat favor it, while 38% oppose it (the rest have no opinion). Among Democrats, 79% favor Medicare for All and 16% oppose it; among independents, 55% support it and 39% oppose. And even among Republicans, 24% favor Medicare for All (72% oppose it). The terminology used to describe health reform affects views somewhat, but even a program described as “socialized medicine” gains support from 44% overall (including 67% of Democrats and 14% of Republicans), with 44% opposed. (“Public opinion on single-payer, national health plans, and expanding access to Medicare coverage,” Kaiser Family Foundation, 4/24/2019)

The Democratic Party’s base has been mounting increasing pressure on party leaders to pursue a single-payer, Medicare for All strategy, and most Democratic politicians now say that Medicare for All is their goal, at least in the long term. However, party leadership has been dragging its feet on the issue, or worse. In December, House Speaker Nancy Pelosi’s top health policy aide privately assured Blue Cross Blue Shield executives that the party leadership had strong reservations about single-payer reform and was more focused on lowering drug prices and protecting the ACA than moving forward to Medicare for All. (Grim, “Top Nancy Pelosi aide privately tells insurance executives not to worry about Democrats pushing ‘Medicare for All,’” The Intercept, 2/05/2019)