Archive for May, 2012

Law school article suggests Supreme Court could reject challenge of PPACA’s constitutionality

In less than one month, the U.S. Supreme Court is expected to issue its ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA).  The high court will decide what’s referred to as a “facial challenge” to the law, which as the name suggests means a claim the law is unconstitutional on its face.  The other test of a statute’s constitutionality is an “as applied” challenge.  In an as applied challenge, the constitutionality of the law itself isn’t called into question. Rather, the contention is the manner in which the law is being implemented is unconstitutional.

Facial challenges are tougher to win because there are no underlying facts on which to judge if the law is being applied such that it doesn’t violate the Constitution.  Plus they face an uphill battle because the courts presume statutes to be constitutional as written.

An indication that the current Supreme Court headed by Chief Justice John Roberts may not be inclined to rule the PPACA unconstitutional on its face appears in this 2009 Columbia Law School white paper written by Gillian Metzger.  The year before the PPACA was enacted, Metzger observes:

One recurring theme of the early Roberts Court’s jurisprudence to date is its resistance to facial constitutional challenges and preference for as-applied litigation. On a number of occasions the Court has rejected facial constitutional challenges while reserving the possibility that narrower as-applied claims might succeed. According to the Court, such as-applied claims are ‘the basic building blocks of constitutional adjudication.’ This preference for as-applied over facial challenges has surfaced with some frequency, across terms and in contexts involving different constitutional rights, at times garnering support from all the Justices on the Court. Moreover, the Roberts Court has advocated the as-applied approach in contexts in which facial challenges were previously the norm, suggesting that it intends to restrict the availability of facial challenges more than in the past.

If this continues to reflect the current philosophy of the Roberts court, it could well reject the challenge to the PPACA and leave the statute and its dual mandates on health insurers and citizens to sell and have health coverage, respectively, intact.


Report: Utilization of health care services declines — but spending higher

The Health Care Cost and Utilization Report: 2010 found that while medical care utilization declined by more than five percent from 2007 to 2010 for inpatient admissions, emergency room visits, primary care provider office visits and radiology procedures, prices rose across all categories of service with outpatient services experiencing the fastest growth.

“Unlike other recent reports on health care spending, we find that the increased spending is mostly due to unit price increases rather than changes in the quantity or intensity of services,” the report concludes.

The report by the Health Care Cost Institute (HCCI) is based on a review of health insurance claims for more than 33 million individuals covered under employer sponsored, private health insurance from 2007 to 2010 including both fully insured and self-funded benefit programs.  The dataset represents about 20 percent of all individuals younger than 65 with employer-provided coverage, according to the HCCI.

Cost shift prompts insurer lawsuit against provider

The dynamic of the medical care “cost shift” in which insured patients are effectively surcharged to cover the cost of the care for those lacking coverage is on full display in this San Jose Mercury News item.  It reports on the “SafetyNet” program at Santa Clara Urgent Care and the 10 other facilities operated by the Bay Area Surgical Management. The program gives 1,000 uninsured residents free health care, which includes urgent care, imaging and gynecological services and outpatient surgeries.   But that care isn’t exactly free and the cost must be covered somehow:  the provider faces legal action from Aetna accusing the provider of overcharging patients with coverage.


Broad adoption of consumer directed heath plans could save $57 billion annually, study concludes

The discussion of how Americans and their employers pay for increasingly costly health care coverage will likely be stoked by this recent study appearing in the journal Health Affairs that concludes consumer directed health plans — high deductible, catastrophic coverage combined with Health Savings Accounts (HSAs) — could achieve $57.1 billion savings annually if half of non-elderly U.S. population had them.  That’s because they operate as true insurance plans, covering medical costs for unexpected, catastrophic events with people paying out of their own pocket for routine care and prescriptions.  The study predicts the potential savings of such together with additional incentives in the Patient Protection and Affordable Care Act will encourage their growth.

Widespread adoption of this scheme would return the nation to something akin to the “major medical” coverage model of health insurance that existed in the post World War II period until pre-paid plans such as health maintenance organizations (HMOs) became prevalent starting in the 1970s and 1980s.  Their growth created an expectation of no or minimal out of pocket costs for routine care and preventative screenings, leading the study’s authors to caution those in consumer directed health plans may forgo them, potentially leading to higher health care costs over the long term.

The authors also suggest that wider adoption of consumer directed health plans could be disruptive to the traditional health insurance and HMO markets and promote adverse selection in these product lines since healthier people may opt for consumer directed plans since their premiums tend to be lower.  A major challenge facing health insurers and plans, however, is setting premiums for consumer directed plans low enough to jibe with consumer expectations of lower, more affordable premiums in exchange for taking on first dollar exposure up to a high deductible limit.  Older albeit generally healthy people in the individual market have experienced sticker shock at rates for high deductible plans, deterring them from buying the coverage even though the premium rate reflects the actuarial risk of a catastrophic medical event.

Massachusetts legislation would surcharge hospital fees above statewide median

Late last week’s White Coat Notes reported Massachusetts House leaders are proposing legislation that would create new state agency to monitor health spending and order reductions in hospital and doctor fees it finds excessive.  Hospitals charging patients 20 percent or more above the comparable median statewide contracted price would be face a 10 percent tax surcharge that according to the article would support struggling hospitals.  The California HealthCare Foundation’s CaliforniaHealthline has more details on the bill, H 4070.

Whatever happens in the Bay State bears watching inasmuch as its 2006 omnibus health care reforms served as a prototype for the federal Patient Protection and Affordable Care Act.

Meanwhile, CaliforniaHealthline reports a California ballot initiative that if qualified for the November 2012 ballot would have limited hospital profit margins to 25 was dropped by its sponsor, the Service Employees International Union (SEIU).  The California Hospital Association had termed the measure along with another SEIU-sponsored initiative requiring nonprofit hospitals provide at least five percent of their care on a charitable basis a “thinly veiled negotiating tactic.”

Nearly one third of California state worker health care costs attributable to preventable chronic conditions

An Urban Institute Health Policy Center study released this week commissioned by the California State Controller’s Office found nearly 30 percent of health care expenditures for California state workers in 2008 were attributable to lifestyle-related chronic conditions such as diabetes, heart disease and hypertension. Ironically, the study determined, state entities with the highest percentages of employees with these preventable conditions staffed health-related departments including the Department of Health Care Services and the Department of Public Health.  According to this Sacramento Bee story, the latter department will pilot a workplace wellness program that was kicked off in a ceremony emceed by television personality Dr. Mehmet Oz.  Later in the week, Gov. Jerry Brown, noting preventable and chronic health conditions account for 80 percent of the Golden State’s healthcare expenditures, ordered the state’s Health and Human Services Agency to create a task force to develop a 10-year plan for improving the health of Californians.

California is to be commended in recognizing that some form of intervention is required to bring down medical utilization costs among its workers where a degree of choice and control can be exercised.  The California Public Employees Retirement System (CalPERS), is one of the nation’s biggest purchasers of health benefits, so whatever the state does to demonstrably bend the cost curve is likely to serve as a national model for public and private employers as well as payers and providers as an emerging accountable care paradigm begins to take root.

However, state officials should give thoughtful consideration to how this intervention is framed and executed if it is to have more than symbolic value and actually reduce medical expenditures.  “Workplace wellness” is a misnomer insofar as the lifestyle choices that can exacerbate — and prevent — chronic conditions are made mostly outside of the workplace and involve personal decisions concerning exercise, meals and sleep.  Moreover, a 2011 survey of employers found mixed results among those that adopted workplace wellness programs in terms of tangibly improving the health status of employees.

Instead of “workplace wellness,” the focus should be simply on wellness.  It should treat employees like adults and give them the freedom to make the personal lifestyle choices they and their medical providers believe can best improve and preserve their health and fitness.  Confining employees to a cubicle for set work hours 40 hours a week and adding on more sedentary time spent commuting to and from that cubicle is hardly a health promoting activity.  It robs workers of valuable time that could be spent on activities that enhance health, particularly sustained exercise.  Nor is it necessary since Information and Communications Technology (ICT) has matured to the point state employees who are mostly knowledge and information workers can do their jobs from a home office or wherever else they can concentrate and be productive.

On this point, California’s pilot employee wellness program should incorporate a Results Only Work Environment (ROWE).  A ROWE values getting the work done over daily office attendance.  Early indications are that workplaces that adopt ROWE can achieve better health status.  A University of Minnesota study issued in December 2011 found workers in a ROWE realized increased health-related behaviors of more sleep and exercise — behaviors that can go a long way toward maintaining health and reducing medical utilization.

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