Universal Healthcare in Hawaii via The Hawaii Health Authority
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We the People of Hawaii see a need to lower the cost and increase the quality of our health care. Everyone can have healthcare; the only obstacles are the arbitrary costs imposed by unnecessary insurance bureaucracy.
We assert that, contrary to the official positions of most of Hawaii's health insurance officials, who maintain that, "there is very little if any savings to be had from administrative simplification" that instead, the state can save $350 million dollars per year via allowing the Hawaii Health Authority to design admin-simple Self Insured health insurance systems for public employees and Medicaid.
Please urge Governor Ige to STOP his silent, unreasonable opposition to allowing the Hawaii Health Authority to design these cost saving Self Insured systems.
Gov Ige calls a special session to, with the legislature, appoint the HHA's nine volunteers, and, furnish them with a budget of $250,000, for the purpose of hiring technical assistance with developing the new health plan.
Step Two: The volunteers, who must be single payer friendly, and who cannot be HMSA friendly, design this system in perhaps four months.
Step Three: The HHA submits their plan to the legislature for review.
At that point, either the plan is approved, rejected, or revisions are requested. IF the legislature and governor decide to approve the HHA's plan, then, a paradigm change in our states healthcare will unfold as soon as it is implemented, which could be within two months.
Simplifying admin lowers the cost of healthcare, both for the payer, and, for the provider. This will save our clinics from continuing to close, and will allow those physicians who have already quit, as 31 new physicians on the Big Island have just in 2020, to come back and return healthcare to rural areas on all Islands.
Remember, we are, right now, going bankrupt to keep a health insurance system that dominates the health policy decisions of our law makers. Please ask your state officials to listen to HHA advocates, so that a clear understanding of the causes of our skyrocketing premium costs can be understand. From there, the solution is simple: simplify insurance admin, in order to make healthcare available for everyone.
This will also provide relief for the EUTF fund, as the calculations which led to the state requiring itself to pre-fund EUTF $500 million per year can be adjusted down.
In this time of revenue crisis, it is worth noting that if the state paused pre-funding the EUTF for one year, that would save $500 million for use in other departments, such as, not cutting teacher pay.
Here are samples of three other single payer plans:
The Montana Plan:
The Colorado Plan
The Illinios Plan
Facts are your Friends if you support Single-Payer:
The purpose of this petition is to show how much support Universal Single-Payer Health Care has in Hawaii. Lets find as many members of our legislature as possible to introduce a bill. With a single-payer bill introduced, we will be able to rally public support for both fixing health care.
Please add your name and let's use People Power to "drain the swamp" of corporate bureaucracy, as our Commander in Chief says. Said.
Dennis B Miller
HB 1504 of 2009, enacted as Act 11, 2009 First Special Session, passed over Gov. Lingle’s veto, and now codified as HRS Chapter 322H. Sponsors of HB 1504 included Reps. John Mizuno, Marcus Oshiro, Ryan Yamane, and then-Rep. Marilyn Lee.)
Hawaii Health Care Savings Achievable through Administrative Simplification
Report to Governor David Ige and Hawaii Legislature
The Hawaii Health Authority
The Hawaii Health Authority
The Hawaii Health Authority (HHA)1 is charged under Hawaii law, HRS 322H, with designing a universal healthcare system covering all residents of Hawaii. The HHA met regularly from 2011 until April 2013, working toward this goal. Due to lack of support from recent administrations the HHA has not met since 2013, but the remaining members have remained committed to finding ways to improve access and reduce cost for the state of Hawaii.
The last HHA report in November 2019 documented the failures of Hawaii’s health transformation effort, spearheaded by the health plans, to achieve any of the goals of reform. Outcomes include a worsening physician shortage, worst in primary care and on the neighbor islands, and an epidemic of physician demoralization and burnout and rapid destruction of independent primary care practices. As primary care practices are squeezed financially by HMSA’s payment transformation, we have witnessed a wave of practices refusing new patients with either Medicare or Medicaid, leading to a crisis in access to care. In July 2019, Wallet Hub rated Hawaii 51st, worst in the nation, for finding doctors accepting new patients with Medicare. Meanwhile, the cost of health care to the state has continued to rise at an average rate of about 7% per year over the past decade, with no end in sight.
Payment Transformation and Hawaii’s Primary Care and Physician Workforce Crisis
Hawaii Public Radio (HPR) reported recently on a study by Aimed Alliance, done prior to the COVID-19 pandemic, on the effects of HMSA’s Payment Transformation (PT), which pays primary care doctors a flat payment per attributed patient per month (capitation). This was supposed to avoid the presumed incentive under fee-for-service payment to increase income by increasing the volume of services, and presumably provide unnecessary service.
However, primary care doctors do not think like insurance executives and are generally focused on meeting the needs of their patients, not taking maximum advantage of financial incentives. Hawaii primary care doctors have always been too busy to expand volume of services, and there never was any evidence of excessive volume of primary care services in Hawaii when everyone was paid with fee-for-service.
Pure capitation is a simpler way to pay doctors, but it introduces perverse incentives to skimp on care and to avoid care of sicker, poorer, and more complex patients. The counter-incentives used by HMSA and Medicare are pay-for-quality or outcomes and risk adjustment, both of which depend on very detailed documentation and data reporting. The result is increasing administrative costs for both the payer and for the primary care practices, and there have been no offsetting savings from reduced utilization.
Even worse, these counter-incentives fail to prevent skimping on care, “cherry picking” easier patient populations and avoiding sicker, poorer, and more complex patients and populations that require more of the doctor’s time, and gaming of documentation to increase payment, which are the problems they were intended to counter. The only practices that are able to do well under HMSA’s payment transformation are large, stable practices with mostly middle-class patients and few new patients. Newer practices that take a lot of new patients and don’t discriminate against “difficult” patients are not surviving financially.
The Aimed Alliance report found that a majority of Hawaii primary care doctors say HMSA’s PT has reduced quality of care by causing them to refrain from providing treatment or services, caused them to refer patients to urgent care or specialists instead of seeing them in the office, and caused an increase in administrative tasks that requires them to work longer hours and/or hire more staff. About half say low capitation rates and higher overhead have resulted in reduced practice revenue, and over 80% felt PT has contributed to Hawaii’s physician shortage. 80% would discourage new doctors from starting a primary care practice in Hawaii. Other surveys confirm that primary care practices squeezed financially by PT have stopped accepting new patients with Medicare or Medicaid, because their fees are even lower than commercial insurance plans.
The COVID-19 Pandemic and Its Effects on Hawaii Health Care
Since the COVID-19 pandemic, social distancing and fear have markedly reduced primary care office visits, with many practices reporting about 60-70% drop in fee-for-service practice revenue, even with ramping up telehealth. Hospitals have had to curtail elective surgeries and patients with strokes and heart attacks and complications of diabetes are avoiding coming to the hospital for fear of catching COVID-19, so hospital revenues have plummeted, while deaths and complications from all causes are increasing. The rapid rise in unemployment in Hawaii means many will soon lose their health insurance or be forced onto Medicaid.
Capitation has a positive feature, in that payments are independent of whether the patient comes to the office or not, but this does not solve the problems of excessive administrative burdens and cost, perverse incentives to skimp on care and avoid sicker patients, inadequate capitation rates, and loss of insurance. It appears we are well on the way to losing most of Hawaii’s independent primary care practices by the end of this year, with devastating consequences.
The immediate need is for all of Hawaii’s health plans, including the Medicaid managed care plans, to significantly increase primary care payment. It would be very helpful if Medicaid rates for evaluation and management services (much of primary care) could be raised at least to the level of Medicare. Over the next 1-2 years, Hawaii must take major steps to reduce the administrative waste in health care that has been causing steady increases in the cost of health care, while primary care payment has become so inadequate that our doctors are being forced out of practice.
Self-Insuring Hawaii Employee and Retiree Health Benefits and Medicaid
Substantial savings could be achieved if the state of Hawaii were to adopt HB 1462 and move from a fully insured health benefits model to a self-insured “pay-as-you-go” model, provided payment were simplified and standardized so as to reduce administrative costs for both the state and for doctors. Twenty nine other states now self-insure all their state and county employees and retiree health benefits, with savings of up to 22%. Philadelphia switched from fully insuring city employees through an insurance company to self-funding in 2008, and over the next 5 years their health benefit costs dropped from $98.4M in FY 2008 to $76.4M in FY 2013, a 22% drop. Utah switched to self-insurance and saw their health benefits administrative costs drop from 15% to 5% of their health care budget.
Similar savings could be achieved if the Department of Human Services were to take Medicaid back from managed care organizations and return to a self-insured model with joint federal and state funding, as Medicaid was originally designed, but with enhanced payments to primary care for care coordination. Oklahoma’s Medicaid program tried turning over some counties to managed care organizations and in the rest they paid primary care doctors directly an extra fee to cover care coordination (Primary Care Case Management, or PCCM). After several years, PCCM proved significantly more cost-effective. Connecticut followed the lead of Oklahoma and after 12 years of managed care they terminated their Medicaid managed care contracts in 2012, self-funding Medicaid with primary care case management and raising Medicaid rates for physicians to Medicare levels. Six years later, physician participation in Medicaid had improved substantially, emergency room and hospital costs had dropped 25%, and Connecticut saw their per-member Medicaid costs drop from $706 per member per month in 2012 to $610 per member per month in 2018, a 14% drop.
Self-insuring does come with a caveat – It must be paired with an administratively simple and more cost-effective payment system, and cannot be simply turned over to a health insurance company offering an “Administrative Services Only” (ASO) contract that enables the insurance company to retain what they think should be “their share” of the health care budget, perpetuating the administrative waste in the current system while sticking the state with the risk of high cost cases. Self-insured states do need to hire a third party to administer claims processing, but an Internet search for “Self-funding state health benefits” will quickly show pages of ads from insurance companies offering ASO contracts to states and large corporations wanting to self-fund, and they would not be advertising if they did not expect to profit from these ASO contracts. David Belk’s book, The Great American Healthcare Scam, has a whole chapter on how self-insurance can be exploited by insurance companies.
Self-insuring can save significant money for the state of Hawaii, but only if the state sets up a mechanism to define how doctors and hospitals will be paid and how care will be managed, and writes the RFP (Request for Proposal) for an ASO contract so as to limit it to claims processing, and not controlling rates, fees, payment systems, prior authorizations, etc. This means Hawaii can’t just switch to self-funding and ask a health plan to take care of the details using the same strategies that have gotten us into our current crisis with health care access and cost. How health care financing is structured must be controlled by a state appointed board that is not tied to health insurance plans. The Hawaii Health Authority is already in statute with a mandate to handle just such things, and it needs to be activated and used in order to do self-insuring in a way that will actually save money.
Before the COVID-19 pandemic the Hawai`i state budget was almost 8 billion per year. Health care costs comprise 30% of $8B, with about half of that 30% attributable to employee/retiree EUTF health benefits and the other half to Medicaid (state share). Based on the experience of Connecticut, self-funding Medicaid would save about 14% per year, and on the employee/retiree side, if we move to a simpler, more cost-effective payment system than that of HMSA, we could save at least 15% there as well. 30% of $8B is $2.4B, and 14% - 15% of $2.4B is about $350M in savings per year.
Simplifying and Standardizing Physician and Hospital Payment
A more cost-effective way to pay doctors would be with standardized fee-for-service, as HMSA used to do before the passage of the ACA. We could do even better with a simplified time-based fee-for-service system similar to how independent psychiatrists were paid prior to 2013, but we recommend that the time include time for documentation and care coordination, and not just face-to-face time, and also that the hourly rates be negotiated collectively with physicians to assure that physician payment continues to be reasonable over time. Collective negotiation would require an anti-trust exemption (not difficult to justify if fees are going to be standardized and not determined by a “market”) and a requirement that all physicians must, as a condition of licensure, be members of the organization representing them in fee negotiations. Alaska already has a federal anti-trust exemption allowing collective mediation on fees between a physician organization and their dominant health plan, a situation similar to Hawaii. The Hawaii Medical Association (HMA) would be the logical organization to do this, and if all doctors had to join, dues would be reduced substantially.
Other functions that health insurance companies have coopted include network development and contracting, credentialing, rooting out fraud and abuse (other than their own), and quality improvement projects. All of these could and should be turned over to the same physician organization empowered to negotiate fees, and all but quality improvement could be covered by the dues paid to the professional organization, at no cost to the state. Quality improvement should be funded with grants from the state for projects and should function similarly to Mountain Pacific Quality Health. The expense of doing quality improvement this way would be nominal.
Hospitals should be paid with global budgets, with pooled funding from all health plans and other payers, and not with fees for every item and procedure attributed to individual patients and controlled by a hospital “chargemaster", or through competing risk-bearing ACOs (Accountable Care Organizations). Savings from eliminating hospital billing and collections would be in the range of 15% of total hospital revenues. Hospital based physicians should be paid with salaries from the hospital’s budget. This would require a state agency to negotiate budgets with hospitals, and to gather the funds from all payers and allocate them to hospitals based on community needs. The HHA could assist with designing how the system would work, and with assuring it was done in the community interest, and not primarily the interests of health insurance plans.
The other component necessary for a high-performing, cost-effective health system would be programs for special needs. These should be community based, and not contracted to health plans, so as to assure availability of such services to everyone in the community based on patient need, not insurance status. These community-based programs would be multidisciplinary and funded with global budgets pooled from all payers, in the same way as hospitals, with professionals paid on salaries. Examples include programs for the seriously mentally ill and substance abuse, community health centers, team-based care of complex medical and surgical patients in the community, and specialist consultations to primary care such as Collaborative Care in psychiatry. The same model would work well for many other specialist consultations besides psychiatry, that do not involve procedures.
All of this depends on an adequate and healthy primary care work force. Assuring adequate pay and minimizing administrative burdens for primary care practices must be a priority. The HHA could help with this also. In addition to assuring adequate pay, the availability of community-based programs for special needs as described above would provide essential support to make primary care viable and rewarding again.
In the face of a drastic drop in state tax revenues due to the COVID-19 pandemic, Hawaii urgently needs to find ways to reduce cost. There are substantial opportunities for savings in health care if the state were to pass HB 1462 and move from a fully insured model to a self-insured health benefits program for state and county employees and retirees, and if DHS were to terminate our Medicaid Managed Care contracts and go back to self-insuring Medicaid with enhanced primary care case management.
In order to achieve savings, the state must retain control of physician and hospital payment and fees, and contract with a health insurance plan under an “Administrative Services Only” contract that was limited to claims processing and a few other essential services. The state could then move to an administratively simple standardized payment system instead of the very complex and expensive claims adjudication system now in place. These changes could restore the viability of independent physician practices in Hawaii and reverse our loss of doctors. They would enable Hawaii to save our neighbor island and critical access hospitals from bankruptcy. We could achieve markedly improved access to care for the people of Hawaii, while saving around $350 million per year for the state budget.
Stephen Kemble, MD
Marion Poirier, RN
(Remaining Members of the Hawaii Health Authority)
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