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Health Reform Trends, Research and Analysis Website

This website provides analyses into assorted health care issues in the United States. With the aging U.S. population, there will be a significant increase in demand for health care services.  Under the status quo, these demands will place an extremely heavy burden not only on Federal and state governments but on citizens as health care costs continue to rise faster than inflation, wages, salaries, and benefits.

In 2011 there was an increased interest in 2011 on funding issues. In response, the site adds analyses dealing with wealth and income that may provide potential funding sources, not just for health care but to reduce deficits that have grown sharply during the “great” recession. Analyses focusing on income and wealth issues are now noted separately on the “Research-Analysis” tab on this website.

The analyses on this site rely primarily on data provided by non-partisan government agencies, long-established research institutions, and enterprises whose business is to analyze aspects of health care, be it health insurance or hospitals or health care providers.

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A Single Amendment Makes ACA Affordable and Sustainable

Download PDF Report >>> ACA amendment


Senator Rubio blocked funding of ACA’s “reinsurance”, a key factor in its current crisis. Just one amendment, adding reinsurance back into ACA would do far more than any other to restore ACA to affordability and sustainability.

It greatly reduces insurers’ risk, leading to billions of dollars in lower insurance costs. Those reductions would in turn reduce (also by billions of dollars) premium and co-pay support that ACA provides to the 85% of people who buy insurance on exchanges.

The net result is to shift billions of costs from people to government, in effect bypassing insurers who have been adding 15 to 20% overhead to all the dollars they now handle. The combined savings will provide the bulk of funds needed to cover reinsurance costs.

Ironically, Republicans now support high-risk pools, a less efficient form of reinsurance.


Healthcare costs are extremely skewed with just 1% incurring some 20% of all health costs, and 5% consuming about half. To spread all insurance costs over all members results in less than enthusiastic “return on investment” for most, especially younger and healthier people. Something needs fixing but what. To begin, let us go back to the days before ACA.

Then, health insurers could reject people with pre-existing conditions. This forced millions not only to pay the costs for these conditions but also for all medical attention including ordinary care. ACA prohibiting pre-existing exclusions shifted many billions of dollars of costs to health insurers.

Second, health insurers capped the amount they would pay out in any year or over a lifetime. ACA prohibiting any limits shifted many more billions of dollars to health insurers.

With these huge shifts in costs to insurers, nearly everyone would have to participate in an insurance program in order for insurers to have any hope of financial survival. ACA recognized the need for full participation and included the “dreaded” individual mandate. Note that President Nixon proposed a healthcare reform in the 1970’s that also included an individual mandate and for exactly the same reason.

However, even with full participation, the cost shift to insurers was so great that they would have no choice but to raise premiums and deductibles. ACA also recognized this new imbalance, and added a “Risk Corridor” provision that would provide rebates to insurers who suffered extraordinary losses. The fallacy of this thinking was that after 3 years, the market would stabilize and be self-funding by insurers who had healthier enrollees and who enjoyed extraordinary gains.

In ACA’s first two full years, 2014 and 2015, reimbursable insurers’ losses exceeded $8 billion, but only several hundred million were reimbursed. Senator Rubio had slipped into a spending law a provision claiming to save taxpayers from an “insurance industry bailout.” The chaos from blocked funds was entirely predictable. ACA’s initial concerns became a self-fulfilling prophecy with insurers pulling out of areas with the highest loses and boosting premiums and deductibles in areas where they stayed. Of course, this cannot be sustained.

After years of 60+ failed votes to “repeal and replace” ACA, Republicans went to work with their own plan. One of the key elements in their solution was to fund high-risk pools for people with high medical costs. In effect, by removing high cost people from the general population, costs for the remainder would drop substantially, similar to what existed prior to ACA. Their proposal effectively shifts billions from insurers to the government that would fund these high-risk pools. Ironically, this is 180̊ contradictory to Senator Rubio’s effort to save taxpayers from an “insurance industry bailout.”

However, there is a subtle difference between the ACA and Republican solutions.  With segregated pools, members are either in or out, attaching a stigma to those IN the high-risk pools. It also removes medical confidentiality with regard to members. Finally, if the past is any guide, state run high-risk pools are also prone to manipulation and funding reductions.

On the other hand, ACA reinsurance will allow all members to join in the community pool, and only when an individual’s costs exceed some threshold, reinsurance kicks in and covers those excess costs. This “ceiling” is not a new concept. It is exactly what insurers did when they set annual coverage limits before ACA. Government would assume all payments above some limit. If that limit was still too high for some health insurers, existing private reinsurers could step in to reduce health insurer’s risk. Reinsurers already sell policies to self-insured companies that want to lower their risk.

Reinsurance also offers other advantages. Primary insurers cover everyone’s routine medical costs. Members deal with one insurer for all their healthcare needs. Further, reinsurance requires minimal infrastructure change to process high cost claims. Former insurer “ceilings” simply become thresholds where, instead of denying members’ excess claims, insurers simply forward them to the government for payment.

As noted above, healthcare costs are extremely skewed at the high end. Shifting huge costs from insurers to government lowers insurer’s costs to that near pre ACA. With ACA caps on insurer’s profits, insurers will have to lower premiums and deductibles by billions of dollars. Not only will reductions reflect claims cost transfer to government, but also 15%- 20% overhead that insurers now add to those billions of dollars.

Finally, when premiums and deductibles are lowered, so will premium supports and co-pay help of which some 85% of enrollees receive. With net enrollee payments unchanged, all reductions in insurers’ costs reduce enrollee support costs. Overall, net federal spending increases should be modest.

The solution? Since ACA’s Risk Corridor” has “expired”, all one needs to do is replace it with [a] “Excess of Loss Treaty Reinsurance”, [b] with permanent government financing, and [c] with thresholds adjustable for inflation. One Amendment would have a multi-billion dollar favorable impact on ACA.

Download PDF Report >>> ACA amendment

Senate Filibusters Reveal Deliberate Obstruction

Download PDF Report >>> Senate Filibusters Reveal Deliberate Obstruction


Americans are holding Congress in low esteem because there is little getting done to solve the nation’s problems. Neither party is blameless. Americans want results, but that requires both parties to govern. One cause analyzed here is the recent dramatic increase in use of the filibuster which has reached extraordinary levels. The source of all graphs is one table from U.S. Senate Archives: Senate Action on Cloture Motions

As much as this huge increase in filibusters stands out, even more striking has been their success or failure. For 93 years, the majority of cloture motions to end filibusters failed. In the 2013-2014 session however, 74% of all filibusters were overridden by super majorities of the Senate.

This is not the majority trampling on the wishes of a large minority, but a small minority trying to impose their wishes on a super majority. Clearly, this was not the intent when the Senate set filibuster rules. Rather, this is simply obstruction by a small group abrogating their responsibility to govern.


When the founding fathers created the constitution, they put no restrictions on the senate as to debates. Having no limits was one way to restrain a bare majority from ignoring a large minority. Filibusters offered a protection. While there were some lengthy debates in the 19th century, it was during World War I when filibusters got a bit out of hand as some tried to limit U.S. involvement in the war. But so little else got done that President Wilson urged some limits on debate.

“In 1917, senators adopted a rule (Rule 22) … that allowed the Senate to end a debate with a two-thirds majority vote, a device known as “cloture.” The new Senate rule was first put to the test in 1919, when the Senate invoked cloture to end a filibuster against the Treaty of Versailles.”  In the next 42 years cloture was invoked just 4 times.

The Senate posts its cloture data back to its origin in 1919. First, it is noted that only one senator is needed to start a filibuster. Senate archives track three items: [1] cloture motions filed by at least 16 senators to end a filibuster or debate. Motions are not a vote on the legislation itself, but simply a vote to limit further debate on legislation; [2] votes on cloture that for years this required 2/3 or 67% of all senators, later reduced to 3/5 or 60%; [3] cloture invoked whereby this super majority of senators vote to limit debate to 30 more hours thus ending the filibuster.

The current senate filibuster rule began 95 years ago, and through 2014. 1,624 motions have been filed to end debate. But its use has not been uniform. In its first 50 years, only 49 cloture motions were filed. Prior to 1971, senate filibusters were rarely used with cloture motions averaging about one per year. Rarity was no longer the case from 1971 through 2014 as shown in Graph 1 below. For 36 years, cloture motions trended upwards. However, in the last 8 years, they first jumped to over 100 and then in the last session, rose past 250. In short, the use of filibusters in the last two years was unprecedented in senate history.


    Graph 1                                                    

An obvious question is what is behind this fairly drastic increase in the use of filibuster. This analysis explores multiple aspects to identify root causes.

The first aspect explored was whether the parties of the President and Senate could explain the use of filibusters. Graph 2 above modifies Graph 1 by color coding the party of the President and Senate for each session. The solid blue bars represent both a Democratic President and Senate. The red blue bars represent both a Republican President and Senate. The green and gold bars represent a mix with the President’s party having a minority in the senate.


    Graph 2                                                     

For all but the last bar, both parties engaged in filibusters to restrain senate legislation. Save for the last session, it is fair to say that both parties used the filibuster to require the majority to consider the minority. Motions were filed, votes were taken, and filibusters were or were not sustained.

This graph shows that both parties increasingly relied on filibusters. In 2007-08, the senate majority changed from the party of the President and it was Democrats who were behind the doubling of cloture motions. In 2013-14, motions doubled again, but something else occurred as shown in Graph 3.

Graph 3 is the same as Graph 1 showing motions filed, but adds yellow bars for the filibusters overridden. For all but the last session, attempts to end filibusters failed over half the time which means they achieved their purpose of enabling minority senators to apply some brakes on the majority.


    Graph 3                                                    

However, the same cannot be said for the 2013-2014 session where attempts to end filibusters succeeded 74% of the time rather than failing over half the time. This is not the majority trampling on the wishes of a large minority, but a small minority trying to impose their wishes on a super majority. Clearly, this was not the intent when the Senate set filibuster rules. Rather, this is simply obstruction by a small group abrogating their responsibility to govern.

It also demonstrates that blame for recent senate gridlock is not evenly divided between the two political parties. Rather, the evidence clearly places responsibility on a small group of Republicans sometimes associated with the Tea Party. To be clear, this is not to blame Republicans in general, but only a few disruptive Senators and only in the last session.

Another aspect is to view filibusters by President, regardless of the party of the senate. The next Graph 4 shows motions filed per year for Presidents Kennedy through Obama.


   Graph 4                                                     

In this graph there was less than one cloture motion/year (28 in 42 years) to end filibusters from inception up to President Kennedy in 1961. Motions almost doubled under Presidents’ Reagan & Bush 39, then nearly doubled again under Presidents’ Clinton & Bush 41. Finally, under President Obama, motions doubled yet a third time to over 80 per year and more than four times versus President Reagan. Filing   motions to invoke cloture sometimes ends the filibuster.

Failing withdrawal, the Senate then votes on the cloture motion. Graph 5 below shows a fairly flat trend in percent of motions that went to a vote.

Taking votes on cloture has had little effect on filibuster usage. As suggested in Graph 3 above, the same cannot be said for percent success in ending filibusters.


   Graph 5                                                     

Graph 6 below shows the percent of filibusters defeated by president. For both President Bush 41 and Obama, percents are heavily affected by their two latest years in office. But only in Obama’s presidency is the overall average of filibuster defeats approaching a super majority. Clearly, many minority senators are voting with the majority to at least end debate and allow a vote on the actual legislation. And voting yea or nay is the responsibility of governing.


   Graph 6                                                     

Yet another view of filibusters is to compare the first six years of Presidents Nixon, Reagan, Clinton, Bush 41 and Obama, the last five presidents who had a second term. In Graph 7 below, the red bar is the number of motions filed. The blue bar is the number of cloture votes which alone suggests strong opposition to the filibuster. Finally, the green bar is the number of filibusters overridden, with 2013-2014 Senate having more overrides than all four previous presidents.

The key takeaway of this graph is that both Democratic Presidents had filibusters more than double over the same period of the Republican presidents before them. Again, this exhibits a greater reliance by Republicans to use filibusters to restrain the incumbent President.


    Graph 7                                                   


Americans are holding Congress in low esteem because there is little getting done to solve the nation’s problems. Neither party is blameless. Americans want achievement, but that requires both parties to govern. Each party blames the other for the gridlock, but is blame really equal? This analysis shows that with regard to filibusters, recent blame falls more heavily on a small group of Republican senators.

Once a rarely used tool, the Senate’s increased use of the filibuster not only has reached extraordinary levels but differs significantly from history. The current senate filibuster rule began 95 years ago, and through 2014, 1,624 motions have been filed to end debate. But its use has not been uniform.

In its first 50 years, only 49 cloture motions were filed. In the 24 years from President Nixon through Bush39, 427 motions (18 per year) were filed. In the 8 years from President Clinton through Bush41, motions increased to 643 (40 per year). Finally in 6 years of President Obama, 505 motions were filed (84+ per year).

As much as this huge increase in filibusters stands out, even more striking was their success or failure. For 93 years, the majority of cloture motions to end filibusters failed. In the 2013-2014 session however, 74% of all filibusters were overridden by super majorities of the Senate.

This is not the majority trampling on the wishes of a large minority, but a small minority trying to impose their wishes on a super majority. Clearly, this was not the intent when the Senate set filibuster rules. Rather, this is simply obstruction by a small group abrogating their responsibility to govern.

Still another apparent trend is for Republicans to sharply increase use of the filibuster when the presidency changes from Republican to Democratic. While not conducive to results, it is a method Republicans have felt very free to use.

Download PDF Report >>> Senate Filibusters Reveal Deliberate Obstruction


Filibuster and Cloture

Institutional Development

Senate Action on Cloture Motions







While most senate filibusters are initiated by the minority party, the most controversial filibusters were initiated by senators in the majority, not minority party. “During the 1930s, Senator Huey P. Long effectively used the filibuster against bills that he thought favored the rich over the poor. The Louisiana senator frustrated his colleagues while entertaining spectators with his recitations of Shakespeare and his reading of recipes for “pot-likkers.” Long once held the Senate floor for 15 hours. The record for the longest individual speech goes to South Carolina’s J. Strom Thurmond who filibustered for 24 hours and 18 minutes against the Civil Rights Act of 1957.”


ACA Health Insurance Exchanges – Not All are Competitive

Download PDF Report >>> ACA Exchange Premium Extremes


The Affordable Care Act (ACA) created state run Insurance Exchanges to stimulate competition among health insurers. Some believe that private insurers are better suited to manage the complex health insurance market. But are they?

Kaiser Health News (KHN) recently published premiums that private insurers charge on ACA Exchanges. KHN identified 10 ACA Exchanges with the highest premiums, and 10 with the lowest. They found extreme differences and attributed them to competition or lack thereof. This analysis confirms those conclusions by comparing actual Medicare costs for those same areas.

Detailed cost data published by Medicare show that medical costs for seniors are fairly consistent across these 20 ACA Exchanges. Though costs for seniors are much higher than for those under 65, they provide a valid proxy for all medical costs when comparing one market area with another.

Medicare payments are based on service costs with pricing input from the American Medical Association. Medicare adjusts for regional differences so costs are consistent across the nation. Medicare essentially ignores hospital and doctor billing prices.

Private insurers, on the other hand, derive their costs more from provider billing prices which have been shown to be highly inconsistent.  (http://insr.us/hospbill) Insurers do negotiate discounts from billing prices, but if the billing basis is inconsistent, it is harder to get a consistent result.

If there are few dominant providers, insurers have less leverage over discounts. If there are few dominant insurers, they are less inclined to aggressively set lower premiums.

Only one conclusion supports the enormous differences in premiums between the high and low cost ACA Exchanges. In areas where little competition exists, whether it be providers or insurers, private insurers are unable or unwilling to offer competitive pricing. The belief that private insurers are better suited to restrain market prices rings false in these instances.


For years, health insurance markets have been divided into areas that coincide with county lines. The ACA insurance Exchanges continue to abide by these market boundaries.

Kaiser Health News (KHN) analyzed these “market areas” and found huge differences in ACA Exchange premiums. They identified 10 most expensive market areas and 10 least expensive areas (listed in Appendices 3 and 4).

ACA Exchanges insure people under 65, and premiums are derived from expected costs based on historical costs in the counties that make up each ACA Exchange.

Medicare publishes medical costs data down to the county level. Though Medicare costs apply primarily to seniors, one can map those costs to align with the 20 market areas. It does not matter that Medicare’s costs are much higher than for those under 65. The relative costs are what are important.

If two market areas have similar Medicare costs, it is fair to assume that medical costs for those not in Medicare will also be similar. Conversely, if Medicare costs are far different, one expects non Medicare costs will also be different.

Medicare data include all costs, while ACA Exchange data is only for premiums. Is this apples and oranges? Well no, because ACA requires insurers to offer plans identical in coverage and which differ only in cost sharing.

With identical coverage, the costs of each plan are identical. All that differs is the cost sharing. Plans called “Bronze” have premiums that cover 60% of expected costs, “Silver” which cover 70%, “Gold” – 80%, and “Platinum” – 90%.

Knowing this, one simply divides the premium by the percent coverage to derive total expected costs. If premiums for a silver plan are $280 per month, total expected costs would be $400 per month (280 / 70% = 400).

Since the KHN report applied to Silver plans for a 40 year old, premium costs were divided by 70% to get total expected costs. Direct cost comparisons can now be made between 40 year olds on ACA Exchanges and seniors on Medicare.


Kaiser Health News (KHN) recently published premiums that private insurers charge on ACA Exchanges. KHN identified 10 ACA Exchanges with the highest premiums, and 10 with the lowest. They found extreme differences but did not include an analysis of the causes.

The graph below shows monthly Silver Plan premiums for a 40 year old in the 10 LOWEST ACA Insurance Exchange Areas. As the labels at right show, those market areas occur over multiple geographic regions.

The green bar at bottom of the graph shows the average premium which is just over $170 per month.

Premiums 10 lowest

Like the first graph, the graph below shows monthly Silver Plan premiums for a 40 year old in the 10 HIGHEST ACA Insurance Exchange Areas. Again the labels at right show those market areas occur over multiple geographic regions.

The green bar at bottom of the graph shows the average premium which is more than $400 per month.

Premiums 10 highest

Combing the highest and lowest, the graph below compares the monthly premiums, gold for the highest cost areas and green for the lowest. The differences in premiums are huge. The lowest ACA Exchange areas have average premiums less than half (about 40%) the premiums of the highest.

Prem hi vs lo

Having a direct comparison between high and low premiums, the next step is to compare all these 20 ACA premiums with another measurement common to all the same market areas. Medicare spending fits that bill, as it not only occurs in every area, it also comprises half of ALL medical spending in them.

This works only if Medicare costs are an appropriate proxy for ACA Exchange costs. To test, one needs comprehensive data on personal health care (PHC) spending by age group. Medicare provides that data which covers millions of people though only through 2004 as shown in the graph below.

Health Spend all ages

The top line, seniors 65 and older, incurred a sharp increase in health care spending 1987 – 1996. Since 1996, cost increases have been proportional among all age groups. A closer look within Medicare age groups is done to assure Medicare is an acceptable proxy for all health care spending.

The following graph subdivides Medicare only costs into three age groups. The sharp rise in 1996 average cost was most affected by those 85 and older. Since 1996, all age group’s costs have risen proportionately. As cost trends for all age groups are similar since 1996, Medicare costs offer a good proxy for medical costs of other age groups as well.

Health Spend Medicare

The graph below combines the prior graphs of total Personal Health Care Spending per capita into seven age groups. The four left bars include all groups under 65 years old. The next three bars (aqua, gold and light blue) represent the three Medicare age groups. The last two bars on the right show national averages for all those under 65 (red) and all those 65 and older (green).

HC Spend all n avg

It is clear that health costs rise rapidly with age, accelerating more in senior years. The average costs for 40 year olds are included in the second (yellow) bar from the left which costs average less than $400 per month.

Averages for Medicare health costs, as shown in the far right green bar, are some three times greater than for 40 year olds. While this data is only through 2004, all medical costs have risen at about the same rate. One can expect Medicare costs today to still be about three times that of a 40 year old.

The above graph shows costs. To directly compare these total costs with ACA Exchange premiums, just covert premiums to total costs. As noted in the Methodology, divide premiums by 70% to get expected costs for each ACA Exchange.

The next graph shows these total estimated costs for each of the 20 market areas. For the 10 most expensive areas, costs average about $600 per month. For the 10 least expensive areas, total average costs are about $245 per month, 40% of the high cost areas. The graph is the same as that for premiums above, but with 40+% higher monthly costs.

HC Cost hi vs lo

With total costs available for all, the graph below compares Medicare costs with costs of 40 year olds in each of the 10 lowest cost ACA Exchange areas. The low Medicare costs in the 4th series is Hawaii, which is the only outlier in this series.

In these competitive ACA Exchange areas, the average spread between Medicare and ACA is over four times. On a national average as shown above, the spread is around three times which shows competition really can reduce premiums.

Medicare vs 10 low

Before comparing total Medicare costs with the highest cost ACA Exchange areas, it is helpful to know what Medicare costs are in the highest cost areas relative to lowest cost areas. The graph below shows Medicare costs in all 20 market areas. While there are variations in total Medicare costs between market areas, there are no trends that favor either high or low cost ACA Exchange areas.

Medicare 20 hi n lo

The conclusion drawn from this graph is that high cost ACA Exchange areas have Medicare costs similar to low cost ACA Exchange costs. Nothing is inherently different for seniors.

The next graph compares total Medicare costs with total costs of 40 year olds in each of the 10 highest cost ACA Exchange areas. As expected, seniors’ Medicare costs are higher than are 40 year olds costs. However, with the national average spread around three times for this age group and Medicare, the difference here is one tenth of that, less than a 30%.

Since Medicare costs are not so different between high and low cost areas, the only conclusion is that ACA Exchange costs are too high. These high cost estimates have led to private insurer premiums far higher expected.

Medicare vs 10 hi

In conclusion, Medicare costs do not differ much between high and low cost ACA Exchange areas. By extension, health care costs for a 40 year old should not differ by much. Yet, the difference in premiums is huge.

If the insurer has near monopoly power, it has little reason to demand deep discounts. Insurers’ margins are constrained by ACA law to 20%. In short, 20% of a higher cost is more profitable than 20% of a lower cost. So why press harder for lower costs?

If the provider has near monopoly power, the insurer has little leverage since there are no competitive providers as an alternative. Either way, individuals in some ACA Exchanges are paying higher costs than expected.

Medicare doesn’t worry about either dominant insurers or dominant providers. It has a national payment scale, and with Medicare amounting to half a provider’s business, the providers are virtually forced to accept Medicare’s terms.


There is a solution that could remedy this situation. Amend the ACA with a proviso to apply only to any ACA Exchange market area in which the spread between insurers’ premiums and Medicare payments is greater than some threshold.

If the spread exceeds that maximum, ACA could create a public insurance option and where the public option requires providers to accept both Medicare and the option or neither. Public option premiums would key off Medicare payments plus an added profit margin to level the playing field with private insurers. This would force competition regardless of whether the insurer or the provider was dominant.


One further check on Medicare as a proxy is a deeper dive into its major components to see if any are skewing total costs. The two graphs below highlight hospital admissions and emergency room visits per thousand beneficiaries in the 20 ACA Exchange areas. As expected, variations exist, but no consistent pattern appears between Medicare admissions between ACA Exchange areas.

CMS Hospital

CMS ER visit

There is one outlier and that is Medicare costs in the highest cost ACA Exchange area, a ski resort area. Here Medicare hospital and emergency room visits are markedly lower. It is likely that seniors living here may be more active in winter sports. This suggests they may be generally fit than the average senior, and thus incur fewer hospital and ER visits.


Source for the 10 least expensive and 10 most expensive ACA Health Insurance Exchange areas were compiled by Kaiser Health News (KHN) from data developed by the Kaiser Family Foundation Program for the Study of Health Reform and Private Insurance, healthcare.gov, and ACA Exchanges. The costs analyzedwere for a 40 year old person.

KHN is a nonprofit news organization committed to in-depth coverage of health care policy and is an editorially-independent program of the Kaiser Family Foundation, a non-profit private operating foundation, based in Menlo Park, Calif., dedicated to producing and communicating the best possible analysis and information on health issues.

APPENDIX 3: 10 Least Expensive Areas (Counties)

$154: Minneapolis-St. Paul. Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, Sherburne and Washington counties.

$164: Pittsburgh and Northwestern Pennsylvania. Allegheny, Armstrong, Beaver, Butler, Crawford, Erie, Fayette, Greene, Indiana, Lawrence, McKean, Mercer, Warren, Washington and Westmoreland counties.

$166: Middle Minnesota. Benton, Stearns and Wright counties.

$167: Tucson, Ariz. Pima County.

$171: Northwestern Minnesota. Clearwater, Kittson, Mahnomen, Marshall, Norman, Pennington, Polk and Red Lake counties.

$173: Salt Lake City. Davis and Salt Lake counties.

$176: Hawaii. All counties.

$180: Knoxville, Tenn. Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Hamblen, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Scott, Sevier & Union counties.

$180: Western and North Central Minnesota. Aitkin, Becker, Beltrami, Big Stone, Cass, Chippewa, Clay, Crow Wing, Douglas, Grant, Hubbard, Isanti, Kanabec, Kandiyohi, Lac qui Parle, Lyon, McLeod, Meeker, Mille Lacs, Morrison, Otter Tail, Pine, Pope, Renville, Roseau, Sibley, Stevens, Swift, Todd, Traverse, Wadena Wilkin and Yellow Medicine counties.

$181: Chattanooga, Tenn. Bledsoe, Bradley, Franklin, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea and Sequatchie counties.

Source: http://www.kaiserhealthnews.org/Stories/2014/February/13/10-Least-Expensive-Health-Insurance-Markets-In-US.aspx


APPENDIX 4: 10 Most Expensive Areas

$483: Colorado Mountain Resort Region. Eagle, Garfield and Pitkin counties, home of Aspen and Vail ski resorts. Summit County premiums are $462.

$461: Southwest Georgia. Baker, Calhoun, Clay, Crisp, Dougherty, Lee, Mitchell, Randolph, Schley, Sumter, Terrell and Worth counties.

$456: Rural Nevada Esmeralda, Eureka, Humboldt, Lander, Lincoln, Elko, Mineral, Pershing, White Pine and Churchill counties.

$445: Far western Wisconsin. Pierce, Polk and St. Croix counties. (across the border from St. Paul, Minn.)

$423: Southern Georgia. A swath of counties adjacent to the even more expensive region. Ben Hill, Berrien, Brooks, Clinch, Colquitt, Cook, Decatur, Early, Echols, Grady, Irwin, Lanier, Lowndes, Miller, Seminole, Thomas, Tift and Turner counties.

$405: Most of Wyoming. All counties except Natrona and Laramie.

$399: Southeast Mississippi. George, Harrison, Jackson & Stone counties. In Hancock County, the lowest price plan is $447.

$395: Vermont.* (Unlike other states, Vermont does not let insurers charge more to older people and less to younger ones. Its ranking therefore will differ depending on the ages of the consumers)

$383: Connecticut. Fairfield County. (The southwestern-most county, which includes many affluent commuter towns for New York City.)

$381: Alaska. All counties.

Source: http://www.kaiserhealthnews.org/Stories/2014/February/03/most-expensive-insurance-markets-obamacare.aspx?p=1

APPENDIX 5: Source-healthcare spending by age group:



APPENDIX 6: Source-Medicare Costs and Utilization by geographic area:

Table_State County_All_December 2013.zip from Centers for Medicare & Medicaid Services (CMS).

Website: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Geographic-Variation/Downloads/State_County_Table_All.zip


APPENDIX 7: Some Relevant Provisions of the Affordable Care Act.

It now appears that some market areas have less competition and the only way for an insurer to offer qualified plans is for ACA to ease a bit regarding condition (B) “ensuring sufficient choice of providers”.


1311(c) (1) Qualified Health Plans

(1) IN GENERAL.—The Secretary shall, by regulation, establish criteria for the certification of health plans as qualified health plans. Such criteria shall require that, to be certified, a plan shall, at a minimum—

(A) meet marketing requirements, and not employ marketing practices or benefit designs that have the effect of discouraging the enrollment in such plan by individuals with significant health needs;

(B) ensure a sufficient choice of providers (in a manner consistent with applicable network adequacy provisions under section 2702(c) of the Public Health Service Act), and provide information to enrollees and prospective enrollees on the availability of in-network and out-of-network providers;

(C) include within health insurance plan networks those essential community providers, where available, that serve predominately low-income, medically-underserved individuals individuals, such as health care providers defined in section 340B(a)(4) of the Public Health Service Act and providers described in section 1927(c)(1)(D)(i)(IV) of the Social Security Act as set forth by section 221 of Public Law 111–8, except that nothing in this subparagraph shall be construed to require any health plan to provide coverage for any specific medical procedure;

1311(c) (2) Rule of Construction

RULE OF CONSTRUCTION.—Nothing in paragraph (1)(C) shall be construed to require a qualified health plan to contract with a provider described in such paragraph if such provider refuses to accept the generally applicable payment rates of such plan.


Download PDF Report >>> ACA Exchange Premium Extremes

Will Reducing Part-Time Hours Avoid the Large Employer Mandate?

Download PDF Report >>> ACA Large Employer Mandate


There has been much discussion about employers reducing hours for part-time workers to less than 30 hours per week.  The argument is this will exempt employers from penalties under the ACA because penalties apply only to “full-time” workers not offered health insurance.

However, a careful reading of the Act suggests that only for purposes of assessable employer penalties, that “full-time” definition is overridden. What does apply is an aggregate 40 hour week. For instance, two part-time employees working 20 hours would equate to one full time employee.

Depending on the aggregate number of hours of part-time “non-seasonal” employees, and on whether or not a company offers health insurance to any of its employees, a company can be penalized between $2,000 to $3,000 per year per un-insured employee if the number of full-time workers PLUS full-time equivalent workers is 50 or more.  In conclusion, switching from full-time to part-time workers of equal total hours worked may not avoid the ACA employer mandate.


The discussion includes line references in [bold brackets]. These refer to excerpts from the Affordable Care Act regarding employer shared responsibility. The full path to this excerpt is “TITLE I, Subtitle F, Part II, Section 1513”. For reference, each line in the excerpt is numbered, and key discussion points refer to the Act by those line numbers in [bold brackets].

Website formats do not show these line numbers so a PDF file needs to be downloaded which does show these line numbers in the ACA excerpt. The download link appears both at the beginning and at the end of this analysis.


The Affordable Care Act has been shrouded in controversy since well before it even was signed into law in March, 2010. Since then, little has improved. The House of Representatives has passed 38 (and counting) laws to repeal the Act. With the Supreme Court having ruled, a continuing emphasis has been made to circumvent provisions considered onerous.

One of the ways getting media attention is companies cutting back on the hours of part-time employees to insure that they work less than 30 hours per week. 30 hours is the point at which an employee is defined as full-time [lines 78-79] and counts toward the large employer mandate.

Small employers remain exempt from penalties as regards offering health insurance. Large employers, though they have a one year penalty delay, must offer health insurance. An important definition in ACA is that of “large employer.” The ACA does not simply define any large employer, but rather defines an “applicable large employer” [lines 41-44] for which the ACA mandate provisions specifically apply.

For instance, an employer would NOT be considered large if its workforce was [a] less than 50 full- time employees for at least 8 months, and [b] not more than 4 months per year in which [c] seasonal employees cause employment to rise above 50 [lines 44-50]. Agricultural workers bringing in the harvest and extra retail clerks during Christmas are examples of seasonal workers that would not trigger employer liability.

The issue is over smaller companies that have just over 50 full-time employees.  Should they reduce hours of some employees to have less than 50 workers? Apparently, some companies are doing so to avoid the ACA mandate. But that may not work if they employ many part-time workers.

Two examples serve to test this issue. Call these companies “ACME1” and “ACME2”. Each has 35 full-time workers (30+ hours per week) and 60 part-time workers at 20 hours per week each. They differ only in that ACME1 does not offer health benefits for anyone [lines 9-11] while ACME2 offers benefits to its full-time workers [lines 22-24].

Under ordinary worker definition, neither ACME is a “large employer”.  But ACA uses a different definition to determine “applicable large employers” that are subject to the liabilities and penalties of ACA. For “applicable large employers”, the definition of full-time employees INCLUDES the aggregate number of hours of part time employees per month divided by 120, [lines 63-68] which average is 30 hours per week, the minimum for full time employee..

For each ACME, the aggregate hours/month of 60 part-time workers is 4,800 (60 workers x 20 hours/week x 4 weeks) or 40 (4,800 total hours/120 ACA aggregate) full-time equivalents each. Adding 40 full-time equivalents to each ACME workforce results in 75 “full-time” workers. That is above ACA’s 50 worker cutoff and each would be defined as an “applicable large employer”.

Each of these employers is then liable for an assessment under the ACA, but their penalties are different. Both the penalty rate and the employee penalty count are different.

The liability rate for ACME1 that did not offer health insurance [lines 8-11] is $2,000/year [lines 38-39] applied to ALL its employees [lines 16-18]. The liability rate for ACME2 that did offer insurance to full-time workers [lines 19-24] is $3,000/year [lines 29-31] but applicable only to the full-time equivalents of its part-time employees.

The ACA does allow an exemption of 30 employees when determining the assessment liability [lines 56-61]. ACME1’s employee count would be 45 “full-time” employees (35 actual plus 40 full-time equivalents less 30 exemptions). Applied for a full year, the penalty is $90,000 (45 * $2,000).

The 30 employee exemption applicable to ACME2 has a different effect. The 35 full-time employees are excluded. That seems to leave the 30 count exemption to apply to the full-time “equivalents”.  Just like ACME1, the aggregate count of these full-time equivalents is 40. With an exempting 30 of these employees leaves 10 liable to penalty. Applied for a full year, the penalty is $30,000 (10 * $3,000).

In conclusion, switching from full-time to part-time workers of equal total hours worked may not avoid the employer’s responsibility for offering its workers health insurance.

Download PDF Report >>> ACA Large Employer Mandate


DRG Summary for Medicare Hospital Payments

Download PDF Report >>> Medicare Hospital Payments

SUMMARY – Medicare Hospital Payments 

Medicare does not rely on hospital billings but on data built over decades as to the reasonable cost of services. Some may question the absolute amount of Medicare reimbursements but the relative payment scales are extensively validated by actual data.  Conversely, this analysis shows hospital pricing has inconsistencies that cannot be rationally explained.

However, private insurers negotiate discounts from these hospital pricings. If billed prices are inconsistent, then so are discounts based on them. A major constraint on medical costs will occur when patients can make informed cost decisions at the DRG level, not just for overall premiums and co-pays. Currently, few persons can make those informed decisions.

Many states have enacted legislation for hospitals to be more transparent about their prices, but enforcement is spotty.  This Medicare data suggests that the country would be well served if hospitals posted DRG prices for all to compare.


In May, 2013 Medicare released its most comprehensive set ever of statistical data regarding hospital payments.  The data covered fiscal year 2011 and included the top 100 DRG’s (diagnostic related codes) based on inpatient discharges. Data excludes DRG’s for hospitals with fewer than 11 discharges for that DRG. This allows focus on higher volume services and their financial impact.  The final data set of the top 100 DRG’s results in over 166,000 records of nearly 7 million discharges from over 3,300 hospitals.

The data itself lists for DRG’s for each hospital, the number of discharges, the average covered (billed) charges, and the average total payment including Medicare. Each hospital, also includes its HRR (hospital referral region) which is the method governments use to determine “market areas”.

The chart below from Kaiser Foundation indicates that inpatient hospital is just over a quarter of Medicare spend or about $140 billion annually.


This analysis examines inpatient service pricing. Step one was to reduce the extreme data, both high and low. To minimize billing overstatement, this analysis removed 51 discharges that were high cost outliers. To minimize billing understatement, the smallest states totaling 10 % of the population and which tend to be more rural and variable were skipped. The sample data covers 6.3 million discharges from over 145,000 records of 100 DRG bills and costs. Total inpatient payments are $61 billion or 40% of total spend.

The data itself was analyzed five different ways.

  1. Percent of average paid vs. average billed, grouped by percent paid quartile
  2. Percent of average paid vs. average billed, grouped by state
  3. Variance from average of billed charges, grouped by state
  4. Variance from average of paid charges, grouped by state
  5. Extremes of 15 largest DRG groups expressed as a ratio of the maximum to minimum billed, along with the number of discharges included in each group


% average paid vs average billed, by % paid quartile

The graph below shows 5 sets of bars representing four quartiles 0% to 100% plus a small number of DRG’s that paid more than was billed. The left (gold) bar is the average bill for the four quintiles while the right (blue) bar is the corresponding average paid for each group. The right axis shows average dollars per discharge. Total average billed dollars is $36,384 and ranges from $54,000 highest to $11,867 lowest. Total average paid dollars is $9,754 and ranges from $14,481 highest to $9,548 lowest.

Note the inverse relationship of billed versus paid. One might expect higher billings to result in a lower percentage paid. What was not expected is that the actual dollars paid goes up as the overbilling goes down closer to paid dollars. Clearly billings for lower cost DRG’s bear little resemblance to cost.


% average paid vs. average billed, grouped by state

The graph below uses the same payment data above but groups results by state.  And rather than two separate bars for billed and paid, there is one bar representing the percent of bill paid. (i.e. paid/billed) equivalent to the blue bar above.


This graph does highlight the extent of overbilling by state. It does not show either the billed amounts or the paid amounts.  The graph begins with the states with the highest overbilling (and hence lower paid percent) and extends to more realistic levels of overpricing. Maryland at the bottom has billed prices very close to paid, with only a 6% discount to bill.

In the above graph, Illinois payments of 27% billed is the average for these 30 states. States listed above Illinois have more severe overpricing issues than states following Illinois.

“Discounts” from billed rates can have serious side effects. Just to call them discounts is something of a misnomer.  For many, there seems little connection between what it costs and what is billed.  Medicare of course ignores billed prices and pays what the procedures cost plus a margin.  But private insurers do not have the extensive national database that Medicare has. Instead they negotiate “discounts” from billed or list price. But as this graph shows, and as one drills down deeper by hospital, these list prices are all over the map, and that alone can skew private insurance payment amounts.

But two other adverse factors also come into play. The most important is that billed rates are what uninsured people are charged when they require treatment. Most of the uninsured cannot afford the insurance, and should they be hospitalized, things get far worse. Over 60% of personal bankruptcies have medical bills as a significant factor.

Another adverse factor is that hospitals report the amount of uncompensated care that they provide, and are provided tax exempt status if that care exceeds a specific target, and/or get reimbursed for some of these expenses. The computations are far from transparent, and it is quite possible that taxes are avoided or reimbursements received that overstate actual uncompensated care were it calculated as Medicare does.

Variance from average of billed charges, by state

The graph below offers a more close-up view of overbilling. It shows how each state’s average dollar amounts differ from the 30 state billing average of $36,384.


Data is sorted from the most overbilling at the top to the least at the bottom. Note that Massachusetts, which state closely resembles the Affordable Care Act, has less overpricing (though still 50%) than all other states except Maryland.

Variance from average of paid charges, by state

The graph below is the same format as the prior except using paid instead of amounts. Its scale is also much lower. In the former graph, Maryland had the least overbilling. But as shown below, Maryland has the second most expensive payments following only slightly behind California.

This graph, more than any other highlights the cost-of-living differences between different parts of the country. Larger urban states tend to have higher costs than smaller less urban states. Nevertheless, the $5,000 difference between the extremes reflects costs nearly double from the lowest cost states to the highest.  The financial effect (+30%/-40) seems larger than justified by differences in cost-of-living alone.


The most obvious difference would be intensity where higher cost states are able to justify more services. Another factor could be the use of more expensive equipment and methods.

Extremes of 15 largest DRG groups expressed as a ratio of maximum to minimum billed, along with the number of discharges included in each group

The graph below represents two different data, each with its own range of values.  The grouping is a selection of 15 of the most frequent DRGs. The wider (green) bars have their value scale shown along the top. The wide bar represents the ratio of the maximum billing divided by the minimum billing – in other words, the ratio of maximum to minimum, the extremes of over-pricing. For instance, the second DRG, “Cellulitis” has its highest billing more than 70 TIMES that of the lowest bill. Bad as that is, the extreme for septicemia is over 100 times the lowest billing. These are extreme differences for closely related illnesses. Sure there are differences in how serious the illness is, but high-low factors greater than 50, not even considering ratios greater than 100 are hard to explain.


Then there are the narrow (gold) bars. They represent the number of discharges in each DRG group and whose values are shown below the graph. There are over 3.6 million discharges in the data.  One may reasonably conclude that hospital pricing bears little relationship to costs of service. While deep discounts mitigate some of this, discounting just reduces the magnitude but not the irrational pricing itself.

Download PDF Report >>> Medicare Hospital Payments

Link to Medicare Provider Charge Data

MSNBC misses on Medicare reforms

Lawrence O’Donnell commented on Medicare reforms in Obama’s State of the Union speech. He seemed to imply that Obama was shifting from “fee for service”, the current model, to  “capitation”, or HMO model. That is neither what Obama said nor implied.

What the Affordable Care Act (ACA) promotes is not the HMO or capitation model, but “payment for results”. This is something of a hybrid of “fee-for-service” and “capitation”. Fee-for-service IS unsustainable while a Medicare HMO would put the entire cost risk on the providers — both the risk [1] for the cost of each incident AND [2] for the frequency of incidents.  That is too much risk for Providers. But there is a middle road.

“Payment for results” in the ACA “constrains” the cost for an incident but for NOT the frequency of incidents. So if twice as many seniors got the flu, providers would receive flu reimbursement for each senior treated.  Just as occurs now, there is no added risk to providers if more people get sick or injured.

What changes is the reimbursement for an individual incident.  “Payment for results” ends the one-for-one fee-for-service where hospitals and doctors are reimbursed a dollar for every eligible dollar billed.

However, Medicare’s “results” payments would apply only to combined groups of hospitals and doctors called “Accountable Care Organizations” (ACO). To encourage formation of ACO’s, ACA offers a carrot. If the ACO members working together can treat, for example, a flu incident for less, Medicare will first pay the ACO that lower cost but it will also share with the ACO the savings between billed cost and an imputed fee-for-service cost.  Further, Medicare would make one combined payment to the ACO and not be involved in how the ACO divides that payment between hospitals and doctors.

Along with the carrot is a stick. If the ACO over-treated (higher cost) or mistreated that led to a relapse (poor result) and additional treatments,  the ACO would not get reimbursed the full amount for these “extra” services. The ACO’s have a two-edged incentive to become more efficient.

With fee-for-service, efficient providers that bill less are paid less. Medicare keeps ALL the savings, so why should providers bust their butts to lower costs. Under ACA these ACO providers now get to share in the savings.  This idea is not only good for providers and Medicare, but the entire health insurance industry. Providers are rapidly forming ACO’s across the country, not just for Medicare patients but for the entire population. Even some insurers are forming ACO’s, becoming both the insurer and provider.

For decades, hospitals or doctors have competed somewhat “softly” in that you never see price wars between providers.  The business model of for-profit insurers closely mirrored the “cost-plus” model of some  military contracts that led to $600 toilet seats.  Insurers had limited incentive (or success) to put heavy pressure  on providers. Instead, insurers spent more time cherry picking their membership to reduce claims instead of constraining  provider costs.

Under ACA’s prohibition of excluding people with pre-existing conditions, insurers will no longer be able to cherry pick their membership. To compete, they will have to focus more attention on lowering provider costs. Hence, their incentive is also to promote ACO’s.

Finally, the ACA made payment for results a pilot program since this model is untested in the United States. Not being mandatory, the CBO has not factored in any savings arising from this program.  The savings could be substantial and we have some evidence that savings will occur.

One analyses on this site, “Medicare – Fewer Benefits or Less Waste” compares Mayo Clinic’s all-in costs versus the highest cost 20% of hospitals. Mayo’s prices are higher than industry average, but their intensity was lower (fewer days, fewer treatments). If the 20% highest cost hospitals had costs comparable to Mayo’s, the savings could exceed $250 BIllion over 10 years. A significant savings indeed.