Healthcare overhaul won’t stop premium increases

Posted by on Tuesday, Apr 13, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Healthcare overhaul won’t stop premium increases

By Noam N. Levey
Los Angeles Times
April 13, 2010

Public outrage over double-digit rate hikes for health insurance may have helped push President Obama’s healthcare overhaul across the finish line, but the new law does not give regulators the power to block similar increases in the future.

And now, with some major companies already moving to boost premiums and others poised to follow suit, millions of Americans may feel an unexpected jolt in the pocketbook.

At least in the short term, regulators will be able to do little more than require insurers to publicly explain why they want to raise rates. Consumer advocates think that will not be an effective deterrent against premium increases such as the 39% hike that Anthem Blue Cross sent some California customers last year.

“It is a very big loophole in health reform,” Sen. Dianne Feinstein (D-Calif.) said. Feinstein and Rep. Jan Schakowsky (D-Ill.) are pushing legislation to expand federal and state authority to prevent insurance companies from boosting rates excessively.

But more intensive oversight would not begin until 2014, when states set up new regulated insurance markets, or exchanges, where consumers who do not get insurance at work would shop for coverage.

The healthcare bill allows regulators to ban insurers from the exchanges if their rates are deemed unjustified.

http://www.latimes.com/news/la-na-health-premiums13-2010apr13,0,3121779,full.story

The health insurance overhaul that is now law does not include significant regulatory control of private insurance premiums. At most, plans can be excluded from the state insurance exchanges if their premiums are considered to be excessive. Thus the call for more legislation to increase oversight of premium increases. But would this really address the problem?

Actually the bill does require that 75 to 85 percent of premium dollars must be spent on health care. As long as the insurers demonstrate that they are complying with that requirement, the premium increases are not deemed to be excessive as far as excluding them from the exchanges. Of course they will be excessive, but that is because health care costs will continue to rise at excessive rates.

There are two questions we should be asking. One is why we should consider 15 to 25 percent of the premium to be a reasonable share for the private insurers to consume for their own intrinsic purposes, especially when they place an administrative burden of another 12 percent or so on the providers of health care, amounting to an administrative cost of 27 to 37 percent of the insurance premiums. You would think that this would be a prime target in our efforts to improve health care spending.

The other question we should be asking is why we should finance health care using using a market model that has a half century track record proving that it is ineffective in controlling costs, when we could be using a public insurance model that would use proven economic tools that can actually slow health care increases to sustainable rates.

Regardless of the hoopla, we didn’t reform health care financing, we only expanded our existing dysfunctional system. We don’t have to accept this. We can still do it right.

Mutual fund managers are relieved

Posted by on Monday, Apr 12, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Health Care Overhaul May Help a Fund Sector

By Geraldine Fabrikant
The New York Times
April 9, 2010

Now that President Obama has finally gotten his sweeping health overhaul passed, mutual fund managers can breathe a sign of relief. Finally, there is some certainty about the changes, and most of them appear to be beneficial for health care stocks.

“There does not seem to be any onerous cost control,” said Les Funtleyder, a heath care analyst at Miller Tabak, an insititutional brokerage firm and asset manager.

In the wake of the new bill, the only negative he sees is a potential problem for insurance companies, like WellPoint, the UnitedHealthGroup and Aetna, because at some point they will have to cover all potential clients. “Then the question is, will they price these things so that they can avoid losing money?” he asked.

http://www.nytimes.com/2010/04/11/business/mutfund/11health.html?hpw

For those of us who continue to express concerns about the failure of the reform legislation to adequately control the excess growth in health care spending, this news is no surprise. Mutual fund managers are relieved that there are no onerous cost controls, allowing them to continue to include health care stocks as an important part of their portfolios. The only concern they’ve expressed is that health insurers now are going to have pay for health care for high-cost patients that they’ve been successful in excluding from their plans.

Expanding our expensive dysfunctional health care financing system works well for Wall Street, but it doesn’t work for the rest of us. It is absolutely inevitable that we will have to adopt a program of social insurance, preferably an improved Medicare for all.  The sooner, the better.

Illinois lawmaker to reintroduce single-payer bill

Posted by on Monday, Apr 12, 2010

By Chris Gray

The ink may not be dry on the health bill signed into law by President Obama, but Illinois state Rep. Mary Flowers is undeterred in her plans to continue to push for single-payer health care in the president’s home state.

“I’ve gotten lots of calls from my constituents asking where they could sign up for health care,” said Flowers, a Democrat from Chicago’s South Side. “It’s a long battle just to explain this legislation. It would’ve been a lot easier just to have single payer.”

The new health law retains a dominant role for the for-profit, private health insurance industry, with all of the costly, unnecessary paperwork and bureaucracy that comes with it. In contrast, a single-payer system would create a streamlined public agency to handle all medical bills, similar to how Medicare operates today, and use the resultant savings to assure everyone comprehensive, quality care.

On the national level, supporters of single-payer reform have backed two pieces of legislation: H.R. 676, the U.S. National Health Care Act, sponsored by Rep. John Conyers Jr., D-Ill., and 87 other congresspersons, and S. 703, the American Health Security Act, sponsored by Sen. Bernie Sanders, I-Vt. It’s expected that both bills will remain in the legislative hopper.

Meanwhile, Flowers plans to reintroduce her state-based single-payer bill, HB 311, next January. She has pledged to rename it the Nicholas Skala Health Care for All Illinois Act.

During the present legislative session, HB 311 will likely not make it out of committee. Flowers said the other legislators were reluctant to move forward with a state single-payer bill until they saw what Congress would pass in Washington. She said one of her health care committee meetings failed to even attract a quorum.

But Flowers said that once people see how inadequate the federal legislation is, her bill should gain more support.

“We will be paying money into the insurance companies without getting any coverage,” Flowers said. “I think quite frankly it’s going to help [state single-payer reform] when people see that the insurance companies will not cooperate, constantly raising rates on deductibles and premiums.”

The bill, originally written by Nick Skala, a founding member of the single-payer advocacy group Health Care for All Illinois who died in 2009, has been introduced to the Illinois General Assembly several times.

Flowers said she may not have gotten so involved with single payer if not for the efforts of Skala and Dr. Quentin Young, the national coordinator for Physicians for a National Health Program.

“Nick’s whole life was making sure that the people of Illinois have access to health care. It was only fitting that the least we could do to remember him was to name the health care bill after him,” she said.

In 2008, Flowers, with the help of 35 co-sponsors, including House Speaker Michael Madigan, was able to shepherd the Health Care for All Illinois Act out of committee, but it never came up for a vote in the full House.

House Bill 311 was greeted with significant grassroots support during that session. In a “Single Payer Lobby Day” on March 24, 2009, more than 150 residents and health care providers from across the state of Illinois, representing at least 30 organizations, descended on Springfield to show their support for the bill. The large crowd forced the House Health Care Access Committee to move into the largest hearing room at the State Capitol to accommodate them.

Champaign County alone brought two dozen people to the hearings as well as a couple thousand petitions in support of single-payer legislation in Illinois, said Claudia Lennhoff, executive director of Champaign County Health Care Consumers.

That support still exists, she said. “I think people are hungry at the opportunity to do something around single payer,” Lennhoff said. She said it was the grassroots support that moved Champaign’s state representative, Naomi Jakobsson, to co-sponsor the bill. “People need to know that they made a real impact.”

About 70 members of the Illinois Single Payer Coalition met recently in Chicago’s Hyde Park neighborhood, talking about grassroots efforts from East St. Louis to Springfield to Chicago and its suburbs. While many of the activists were unhappy, if not incensed, that single-payer national health insurance was pushed to the side during the congressional debate, they show no signs of giving up on their goal.

To find out more about the work of the ISPC, visit www.ilsinglepayercoalition.org. To learn more about Health Care for All Illinois, the state affiliate of Physicians for a National Health Program, visit http://healthcareil.org/.

Chris Gray is an intern at Physicians for a National Health Program (www.pnhp.org).

Parker Griffith’s Selective Memory

Posted by on Monday, Apr 12, 2010

By Pippa Abston MD, PhD, FAAP

Just got back from a day at the annual MASA (Medical Association of the State of Alabama) meeting in Huntsville. I’ll have more overall impressions later, but I had to post this before going to sleep tonight, while it is still fresh in my memory (you’ll see why in a minute).

The last session before dinner was a panel of 3 physicians, including none other than our friend Congressman Parker Griffith. He was speaking about healthcare reform, with the usual rhetoric. When I saw he was on the panel, I realized I’d have a chance to ask him a question, so I had several minutes to decide how best to word it. You know, it is an art, because politicians are good at turning questions around to suit themselves.

So when the time came, I got up and was last in a line of only 4 physicians to come to the microphone with questions. The tone of voice you should imagine me using is very sweet and sincere. I introduced myself as a general pediatrician and the physician coordinator of North Alabama Healthcare for All, a Chapter of Physicians for a National Health Program. Then I made a little joke about being MASA’s token liberal, which got a laugh. I said to Parker that I had enjoyed meeting him and talking to him several times. I reminded him of a meeting lasting over an hour that we had a little over a year ago at his Huntsville office with me, 5 other physicians and a couple of other single payer advocates. I recalled for him that he had said he thought universal single payer coverage was the best idea and that we would eventually get it, but it just wasn’t practical politically right now. We had asked him if he would be willing to sign HR 676, the Conyers single payer bill, and he said he wouldn’t– because he didn’t feel like he had enough influence yet in Congress where it would make any difference to the bill passing. After reminding him of this conversation, I said that I was not naive and realized politicians do often say things they don’t mean, because they want us to like them. But if he really had meant it, my question to him was “What would have to change to make it safe for you and other conservatives to publicly admit they support single payer?”

I noticed he was turning a little red as I was talking! His response was “selective memory is an interesting thing.” Then he proceeded to say that he had actually told us that if our country had “grown up” with single payer, we probably wouldn’t change it. He said he had told us he was for universal access but that he wouldn’t support Conyers’ bill because that would be socialized medicine.

So I did make one short response, reminding him that there were 5 other doctors in the room who had the same selective memory. Parker responded with a soliloquy about the problem in healthcare being insufficient numbers of providers, which is a true problem but not related. Then Rep. Price spoke up and rescued Parker, and I sat down.

After the session, I thought maybe I’d be getting some glares from my colleagues, but far from it! I can’t tell you how many people came up and congratulated me on my question, and said it was obvious to them all that I was telling the truth about what Parker had said. I even got hugs, and I was invited to speak at a fund-raiser for a Republican opponent of Parker (had to graciously decline). Apparently, the poor man has alienated so many docs in his conservative base that no one spoke up in his defense.

Anyway, I was grateful at the warm, friendly reception I was given as a public liberal by my MASA friends. They know we disagree on some issues, but we are able to enjoy each other’s company and conversation. And they know that, whatever our disagreements, the bottom line is that we all care about our patients. At the physician level, I really do believe there is hope for an honest dialogue and will continue to work towards that end.

Originally posted on Dr. Abston’s blog

Health care reform and children

Posted by on Friday, Apr 9, 2010

By Pippa Abston MD, PhD, FAAP

I’ve noticed you get fewer people complaining about the idea of universal coverage for children, I guess because they’re cuter and we know they can’t get a job to pay for their own healthcare. Believe it or not, there are actually some people who don’t want to pay for the children of “irresponsible” parents. A new form of eugenics?

But most people do care about children. Wait until they hit 18, however, and the compassion starts nose-diving. Folks don’t want to take any chance that they might wind up spending any money on someone who is lazy and just doesn’t deserve help, by whatever criteria they use to determine what “deserve” means.

Of course, I have an ethical problem with even that– but just suppose we take the stand that we DON’T want to help any undeserving adults. Guess who is going to suffer? Not just those adults, but our children!

Children don’t exist in a vaccuum. Providing just for their health insurance is not what they need for optimal health– they need healthy parents and communities. A sick parent may not be able to work enough hours to provide decent housing, food, and clothing. We have heard it said that the schools can’t take on all the responsibility for educating a child and that the parents must pitch in– but what if that parent is ill, works as many hours as she can and then has to crash in bed or on the sofa? How will that parent help educate her child? And even more importantly, a sick parent may not have the emotional resources to provide a child’s primary needs– love, attention and nurturing. Imagine also the emotional burden on the child, having to watch a loved parent suffer needlessly.

The same applies to other community members. A child interacts with so many people during the day– neighbors, church leaders, a schoolbus driver, the lunchroom lady, athletic coaches, etc, etc. We need these people also to give their best efforts to our nation’s children. A bus driver who can’t get health care for his diabetes could go into a coma while driving your child to school and crash.

And then there’s the problem of infection. Any adult who can’t afford care but isn’t at an emergency level of illness will usually NOT go to the ER. So there’s that adult walking around sharing his whooping cough with your infant, who is not old enough to have finished her vaccines. Or swine flu. Or in case of bioterrorism, anthrax, small pox, you name it!

I hope everyone can see from the above how short-sighted it is to exclude any of us from health care. If not for them, for the sake of our children.

Originally posted on Dr. Abston’s blog

UCSF student Eric LaMotte on single payer

Posted by on Friday, Apr 9, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Opinion: Healthcare Reform Not Found: Abort, Retry, Ignore?

By Eric LaMotte
Synapse, The UCSF Student Newspaper
April 8, 2010

Despite the intense efforts of a vocal minority, healthcare reform was enacted this year by congressional Democrats who claimed to place the needs of American citizens over those of corporations. Unfortunately, they chose to enact policies that will continue to allow a costly, complex, fragmented, for-profit insurance system to inflict damage on the rest of our healthcare system. Now, living in a post-reform world, we must decide where to go from here, and I am reminded of the error prompt that every frustrated computer user has had to answer at one point or another: Abort, Retry, Ignore?

Amidst the already loud voices in support of “Abort” and “Ignore,” we need to raise a new and thundering voice for “Retry.” The national single payer bill described above (in the full article at the link below) is already written: HR 676.

In California, we will have our own shot at enacting a statewide single payer system with SB 810. The bill passed the State Senate in January by a vote of 22-14. But it’s a long way from being enacted, and California’s idiosyncratic political system makes it unlikely that California will be the first state to enact a single payer plan. You can support real reform by joining efforts with PNHP/CaPA, CaHPSA, AMSA, CNA, or California OneCare.

http://synapse.ucsf.edu/articles/2010/April/8/opinion.html

For a picture of Eric LaMotte with Senator Arlen Specter, with the caption, “Senator Specter talks with first-year medical student Eric LaMotte, who supports single payer health insurance”:

http://today.ucsf.edu/stories/senator-specter-urges-ucsf-community-to-exert-political-power/

For a breather, today’s message is an affirmation that there is hope for the future in health care, as represented by this article by Eric LaMotte, an astute medical student at the University of California at San Francisco (my alma mater).

Thanks, Eric.

(During our travels this month, qotd messages will be sporadic to nil.)

Pennsylvania’s Blues avoid battle

Posted by on Thursday, Apr 8, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Highmark sues to block state review of Blues competition

By Emily Berry
American Medical News
April 5, 2010

Highmark Inc. has asked a state court to block the Pennsylvania Dept. of Insurance from investigating or releasing any findings about the state of competition between the state’s four BlueCross BlueShield-affiliated plans.

In a lawsuit filed March 16, the Pittsburgh-based company accused Pennsylvania Insurance Commissioner Joel Ario of planning to try to break up the Blues plans’ current licensing arrangement, set by the BlueCross BlueShield Assn.

The state’s four Blues plans split their business into distinct territories. The only overlap is in central Pennsylvania, where Highmark, which has a Blue Shield trademark, and Capital BlueCross compete.

Pennsylvania Gov. Ed Rendell criticized Highmark’s decision to block the state’s review. “I am disappointed — but not surprised — that Highmark has chosen to fight our efforts to ensure the protection of consumers and guarantee a free and fair marketplace,” he said in a statement. “Health insurance is a big business. Historically, it has operated — and especially here in Pennsylvania — with limited regulation and weak oversight.”

http://www.ama-assn.org/amednews/2010/04/05/bisb0405.htm

Pennsylvania’s four BlueCross BlueShield plans have staked out different territories, effectively eliminating market competition between the Blues. One of the reasons that the reform model was based on private health plans was that market competition was supposed to bring us higher quality insurance products at lower costs. Instead, Pennsylvania is getting higher costs at whatever quality.

What is in the recently-enacted health reform legislation that will prevent such anti-competitive practices? The state health exchanges? This is an industry that is suing to block the release of any information about anti-competitive behavior. Just because they’ve been granted a new marketing tool in the form of the exchanges doesn’t mean that they are going to change their ways. The major markets are already concentrated amongst a few insurers, and they will continue to remain so.

Since we have lost the benefit of competition, why should we spend so much more merely to keep the private insurers in control? Let’s recover the resources that they waste and use the funds for a truly universal program that actually does cover all of us. That will require new, preemptive legislation, but it’s just what we need – an improved Medicare for everyone.

Why are insurers buying back their shares?

Posted by on Wednesday, Apr 7, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Health plan profits: Relying on the market

By Emily Berry
American Medical News
April 5, 2010

Boosting earnings per share keeps Wall Street (and shareholders) happy. And in for-profit health insurance, shareholders come first.

When companies have extra cash, they think of the best way to benefit shareholders. “It is a fairly straightforward decision: they have dollars. They could potentially use those to buy new computers, hire new staff, open new markets, increase reimbursement or deliver more services, but in the for-profit world, their first obligation is returns to their owners,” said Joe Paduda, principal for the consulting firm Health Strategy Associates in Madison, Conn.

So how are they making money?

Administrative cost controls play some part. But there are other factors: First, insurers also make money from investing premium dollars, and the returns they make on those investments have stabilized since the market crash of 2008.

The other factor is plans’ billions of dollars worth of share buybacks, which affect the figure Wall Street watches most — earnings per share. Even if cash profits don’t change, per-share earnings will go up, because a company has fewer shares in the market.

Insurers’ investments and share buybacks matter, because they can indirectly affect doctors’ pay. If the market isn’t doing well and investment income drops, insurers feel even more shareholder pressure to raise premiums or cut costs, rather than risk an operating loss. That means less flexibility for doctors in negotiating reimbursements.

“They have less margin for error, because investment returns are so low,” Paduda said. If health plans see higher-than-expected spending, “or they sell a policy to folks who, God forbid, actually get sick, then they’ve got a problem.”

(Dave Shove, a New York-based senior research analyst specializing in managed care for BMO Capital Markets Equity Research Group) said share repurchases are simply a way to reward shareholders. Other options are paying dividends or buying other firms.

But health insurers historically have made very few dividend payments, he said, and “the health insurance business is pretty consolidated now. That just leaves one thing to do, and that is buy back stock, so they’re doing it.”

(Scott Harrington, PhD, professor of health care management at the Wharton School of the University of Pennsylvania) said health insurers, like other companies, have favored share repurchases over paying bigger dividends, in part because the tax code favors repurchases, but also because if shareholder dividends are increased one year then cut the next, the market interprets that as very bad news.

WellPoint Chief Financial Officer Wayne DeVeydt told investors at a March conference that the company plans to spend nearly $4 billion on share repurchases in 2010, following $2.6 billion in 2009.

Not everyone likes the way investments and stock prices drive the U.S. health care system. But short of a single-payer, government-controlled system, health system reform proposals are not aimed at changing this part of the way health insurance companies work.

“This is the world we live in,” Shove said. “These guys are for-profit, and as long as we have insurance companies, we have to live with the consequences of that.”

http://www.ama-assn.org/amednews/2010/04/05/bisa0405.htm

When some of the non-profit Blues insurers converted to for-profit status, the primary reason given for that conversion was to open access to capital markets. What does that mean?

When a shareholder-owned corporation issues new stock, it is allegedly for the purpose of raising capital to expand operations, growing the industry and increasing profits. That is what capitalism is all about.

But when a corporation buys back stock, it is not for the purpose of contracting operations, but rather it is to pump up the per share value. It is not merely a coincidence that this increases the value of the large blocks of shares held by top management and the board of directors, by increasing the percentage of ownership in the company. New stock issues dilute ownership, whereas stock repurchases concentrate ownership.

The funds used to buy back the shares could have been used instead to slow the growth in premiums or to reduce the excessive cost sharing burden created by the shift towards underinsurance products, benefiting their customers – the patients. But no. As this article states, “shareholders come first.”

As Dave Shove states, “”This is the world we live in. These guys are for-profit, and as long as we have insurance companies, we have to live with the consequences of that.”

Perhaps the most important statement in this article: “… short of a single-payer, government-controlled system, health system reform proposals are not aimed at changing this part of the way health insurance companies work.”

The obvious conclusion is that reform should not stop short of a single payer system. We have more work to do.

Hospital executives rank United HealthCare and WellPoint/Anthem as worst

Posted by on Tuesday, Apr 6, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Fourth Annual National Survey of Hospital Executives Reveals “Best” and “Worst” Among the Nation’s Insurance companies

Revive Public Relations
March 31, 2010

Revive, a national public relations firm specializing in Health Care and Healthy Living, today released the results of its fourth annual National Payor Survey of hospital executives. The only one of its kind in the country, the survey targeted hospital leaders in the industry who negotiate managed care contracts with national health insurance companies – CEOs, CFOs, and directors of managed care.

The survey gathered data on hospital leaders’ opinions on seven of the largest health insurers or insurer groups in the nation: United HealthCare, CIGNA, Aetna, Coventry, Humana, Wellpoint/Anthem, and the local state or regional independent non-profit Blue Cross or Blue Shield plan.

While all respondents tend to regard insurance companies as equally negative when it comes to business practices, each year’s survey has revealed United HealthCare as the clear outlier. For four years, United HealthCare has been consistently ranked as the worst among respondents in all survey categories and a clear trend has emerged. This year, WellPoint/Anthem saw declines that brought the company down to levels near United HealthCare.

http://www.revivepublicrelations.com/downloads/2010PayorSurveyPressRelease.pdf

Words hospitals used to describe United HealthCare:

17% – Bad/Negative
15% – Inflexible/Rigid/Unreasonable
13% – Challenging
13% – Deceptive/Dishonest/Unethical
8% – Aggressive/Bully
and
11% – Good/Fine
2% – Prompt
2% – Convenient/Easy
1% – Professional

(Similar terms were used to describe other insurers, including WellPoint/Anthem)

http://www.revivepublicrelations.com/downloads/2010PayorSurveyResults.pdf

From the perspective of hospital executives, the two worst insurers in the nation happen to be the largest – United HealthCare and WellPoint/Anthem, even though “all respondents tend to regard insurance companies as equally negative when it comes to business practices.”

And now we have reform that not only locks us into this industry, but expands it further!? It can be changed.

Gaming the individual mandate

Posted by on Monday, Apr 5, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Short-term customers boosting health costs

By Kay Lazar
The Boston Globe
April 4, 2010

Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion, according to data the state’s largest private insurer provided the Globe.

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month.

The problem is, it is less expensive for consumers — especially young and healthy people — to pay the monthly penalty of as much as $93 imposed under the state law for not having insurance, than to buy the coverage year-round. This is also the case under the federal health care overhaul legislation signed by the president, insurers say.

http://www.boston.com/news/health/articles/2010/04/04/short_term_customers_boosting_health_costs/?page=full

Health policy science told us ahead of time that a mandate for individuals to buy private health insurance would not work if the penalties for not doing so were quite modest. Yet Massachusetts enacted such a plan, and now very similar policies have been enacted into federal law.

The Massachusetts experience has demonstrated that health care consumers will act in their own financial interest. Individuals who perceive themselves to be in good health will elect to pay the much lower penalty for being uninsured. If they then develop expensive medical problems, they will sign up for a health plan, but then will drop their coverage after their medical needs are met. It means little to them that this drives up premiums for those who remain in the insurance pools.

There are legitimate reasons that state and federal legislators have been reluctant to assign greater penalties for not being insured. The most important is that insurance premiums are simply not affordable for moderate income individuals who do not receive adequate public or employer assistance. Even the modest penalties create a financial hardship for some. Pushing the penalties higher would compound the financial stresses that too many middle income families are already experiencing.

There are policy interventions available, but those under consideration are based on leaving the private insurance industry in charge. One suggestion is to close enrollment except for a short period of open enrollment once or twice a year. This would leave already financially strapped individuals without a safety valve should problems arise during closed enrollment periods. Another suggestion would be to reinstitute (Massachusetts) or expand (federal) the waiting period before preexisting disorders are covered, even if of very recent onset, again preventing coverage for more urgent, serious problems.

Though some might suggest that these individuals would be getting what they deserve for not being insured, the real fault is with policies inherent in the design of a financing system based on private insurance plans. Individuals are forced to choose between private insurance coverage that they may not be able to afford, or exposing themselves to the potential of greater financial insecurity by remaining uninsured. If solving problems in a system creates new problems, then we should question the system itself.

We can do this far better. We can separate the financing from the delivery of health care. With a single payer, improved Medicare for all, everyone would be automatically covered, for life. The financing of the system would not be through premiums tagged to private plans, but rather would be through progressive tax policies in which each person would pay an equitable share, and no one would face a financial hardship.

Gaming the individual mandate is not a very fun game. Let’s shut it down, and change to a system that works for everyone.

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.

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