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 for all
By Helen Thomas
San Francisco Chronicle
August 12, 2009
It’s all so sad. Well-organized conservatives have launched a full-scale attack on health care reform. And they appear to be winning — for now.
I covered the battle to create the Medicare system back in the 1960s. The cries of “socialized medicine” worked for years until President Johnson rammed Medicare through Congress in 1965.
What kind of a nation are we if we do not provide everyone with the excellent medical care that only some of us now receive?
I continue to think the so-called single-payer system is the only answer to the nation’s obligation to make sure that no one lacks health care. Yes, single payer means a government-run health insurance program for all — the prevailing system in Canada and in many nations in Europe.
President Obama is making a big mistake by ignoring the single-payer proposal.
In 2003 before he became a U.S. senator from Illinois, Obama actually called himself a single-payer “proponent.” But now that he is president, Obama has buckled to Republicans and conservative Blue Dog Democrats in pursuit of consensus. My question is if Congress passes a watered-down version of health care that doesn’t truly cover everyone, is the result worth it?
President Obama should lay down markers for real health care reform — meaning we all kick in to a national program instead of fattening the pocketbooks of the insurance financiers.
Instead, the president has given up on Medicare for all, calling single payer “impractical.”
He still has time to do the right thing and nothing to lose.
For the full article:
Helen Thomas doesn’t ever give up, thank goodness. As she writes, President Obama “still has time to do the right thing.”
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.
The Value of Provider Networks and the Role of Out-of-Network Provider Charges in Rising Health Care Costs
AHIP (America’s Health Insurance Plans)
One tool that health insurance plans use to improve quality and make health care more affordable for consumers is the establishment of provider networks.
Some out-of-network providers are charging exorbitant prices — several hundred or even over a thousand percent of the Medicare reimbursement for the same service in the same area. Recent examples: $4,500 for an office visit when Medicare would have paid $134; $14,400 for removal of a gallbladder when Medicare would have paid $656; and $40,000 for a total hip replacement when Medicare would have paid $1,558.
Consumers who are charged exorbitant fees by out-of-network providers incur additional costs because the protection against balance billing generally does not extend to services provided out-of-network. This detracts from the ability of health plans to offer affordable access to out-of-network providers for those consumers who want the advantages of a network, but also maintain the option to go out-of-network if they choose.
New Report Examines Out-of-Network Charges by Some Physicians
August 12, 2009
While the issue of how much is appropriate for out-of-network physicians to charge has not been part of health reform discussion to date, this report demonstrates that it needs to be. No mechanism exists to protect patients who seek care out-of-network from receiving bills that are unreasonable and unaffordable.
“As policymakers pursue health care reform, we encourage them to look at how much is being charged for services, particularly since higher charges don’t mean high quality of care,” said AHIP President and CEO Karen Ignagni. “With the nation facing the crushing burden of rising medical costs, all stakeholders should be focusing on constructive ways to bring costs under control.”
As we look at comprehensive health care reform, we really have to ask ourselves just what is it that the private insurance plans are providing us in exchange for their exorbitantly high administrative costs and the costly administrative burden they place on the health care delivery system?
Risk pooling? Public systems pool risk much more effectively than private plans. In fact, the private insurance industry wastes resources in their efforts to avoid risk. They’re not selling us the equitable risk pooling function that we want, and yet they’re charging us more for their lousy services. We don’t need that.
Managed care? Patients and their health care professionals do not want intrusive administrative managers intervening in their care. The private insurers have received that message and have backed off on the more explicit prohibitions of care. What they have not backed off on is selling us ever more of their wasteful, expensive managed care administrative services that are no longer particularly effective in moderating health care costs increases. They are perpetuating their unwanted intrusions, and they are charging us more for that. We don’t need that either.
So what service are they providing us? They have instituted private sector price controls by establishing contracts with hospitals, laboratories, health care professionals and other sectors of the health care delivery system. Their report released this week confirms that this is an important function. Prices set by the health care industry are much higher than prices dictated by the health insurance industry. If you think health insurance premiums are high now, just think of what they would have been without the private sector price controls applied to the contracted networks of providers.
Of course, there are trade offs. It is very expensive to provide the administrative services of both the insurers and the providers that are necessary to establish and manage these contracts. More dollars are diverted from actual health care to pay for these administrative excesses. A more perverse trade off is that patients are denied their free choice of health care professionals, hospitals, and laboratories since they must choose from the limited in-network panels provided by the insurers. They are limiting our choices, and they are charging us more for these unwanted services. Who wants that?
There is one more trade off that has left a gigantic, gaping hole in the private insurance model of health care financing. There are many legitimate reasons why an individual may receive care from out-of-network providers. When the private insurers do not have contracts with these out-of-network physicians and hospitals, they have no ability to dictate private sector prices. If the private insurers pay the full out-of-network fees, in-network providers will cancel their contracts and then demand the same prices, thus driving up our insurance premiums. If the insurers do not pay these high out-of-network fees, the patient is stuck with them. This is one of the reasons that individuals with “good” insurance end up in bankruptcy due to medical debt.
The timing of this AHIP report is no accident. Congress and the administration have now agreed that individuals will be required to purchase private health plans, perhaps with the additional option of a private model plan that is public in name only. Since the insurers have agreed to provide coverage for everyone not covered by other public and private plans, and since they will continue to use contracted provider networks (PPO, POS, and HMO), they understand that a solution to the high prices of out-of-network providers will have to be provided.
What is their solution? Although it appears only between the lines, their proposal is really not that subtle. “Out-of-network providers are charging exorbitant prices.” AHIP places the entire blame on those who refuse to sign their contracts. “No mechanism exists to protect patients who seek care out-of-network from receiving bills that are unreasonable and unaffordable.” AHIP obviously is calling for a mechanism to control the prices of providers with whom the insurers have no contract.
Lacking the ability to enforce private market contracts that were never agreed to, there is only one other entity that can provide a price-control mechanism. Jumping out from the space between the lines of their report, that entity is obviously the government – yes, the GOVERNMENT! AHIP is implicitly supporting government price controls for health care. But then that isn’t such a foreign concept for them. For decades, they’ve been using price controls through their own private bureaucracies.
So the only service they are providing is a profoundly expensive, administratively wasteful set of fragmented, restricted networks of providers that fall short of controlling prices throughout the system, and for that we have to give up our choice of health care professionals and facilities, not to mention giving up more of our money.
What if we got rid of the private insurers and had the government do it instead? Our experience with Medicare should give us an idea of how that might work. The administrative waste in the Medicare program is much less than that of the private plans. The additional administrative burden placed on the health care delivery system would be reduced dramatically since the providers would have to deal with only one payer and one set of rules. Not only would all risks be pooled together into a single pool, that pool would be funded much more equitably based on ability to pay. Since virtually all physicians and hospitals would participate in the program, patient choice would be almost unlimited, including the right to choose an integrated health system, if so desired.
Just like the private plans, Medicare has established prices for those contracting with the program. But what about those providers who do not have contracts? These are like the providers over whom the private insurers have no control. Well, Medicare is a government program. As such they dictate the prices, with slight adjustments, for non-contracted providers. The only way a physician can charge a Medicare patient the full list price is to refuse to bill Medicare for any patient at all for a minimum of two years, and to have this patient sign an agreement that he or she likewise will not try to collect from Medicare.
So we already have the heavy hand of government administering price controls. But isn’t that what AHIP is not so subtly advocating? GOVERNMENT PRICE CONTROLS for those providers who refuse to sign their private insurance contracts! If the government is going to control prices anyway, then why would we need or even want the private insurance contracts?
BusinessWeek’s statement this past week that the health insurers have already won should not be accepted as a given, but should be considered a challenge to us to demand, in loud and clear terms, the reform that we need. Let’s make it a very hot August for our representatives in Congress, but let’s make our message effective by being polite while we generate heat.
From: Douglas W. Elmendorf, Director
To: Honorable Nathan Deal, Ranking Member, Subcommittee on Health, Committee on Energy and Commerce, U.S. House of Representatives
Congressional Budget Office
August 7, 2009
This letter responds to the question you asked at a July 16, 2009, committee markup concerning the Congressional Budget Office’s (CBO’s) analysis of the budgetary effects of proposals to expand governmental support for preventive medical care and wellness services.
Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.
Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness.
Wellness services include efforts to encourage healthy eating habits and exercise and to discourage bad habits such as smoking.
… obesity is the end result of several interacting factors that are not all intrinsically unhealthy. One of those factors is obviously diet, which can be hard to regulate because many foods are safe to eat in moderation. Another key factor is lack of exercise, a bad habit that — like a poor diet — can be difficult for individuals to change and is particularly difficult for policymakers to influence. Approaches for losing weight reflect those difficulties: A variety of interventions appear to succeed in the short run, but relatively few participants are able to maintain their weight loss for a long period of time.
The Impact of Prevention on Reducing the Burden of Cardiovascular Disease
By Richard Kahn, PhD; Rose Marie Robertson, MD, FAHA; Robert Smith, PhD; David Eddy, MD, PhD
Aggressive application of nationally recommended prevention activities could prevent a high proportion of the (coronary artery disease) events and strokes that are otherwise expected to occur in adults in the United States today. However, as they are currently delivered, most of the prevention activities will substantially increase costs.
Does Preventive Care Save Money?
By Joshua T. Cohen, Ph.D., Peter J. Neumann, Sc.D., and Milton C. Weinstein, Ph.D.
The New England Journal of Medicine
February 14, 2008
Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not.
Prevention and wellness programs frequently can be very beneficial for our physical health and our sense of well being, and when they are, they may well be worth the investment of our time and money.
What is troublesome is that Congress and the administration have chosen the most expensive model of health care reform, and they are pretending that the savings from prevention and wellness will be a major source of financing that reform. They contend that much of the benefit allegedly would be beyond the ten years budgeted, because it would take that long to realize the savings. But almost all studies indicate that the hoped for savings will never materialize. We’ll be spending more instead.
Yes, improved prevention and wellness programs should be a goal of our health care reform efforts, but the two most urgent goals are to include everyone and to make health care affordable.
Including everyone is easy. Simply make enrollment automatic for everyone.
Affordability is much more difficult, but you do not begin by choosing the most expensive model of reform, then adding programs that cost yet more money, and then pretending that they will magically reduce costs well off into the future when there is no evidence to support that wish-it-were-true policy.
The first and most important step toward attaining affordability would be to reject the most expensive model of financing health care, and instead enact the least expensive model which also happens to be the most effective: a single payer, Medicare-for-all national health program. The task of improving prevention and wellness programs would be much simpler and less expensive under such a model.
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.
Dear PNHP colleagues and friends,
We at Physicians for a National Health Program are terribly saddened to report the sudden and unexpected loss of one of our staff members, Nicholas Skala, who died over the weekend in his Chicago home at the age of 27 of unknown causes.
Nick was one of our nation’s most gifted and dedicated advocates for single-payer national health insurance — for truly universal, comprehensive and quality care for all. His incisive mind, wide-ranging knowledge and formidable skills of argument were devoted entirely to bringing about a better world for everyone.
To his friends and co-workers, he was an extremely witty and compassionate human being, and a great source of inspiration and encouragement.
Nick had only recently returned to Chicago from two months in Washington, D.C., where he contributed significantly to the cause of single-payer health reform in multiple ways. He was committed to working for PNHP in our Chicago office during the next six weeks prior to his return to his classes at Northwestern University Law School.
His death is a heavy blow to our organization and to the entire single-payer movement.
We at PNHP extend our deepest and most sincere condolences to Nick’s family and friends.
We vow to redouble our efforts to bring about Nick Skala’s vision.
Ida Hellander, M.D.
by Kip Sullivan, JD
Conservatives never base their opposition to single-payer on the ground that it is “politically infeasible.” They oppose single-payer on policy grounds and they say so. The “political feasibility” argument is used exclusively by proponents of universal health insurance who profess to admire single-payer systems but who refuse to support single-payer legislation in any meaningful way (and often support legislation that impedes single-payer’s progress) on the ground that single-payer cannot be enacted, soon or at all. Merton Bernstein and Ted Marmor refer to these people as “political yes buts.”
“Political yes buts” have been lecturing single-payer advocates since the modern American single-payer movement began in the late 1980s. Several “yes buts” took issue with a comment I posted on July 20 on this blog entitled “Bait and switch: How the ‘public option’ was sold.” In that comment, I compared the original version of the “public option” promoted by Jacob Hacker, the intellectual godfather of the idea, and Health Care for America Now (HCAN) with the version incorporated in two bills introduced by congressional Democrats in July.
I reported that Hacker’s original proposal called for a public health insurance program that would enroll 130 million people whereas the “public option” contained in the Democrats’ House bill would enroll 10 million at most and the “public option” in the Democrats’ Senate HELP Committee bill would enroll approximately no one. (Now that Democrats in the House have compromised away to the Blue Dogs a requirement that the “public option” use Medicare’s rates plus 5 percent, I assume the Congressional Budget Office will attribute roughly zero enrollment to the House version too.)
I stated that a “public option” with zero to 10 million enrollees might not survive and, if it did, it would have little effect on health care costs and the number of uninsured and underinsured. I criticized the leaders of the “public option” movement for failing to notify the public that the mousey “options” in the Democrats’ bills bear no resemblance to the huge “public option” originally proposed by Hacker and celebrated by HCAN.
My July 20 comment moved rapidly over the Internet, starting with a few blogs maintained by some long-time single-payer advocates (including Black Agenda Report and Corrente), and triggered much discussion. From what I could see, most of it was appreciative. However, there was some criticism. The critics didn’t challenge my facts, nor my conclusion that the “public option” had undergone great shrinkage, nor that its advocates had failed to apprise the public of that fact.
The criticism fell into two categories. The first category boiled down to the argument single-payer advocates have heard for two decades: Single-payer legislation is not feasible, or is less feasible than some version of the “public option.” The second type of criticism amounted to: It doesn’t matter that the “public option” has been degraded to a tiny ghost of its former self because it will inevitably be strengthened after it becomes law.
Here is an example of the “political feasibility” argument:
Simple fact: Single-payer is not within the realm of possibility this term.
Here is an example of the argument that it’s ok to support the mouse version of the Democrats’ “public option” because fundamental reform is usually achieved by building on small incremental reforms:
The author doesn’t even seem to understand how legislation is made….The fact is, it will be a lot more politically difficult for members of Congress to vote against those future incremental improvements than to vote against the entire plan now. Once it’s in place, and constituents start calling their elected officials with complaints, they’re going to have to fix those problems – or at the very least, not get in the way of the solution….We won’t get there overnight, but this bill will at least be a decent start.
Here is an example by a critic who makes both arguments:
As Teddy Kennedy says, the most important thing is to get a public plan by hook or crook and then expand it. But I would love to know why this fellow and others like him believe that, all things being equal (the same presidential campaign, the same economic conditions) single payer could have been sold more effectively than a public plan.
I address both types of criticism in this paper.
The feasibility argument is old, and it’s backwards
I first heard the “political feasibility” argument from members of a Minnesota health care reform commission in the spring and summer of 1990 when the coalition for which I was working, the Health Care Campaign of Minnesota, started visiting commission members to drum up support for single-payer legislation. I remember very clearly hearing the political feasibility argument on a hot summer day in 1990 in the office of Senator Linda Berglin, a commission member who also chaired the Senate health committee. Berglin, who was and still is from the safest Democratic-Farmer-Labor district in Minnesota, said she wouldn’t support single-payer because “we can’t beat the insurance industry” (or words almost exactly like those). A year later she was claiming that legislation that relied on HMOs to contain cost would have a much greater chance of passing in Minnesota and that’s what she was going to focus on.
Over the years 1992 through 1994, Minnesota’s legislature did in fact pass a series of bills (collectively referred to as “MinnesotaCare”) that were supposed to achieve substantial cost containment by encouraging faster enrollment in HMOs, and thus establish universal health insurance by July 1, 1997. Of course, it all fell apart, beginning in 1995. Minnesota is no closer to universal health insurance today than it was in 1990 when I was first advised by my betters about how politically infeasible single-payer is and how politically feasible the HMO approach would be.
A half-dozen other states have suffered the same lesson. Legislative leaders, egged on by left-of-center groups that didn’t know much about health policy but which maintain close relations with Democrats, thought they could achieve universal coverage by funneling more tax dollars through “managed care” insurance companies. This occurred recently in the state of Massachusetts where “Romney-care,” a program that requires Massachusetts residents to buy health insurance from that state’s bloated insurance industry, was enacted in 2006. The program is having a very hard time staying afloat. All these multiple-payer state initiatives foundered because they did not contain cost.
It is now the summer of 2009. You can imagine my reaction to people who claim single-payer isn’t politically feasible but that other proposals that leave the insurance industry at the top of the health care food chain are. I want to get out my guitar and sing in a sad, tremulous voice, “Where have all the flowers gone …. When will they ever learn?”
How many times must universal coverage advocates rush onto the battle field to promote a multiple-payer solution and get slaughtered before they realize they can’t get to universal coverage that way? How many defeats will it take till they know that universal coverage without cost containment is not politically feasible? How many times can they be fooled into thinking that there are ways to cut costs other single-payer?
There are several reasons why the lessons of previous defeats don’t sink in with many universal coverage advocates. I’ll discuss two here: (1) insufficient knowledge of how social change happens; and (2) insufficient knowledge about the role that promoters of market-based solutions to the health care crisis played in marginalizing single-payer legislation in Congress.
Naivete about social change
As the remarks by critics of “Bait and switch” quoted above suggest, some “political yes buts” have a superficial understanding of how social change happens. They think it happens quickly or not at all, and they think it begins and ends in Congress.
This view of social change is often expressed in the mantra quoted above, “Single payer is not within the realm of possibility this term.” The implication is that if single-payer advocates cannot demonstrate that they have at least 51 percent of the votes lined up, they should retreat to the sidelines and watch the “political yes buts” do their thing. It implies that social change must occur within a single session of Congress rather than over the course of many sessions. It implies that movements for social change should, in the event that they do not have a majority vote locked up at the beginning of any given session of Congress, put their campaign in moth balls and forgo the opportunity to educate the public and build their movement through lobbying, testimony, rallies and all the other tools associated with campaigns to move bills in Congress.
In short, it implies an absurd Catch-22. To get the “political yes buts” to join them, single-payer advocates must show proof of having a majority of Congress on their side; but to get a majority of Congress on their side, the single-payer movement must build and wage a campaign relentlessly over many years in the face of active discouragement from the “yes buts” – and without pestering Congress with ideas unfairly characterized as utopian.
These demands, when they are spelled out, are obviously irrational. Universal coverage under a single-payer system is going to be difficult to achieve. The difficulty may be on the order of the difficulty of ensuring voting rights for women and civil rights for black people, to name just two examples of movements that took decades to accomplish their goals. If the leaders and supporters of these movements had accepted the Alice-in-Wonderland rules recommended by the “yes buts,” the women’s suffrage and civil rights movements would never have happened.
Naivete about the role of promoters of market-based alternatives to single-payer
The second reason some progressives don’t draw the right lessons from the failure of previous attempts to achieve universal coverage is that they fail to understand the role that advocates of bad policy have played in splitting the universal coverage movement and weakening support for single-payer within Congress. This is particularly true of the failure of Bill Clinton’s Health Security Act in 1994. The conventional wisdom within the “yes but” wing of the universal coverage movement is that Clinton’s bill died because advocates of universal coverage did not rally around his bill quickly enough in the face of “Harry and Louise” ads, and because Clinton didn’t engage in skillful “messaging.” The fact that the Health Security Act was a horrendous bill is not part of the “yes buts’” folklore.
There have been three cycles of health care reform in the last half century – 1970-73, 1992-1994, and 2007 to date. At the dawn of each cycle, single-payer legislation had already been introduced. But early in the cycle, single-payer legislation was “taken off the table” (to quote a statement Sen. Max Baucus now wishes he had never made). Each time the Democratic leadership chose instead market-based proposals that had no track record and no evidence to support them. Each time they favored reform deemed more “politically feasible” than single-payer because it left the insurance industry in place. In all three cycles, the alternative, market-based proposal was promoted by one or two policy entrepreneurs (that is to say, it wasn’t an idea that bubbled up from the grassroots).
Single-payer legislation was the first out of the chute during the 1970-1973 cycle. In January 1970, Sen. Ted Kennedy introduced what we would today call a single-payer bill. But Kennedy and other leading Democrats quickly abandoned single-payer in favor of a theory about cost containment called the “health maintenance strategy.” This strategy revolved around a new-fangled type of insurance company proposed by a Minnesota physician named Paul Ellwood that Ellwood called the “health maintenance organization.”
Ellwood would become rich and famous selling his HMO idea. He single-handedly convinced President Richard Nixon to endorse legislation to subsidize the formation of HMOs all over the country. While Ellwood worked the Republicans, the AFL-CIO worked the Democrats. Within a year, Kennedy and many other Democrats had been persuaded to abandon the single-payer approach in favor of legislation that would subsidize HMOs. The 1970-1973 cycle ended with the enactment of the HMO Act of 1973. Thus was the world’s first HMO industry born. As we all know now, the HMO experiment failed.
Two decades later, when the 1992-1994 cycle opened, single-payer legislation was not only in place in Congress it had also been introduced in many states (the first state single-payer bill to be introduced was introduced in Ohio’s legislature in 1990). The first modern-day single-payer bill was introduced in the US House by Rep. Marty Russo (D-IL) in 1991 and in the Senate by Senator Paul Wellstone in 1992. But as was the case during the previous cycle, the Democratic leadership was seduced by an alternative to single-payer. Once again, Paul Ellwood played an important role in luring Democrats away from single-payer.
Late in 1992, candidate Bill Clinton was persuaded by representatives of a group Ellwood helped form, the Jackson Hole Group, to support something called “managed competition.” The Jackson Hole Group was a coalition of insurance company executives and conservatives who met regularly at Ellwood’s mansion in Jackson Hole, WY. The theory of “managed competition” held that if the insurance “market” were tweaked (with report cards on insurance companies, for example), competition between insurers would intensify, Ellwood’s beloved HMOs would gradually seize more market share, and this would drive industry-wide premiums down. Clinton’s endorsement of “managed competition within a budget” catapulted what might have remained an obscure idea into the political lime light. When Clinton was elected, single-payer legislation once again languished while the Clintons, with help from groups like Families USA, AFSCME, and Citizen Action (now called USAction), flogged their managed competition bill. The 1994 cycle ended with the death of Clinton’s bill in September 1994, and the unraveling of similar managed competition legislation enacted in Minnesota and Washington.
The cycle we’re in now bears many similarities with the last two cycles. When this cycle began (2007 is as good a year to pick as the first year of this cycle, although that is somewhat arbitrary), single-payer legislation was better positioned than ever before to be taken seriously by Democrats. Single-payer bills had been introduced in several states as well as the US House (Sen. Bernie Sanders would introduce a single-payer bill in the Senate in 2008). Polls were showing that two-thirds of Americans and 60 percent of doctors support single-payer (or “Medicare for all”) legislation.
But once again an articulate policy entrepreneur appeared on the scene to sell a market-based alternative to single-payer that would leave the insurance industry at the top of the health care food chain, and once again the Democratic leadership fell for it. This time the entrepreneur was not Paul Ellwood. This time the policy entrepreneur was Jacob Hacker, a professor of political science at Berkeley. Just as Ellwood and the Jackson Hole Group had before him, Hacker said enhanced “competition” among insurance companies was the solution to the health care crisis. (The name of Hacker’s latest paper is “Healthy competition.”) This time enhanced competition would not come from “managing” competition, but from the creation of a “public option.” This time the coalition that promoted the alternative to single-payer was not the Jackson Hole Group, but HCAN, assisted by a sister coalition called the Herndon Alliance.
The Herndon Alliance was founded in 2005 by many of the same groups that would create HCAN in 2008. The Herndon Alliance paved the way for HCAN’s promotion of the “public option” with some laughable “research” claiming to find that Americans want a “public-private-plan choice” approach and don’t want a single-payer system. I have written elsewhere about the bogus “research” conducted by the Herndon Alliance. Suffice it to say here the Herndon Alliance cooked up a new and more insidious version of the “political feasibility” argument.
Until about 2007, when the Herndon Alliance first began publishing its “research,” there was only one variant of the “political feasibility” argument, the one that said the insurance industry is too powerful to beat. The Herndon Alliance variant claimed single-payer is not feasible because Americans don’t want it. According to this variant, American “values,” not the insurance industry, are actually the greatest impediment to single-payer. According to the Herndon Alliance, Americans “value choice of insurance company” and “they like the insurance they have and want to keep it.” HCAN and Hacker picked up these refrains and promoted them vigorously to the public and to members of Congress. This inexcusable attack on single-payer no doubt helped key committee chairs in Congress (Kennedy, Baucus, Waxman, Rangel and Miller) feel more comfortable taking single-payer off the table and concentrating on the “public option.”
By early 2009, it was clear the Hacker-HCAN-Herndon Alliance propaganda for the “public option” and against single-payer had worked with the Democratic leadership, and that the Democratic leadership would fall once again for a market-based alternative and remove single-payer from the table. The removal of single-payer legislation took place without the firing of a single shot in public by the insurance industry and the right wing. It took place at the request of the “yes but” wing.
In the House, single-payer legislation, HR 676, has been rammed back onto the table, thanks to hell-raising by the single-payer movement, including the arrests of some brave doctors and nurses who disrupted hearings in the Senate Finance Committee last May. Last Friday night, Speaker Nancy Pelosi agreed to allow a floor vote on whether to substitute HR 676 for HR 3200, the Democratic leadership’s “public option” bill. This is a significant victory for the single-payer movement, but it should not have come so late in the 2009 session. If Pelosi and the three committee chairmen who wrote HR 3200 had permitted HR 676 to go through the normal committee hearing process, single-payer advocates would have had more time to educate Congress and the public about why a single-payer system is superior to all other alternatives.
It appears almost certain that the reform cycle we’re in now will end the way the last two did – with the Democrats’ competition-based alternative to single-payer going down in flames. It is extremely important that progressives, especially progressives in the “yes but” camp, understand why this happened. Yes, the ultimate villain in these dramas was the insurance industry and their conservative allies. But universal coverage advocates must understand the role of the “yes buts,” and the policy entrepreneurs they listened to, in splitting the universal coverage movement and in seducing Democrats to support legislation that was no more likely to pass than single-payer legislation and wouldn’t have cut costs if it had passed. If they don’t see this – if they persist in believing the insurance industry is the only force single-payer advocates have to contend with – they will, wittingly or unwittingly, help perpetuate the pattern we have seen in the last three reform cycles. They will, in short, perpetuate the insanity of doing the same thing over and over, seeing it fail, and not learning from failure.
It is not inevitable that a scrawny “public option” will be strengthened
The argument that any “public option” is better than none has rarely been articulated, but I suspect we will hear it more often as the reality sinks in that the “public option” in the Democrats’ bill is a joke. “Public option” advocates who learn for the first time that the “option” in the Democrats’ bill will insure few or zero people have only two choices: to abandon the “public option” movement, which is no doubt emotionally difficult to do for those who have invested heavily in the movement, or to continue to work for the Democrats’ version of the “public option” and rationalize that choice with the argument that a tiny “public option” can always be improved once it is established.
The problem with this argument is that the “public option” is not your typical government program. The “public option” is not like the space program or the various college loan programs, to take a few examples, all of which can be expanded or contracted as the years go by without seriously threatening the very existence of the program. The “public option” will be a business. And this particular government-run business may never get very big; it may not even survive. If it doesn’t get big, or doesn’t survive, it won’t develop the huge public fan base that protects popular programs like Social Security and Medicare. In fact, the reverse could happen. A miserable early performance may cause Americans to turn against the idea of a Medicare-like program for the non-elderly. Unlike public programs, businesses don’t have an indefinite time period to develop a supportive public. Businesses don’t automatically take root and go on living forever. The “public option” must prove its ability to survive and undersell the insurance industry quickly. Moreover, the “public option” will be attempting to break into a business that has been consolidating over the last few years. The insurance industry is extraordinarily difficult to crack.
“Public option” proponents who urge us to support even a token “public option” must remember how much is at stake here. At stake is not only the willingness of the public to believe that government health insurance programs can outperform the insurance industry. At stake as well is whether Congress will give the insurance industry a trillion dollars per decade of taxpayer money.
The Democrats’ legislation calls for subsidies to people under a certain income level (probably 300 or 400 percent of the poverty level) so all Americans can afford to obey the proposed law requiring them to buy insurance from either the insurance industry or the “public option.” These subsidies will probably amount to a trillion dollars per decade. If the “public option” doesn’t survive, or survives but never insures more than a tiny percent of the population, that will mean that all or nearly all of that trillion dollars will go to the insurance industry.
It is not written in stone that creation of the “public option” must go hand in hand with a huge bailout for the insurance industry. After all, one could imagine a scenario in which enrollees in the “public option” are the only ones who get subsidies. That was Hacker’s original plan. But Democrats decided early in their bill-writing process that subsidies had to go to both the “public option” and the insurance industry, and Hacker and company did not complain. That decision, plus the Democrats’ desire to achieve near-universal coverage, plus the Democrats’ decision to create only a tiny “public option,” means that if a “public option” is enacted it will be enacted only in conjunction with an enormous insurance industry bailout.
A well-fed insurance industry is bad news for both single-payer and “public option” advocates. An insurance industry strengthened by a trillion dollars per decade of new tax dollars will not only be in a better position to oppose single-payer legislation, it will also be in a stronger position to lobby Congress and the regulators to ensure the “public option” remains stunted.
“Public option” advocates should start talking about the “public option” as if it were inextricably tied to an insurance industry bailout. They should write the phrase “public-option-insurance-industry-bailout” on a Post-it note and paste it to their bathroom mirror to remind them to be honest with themselves and the public about this fact.
To sum up: “Public option” proponents who claim that any “public option” is better than no “public option” because even a skinny little program can be beefed up later are sadly mistaken. A weak “public option” may not survive to be beefed up later, and whether it survives or not, it will serve as fig leaf that will let Congress justify an insurance industry bailout. A strengthened insurance industry is the last thing either the “public option” or the single-payer wing of the universal coverage movement needs. Please say after me: A weak public option is far worse than none at all.
Single-payer will still require a political struggle
As I said in “Bait and switch,” I have no illusions about how difficult a single-payer bill will be to enact. I am under no illusion that a single-payer bill would have passed Congress in 2009 given the world as it was in December 2008. I do believe, though, that if the “yes but” wing of the universal coverage movement had thrown their considerable weight behind single-payer prior to 2009, say, in 1992 when the last reform cycle began, we would either have a Medicare-for-all style system by now, or we’d be on the verge of enacting one now.
Will HCAN and Hacker put out a call to their followers to do all they can to win the floor vote on HR 676 this fall? Or will they give lip service to HR 676 and sit on their hands? When the 2009 session of Congress ends, will HCAN et al. offer their usual misinterpretations of why reform failed?
How quickly America enacts a single-payer system will depend in part on whether progressives learn the real lessons of the failure of the “public option” movement in 2009. If the “yes but” wing draws the same lessons it drew from the failure of the Clinton bill – that the “base” was not well enough organized, or that the Clintons didn’t “sell” their plan skillfully – unity within the universal coverage movement seems unlikely, and the day we get to a single-payer system will be postponed.
I believe the “yes buts” must confront some inconvenient truths immediately. The “political feasibility” rationale for doing nothing to assist the single-payer movement was never a good one or, at minimum, after two decades of constant use, has become an embarrassment and must be discarded. It is foolish to argue that even the tiniest “public option” will constitute a victory that can be built on later. If the “yes buts” see these truths, then unity within the universal coverage movement should be possible. And if unity comes to the universal coverage movement for the first time in 40 years, single-payer can’t be far behind.
Kip Sullivan belongs to the steering committee of the Minnesota chapter of Physicians for a National Health Program.
UnitedHealthcare Expands Availability of Quicken Health Expense Tracker to Nearly 700,000 Consumers
August 3, 2009
UnitedHealthcare, a UnitedHealth Group (NYSE: UNH) company, is expanding the availability of Quicken Health Expense TrackerSM to help nearly 700,000 of its commercial health plan enrollees nationwide better manage their health-related finances and information.
UnitedHealthcare… expects to make it available to more than 20 million commercial health plan participants by year end.
Drawing on claims data, Quicken Health Expense Tracker automatically assembles a complete financial picture of an individual’s medical-related savings and expenses into one easy-to-use location.
Peter Karpas, senior vice president and general manager, Quicken Health Group: “Our goal is to transform the way people interact with the health care system and make the financial side of health care easier for consumers, health plans, employers and providers. And it starts with the support of forward-thinking companies like UnitedHealthcare.”
Quicken Health Expense Tracker was developed by Intuit and Ingenix, a UnitedHealth Group company that is a leader in health information solutions. Ingenix played a key role in designing the security and connectivity between the software and enrollees’ health information.
The Health Insurers Have Already Won
How UnitedHealth and rival carriers, maneuvering behind the scenes in Washington, shaped health-care reform for their own benefit
By Chad Terhune and Keith Epstein
August 6, 2009
As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group (UNH), Aetna (AET), and WellPoint (WLP). The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable.
UnitedHealth followed up on June 30 with another report for lawmakers pinpointing $332 billion in savings through better use of technology and administrative simplification. If enacted, those changes would potentially benefit UnitedHealth’s Ingenix data-crunching unit. Ingenix, with annual revenue of $1.6 billion, is poised to establish a national digital clearinghouse to ensure the accuracy of medical payments and provide a centralized service for checking the credentials of physicians.
During a media presentation in May in Washington, (UnitedHealth’s Simon) Stevens said medical costs incurred by UnitedHealth’s corporate clients were rising only 4% annually, less than the industry average of 6% to 8%. But that claim seemed to conflict with statements company executives made just a month earlier during a conference call with investors. On that quarterly earnings call, UnitedHealth CEO Hemsley conceded that medical costs on commercial plans would increase 8% this year.
What a nice thing UnitedHealthcare is doing. Being dedicated to the health care consumer, they are helping their commercial plan enrollees manage their health-related finances and information through the Quicken Health Expense Tracker developed by Intuit jointly with their own Ingenix division. This is the industry’s solution for reducing the administrative complexity and waste of our fragmented, multi-payer system. Or is it?
Anything that UnitedHealthcare does is designed to benefit its investors. That’s what capitalism is all about. The for-profit insurers’ primary product is administrative services – the more the better. The Quicken Health Expense Tracker does absolutely nothing to reduce the administrative excesses in health care financing; in fact, it merely adds one more administrative product that the consumer ultimately pays for. It increases the cost of health care without providing any direct health benefit. That is not the reform we need.
But the next question should scare all of us. What does UnitedHealthcare intend to do with this very rich trove of information on the health and health-related finances of tens of millions of health care consumers? UnitedHealthcare’s Ingenix already has a track record of using a data bank of much more limited information to cheat health care consumers out of billions of dollars. Although they surely will not duplicate that same stunt, can you imagine UnitedHealthcare executives sitting back and simply staring at this treasure trove without diving in to find the gold to distribute amongst the shareholders, including themselves? Under the principles of capitalism it is their amoral obligation to start digging.
Perhaps we need a study by The Lewin Group to inform us on the costs and the benefits, or lack thereof, of this program. Er… uh… now that they are owned by Ingenix, maybe that’s not such a hot idea.
Read the cover story in the current BusinessWeek (link above). It’s long, and it’s depressing. UnitedHealth and rival carriers “have already won.”
Wait! How could they have won? It’s not over. At stake are both the health and the financial security of the people of our nation. This is war! Man your battle stations! This is the most honorable war we will ever fight because we are saving lives instead of destroying them.
A recent post on the National Center for Policy Analysis’s (NCPA) web site by Dr. Scott Atlas of the Hoover Institute and Stanford University expounded on 10 “surprising facts” about our health care system. After an opening statement that U. S. health care has been denigrated compared to other developed countries around the world, Atlas proceeds to present ten under-recognized “facts” that we should consider before turning to a larger role of government in health care.(1)
This piece comes across as cherry picking of the literature to make the political point that we already have a good health care system, mostly because of the private sector and our advanced medical technology. It fits in well with the NCPA’s announced goals “as a nonprofit, nonpartisan public policy research organization, established in 1983, with the goal to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.” (2)
The NCPA is one of the well-funded right-wing think tanks that uses its sizable corporate funding base to influence public opinion through hard-news coverage, television, talk shows, Op-Ed’s and guest editorials in major newspapers, and Congressional connections. In a 2005 article in the International Journal of Health Services, I rebutted 20 of the NCPA’s conservative claims as disinformation and myths. (3)
So now Atlas brings forward 10 more “facts” that will surprise us — except they are distorted and wrong. They again fit in well with the NCPA’s agenda (4):
• Alleged Fact 1: Americans have better survival rates than Europeans for
• Alleged Fact 2: Americans have lower mortality rates than Canadians.
• Alleged Fact 3: Americans have better access to treatment for chronic diseases
than patients in other developed countries.
• Alleged Fact 4: Americans have better access to preventive cancer screening
• Alleged Fact 5: Lower income Americans are in better health than comparable
• Alleged Fact 6: Americans spend less time waiting for care than patients in
Canada and the U.K.
• Alleged Fact 7: People in countries with more government control of health
care are highly dissatisfied and believe reform is needed.
• Alleged Fact 8: Americans are more satisfied with the care they receive than
• Alleged Fact 9: Americans have much better access to important new
technologies like medical imaging than patients in Canada or the U.K.
• Alleged Fact 10: Americans are responsible for the vast majority of all health
Atlas concludes that “Despite serious challenges, such as escalating costs and the uninsured, the U.S. health care system compares favorably to those in other developed countries.”
So let’s examine some of these claims, which are supported by 16 carefully selected references to the literature, to see whether they hold any water. Rather than deal with all 10, this will look at four in enough detail to see the trends. We will soon see this presumably authoritative document is just another opportunistic use of data disguised as scholarship.
Fact 1 claims that Americans have much higher survival rates for cancer of the breast, prostate and colon than their counterparts in Germany, the U.K and Norway. “Fact 2″ claims that Americans have lower mortality from breast and colon cancer than Canadians. However, as described in some detail in my most recent book The Cancer Generation: Baby Boomers Facing a Perfect Storm, these conclusions are based on five-year survival rates, a flawed method of evaluating outcomes. Although the five-year survival rates for Americans are higher for all cancers in this country compared with both men and women in Europe, researchers tell us that these figures are deceptive and incorrect because of several kinds of bias. For example, the study used by Atlas has no information on clinical stage of cancers. For valid cross-national comparisons, patients have to be matched for stage, since advanced-stage cancers will obviously have worse outcomes than early-stage cancers. There are other technical but crucial kinds of bias which have to be accounted for before drawing conclusions that we do better than other countries. The NCPA’s “facts” did not consider other sources of bias, such as how much screening was done in each country, and are biased to a political conclusion that fits with its agenda.
Fact 3 claims, on the basis of one reference and a reported difference in use of statins for cholesterol reduction, that Americans have better access to care of chronic diseases than do our counterparts in other developed countries. But that conclusion disregards solid evidence to the contrary as shown by a 2007 report by the Commonwealth Fund of a study of health system performance in seven countries — Australia, Canada, Germany, the Netherlands, New Zealand, the U.K. and the U.S. That study asked a much broader question than the use of statins, asking respondents how often during the past year they did not see a doctor, did not get recommended care, or skipped doses/did not fill Rx because of cost? The results completely discredit “Fact 3″– 42 percent of Americans answered “yes” to this question, three times the number of Canadians and almost five times the number people in the U.K. (5)
Fact 7 alleges that Americans are more satisfied with our health care system than citizens in countries with more government involvement in health care. Atlas cites the above Commonwealth study to support a claim that “more than 70 percent of German, Canadian, Australian, New Zealand and British adults say their system needs ‘fundamental change’ or ‘complete rebuilding.’ That is true, but what Atlas doesn’t tell us is that more Americans (82 percent) respond that way, more than respondents in any of the other countries. In fact, that study found that 34 percent of Americans believe that our system should be completely rebuilt, compared to only 12 and 15 percent in Canada and the U.K., respectively. (6)
As is well known, access, cost and quality of health care are interdependent and intertwined such that you can’t evaluate one without the others. If many people cannot get past financial barriers to get access to needed care, they obviously have low quality of care. So it is cavalier and distortional for the NCPA paper to disregard our system’s cost and access problems while claiming that our system compares favorably with other developed countries. Here are just a few objective cross-national comparisons among many that completely discredit any assertion of American superiority, or even equivalency in quality of health care compared with other developed countries:
• A 2008 report by the Commonwealth Fund found that the U.S. dropped from
15th in 2006 to last among 19 countries in 2008 on a measure of mortality that
is amenable to medical care. (7)
• A 2007 report ranked the U.S. 42nd in the world for life expectancy, lower than
most of Europe and Japan. (8)
• A 2006 study found that Americans in late middle age are less healthy than
their counterparts in England for cancer and five other chronic diseases. (9)
• A 2007 study found that Canada has at least the quality of care as in the U.S.,
often with better outcomes, despite spending little more than one-half what we
spend on health care. (10)
• An earlier study showed conclusively that poor women with cancer in
Toronto have better outcomes than their counterparts in Detroit, even after
accounting for race and standards of measuring poverty (for example, the
Canadian women had survival rates more than 50 percent higher for lung,
stomach and pancreatic cancer compared to American women in Detroit’s poorest
• The U.S. has a weaker primary care system than other developed countries; it
has been found to rank 11th among 11 countries on eleven performance criteria
(12); our primary care base is in crisis with less than 10 percent of
medical graduates now opting for careers as primary care physicians (13);
moreover, patients living in parts of our country with larger number of specialists
(and greater use of technology) are more likely to have late-stage colorectal
cancer when first diagnosed. (14)
So much for the NCPA’s latest surprising “facts”, intended as they are to perpetuate the problems (and profits) of our unaccountable market-based system and protect private markets from health care reform. This kind of article by the NCPA does not advance the debate over how to fix our system, and instead is just another poorly disguised assault on the truth.
1.Atlas, S. 10 surprising facts about American health care. National Center for Policy Analysis, No. 649, March 24, 2009.
1. National Center for Policy Analysis. www.ncpa.org/abo/.
2. Geyman, J.P. Myths and memes about single-payer health insurance in the United States: A rebuttal to conservative claims. International Journal of Health Services 35:1, 2005.
3. Ibid # 1.
4. Schoen, C, Osborn, R, Doty, M M et al. Toward higher-performance health systems: Adults’ health care experiences in seven countries, 2007. Health Affairs Web Exclusive 26, w 717-34, 2007.
5. Ibid # 5.
6. The Commonwealth Fund Commission on a High Performance Health System. Why not the best? Results from the National Scorecard on U.S. Health System Performance. Vol 97, July 17, 2008.
7. Associated Press. U.S. ranks just 42nd in life expectancy. Lack of insurance, obesity, social disparities to blame, experts say. August 11, 2007.
8. Banks, J, Marmot, M, Oldfield, Z et al. Disease and disadvantage in the United States and England. JAMA 295: 2037-45, 2006.
9. Guyatt, G H, Devereaux, P J, Lexchin, J et al. A systematic review of studies comparing health outcomes in Canada and the United States. Open Medicine 1 (1), 2007.
10. Gorey, K M et al. An international comparison of cancer survival: Toronto, Ontario and Detroit, Michigan metropolitan areas. Am J Public Health 87: 1156-63, 1997.
12. Starfield, B. Primary Care: Concept, Evaluation and Policy. Oxford University Press. New York, 1992.
13.American College of Physicians. The impending collapse of primary care
medicine and its implications for the state of the nation’s health care.
Washington, D.C. January 30, 2006.
14.Roetzheim, R G, Pal, N, Gonzalez, E C et al. The effects of physician supply
on the early detection of colorectal cancer. J Fam Pract 48 (11): 850-8, 1999.
Adapted from Do Not Resuscitate: Why The Health Insurance Industry Is Dying, and How We Must Replace It, and The Cancer Generation: Baby Boomers Facing a Perfect Storm, with permission from the publisher, Common Courage Press.
John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press
Buy John Geyman’s Books at: http://www.commoncouragepress.com
Health Debate: Costs and Benefits
The New York Times
August 4, 2009
To the Editor:
Universal coverage and cost control are not conflicting aims.
Canada spends 10 percent of gross domestic product on health care, and everyone is covered. The United States spends 16 percent of G.D.P., but tens of millions lack coverage. The cost difference is almost entirely due to higher administrative costs and higher prices, which are directly related to the economics of a multi-payer system.
The lessons from Canada and other countries are clear. If you focus on cost control, you will fail. If you cover everyone because it’s decent and just, you will also achieve economic sustainability.
America, it’s time to do the right thing and then reap the rich rewards of moral public policy.
Michael M. Rachlis
Toronto, Aug. 2, 2009
The writer, a doctor, is a health policy consultant.
U.S. Health Spending Breaks From the Pack
By Catherine Rampel
The New York Times
July 8, 2009
The following graph shows that the United States is the only nation that has failed to slow the growth in health care costs in spite of also being the only nation of those listed that has not provided universal coverage.
health spending per capita in US 2000 PPP dollars, OECD countries
If there is no image in this message, the graph can be accessed at this link:
Senators Closer To Health Package
By Shailagh Murray and Lori Montgomery
The Washington Post
August 6, 2009
The emerging Finance Committee bill would shave about $100 billion off the projected trillion-dollar cost of the legislation over the next decade and eventually provide coverage to 94 percent of Americans, according to participants in the talks. It would expand Medicaid, crack down on insurers, abandon the government insurance option that President Obama is seeking and, for the first time, tax health-care benefits under the most generous plans. Backers say the bill would also offer the only concrete plan before Congress for reining in the skyrocketing cost of federal health programs over the long term.
Spurred by the CBO director’s startling assertion last month that measures drafted by other committees would not bend the “cost curve,” negotiators on the finance panel are also studying a plan to fine insurance companies that do not pay providers electronically, a plan to reduce payments to providers to force them to increase efficiency and a plan to study the comparative effectiveness of various medical treatments.
Once again. The stated goals of health care reform are 1) to cover everyone, and 2) to slow the growth in health care costs so that health care is affordable. So what is Congress doing?
The Senate Finance Committee now would leave 6 percent without coverage, and none of the other bills are truly universal either. Based on the policies contained in the bills, it is likely that the estimates of individuals that would be left out are very conservative, and many more will remain uninsured. So much for universal coverage.
What about bending the cost curve? Most of the legislative measures are aimed at controlling federal spending on health care. Very few of the policies would have any real impact on slowing the growth of our total national health expenditures. This means that more health care costs will be shifted from the government to individuals and employers. Bending the cost curve of the federal budget is of no value if the cost curve of our national health expenditures continues on its current trajectory.
Will private insurance reform slow cost increases? All Congress is asking of the insurance industry is that they guarantee the availability and renewability of insurance coverage. That can have no impact whatsoever on total health care costs, but it does increase health insurance premiums since those high-cost individuals who are currently shut out would then be allowed to purchase coverage in the private plan risk pools. Higher private insurance premiums is not exactly what most Americans want.
Michael Rachlis is right. Look at the curves. Every other nation has adopted health care financing systems – social insurance programs – which have allowed them to moderate the trajectory of health care spending, while providing universal coverage. The United States remains the outlier on both counts.
The members of Congress are diddling with policies that they wish would control costs, but at best will only sanitize the federal budget, while they insist in leaving in place our unique, American-style multi-payer system that can never provide affordable health care for all of us.
An improved Medicare-for-all program would bend our cost curve into the sustainable path shared by all other nations, and would take care of all of us. Let’s go for it!
Building a National Insurance Exchange: Lessons from California
California HealthCare Foundation
Among the deliberations now taking place in the nation’s capitol regarding federal approaches to expanding health coverage, virtually all incorporate the idea of an insurance exchange – an entity to which people can go to select a health plan from a broad range of offerings. Over the past 15 years, California gained extensive experience in designing and operating just such an exchange, an effort that ultimately proved unsustainable.
The California Exchange
1. Provide an easy to navigate single point of entry where people could go to choose among several health plans.
2. Reduce the cost of coverage, using three primary mechanisms:
* Reduce administrative costs by achieving economies of scale
* Command lower prices
* Foster market competition
3. Enhance portability of coverage
The actual experience of the California exchange taught some hard lessons. It showed that none of theses objectives is easily achieved.
The Participation Problem
… as long as the exchange is not the exclusive source of coverage for some populations, health plans may be reluctant to participate…
Insurers do not particularly like the head-to-head competition that is a feature of the exchange concept… Insurers always prefer to insure whole groups directly rather than compete in the exchange.
The Elusiveness of Savings
* Few administrative efficiencies
* A lack of pricing power
* Exposure to adverse selection
People involved in the operations of the California exchange agreed that when there is competition for the same customers within and outside the exchange, the exchange is in “extreme peril” of becoming a victim of adverse selection… Eventually the exchange will fail.
Choosing the Right Model
But once individual choice is part of the exchange design, insurers will prefer to generate business outside of the exchange, as occurred in the California experience… The insurers will still have an incentive to direct higher-risk people to the exchange rather than insuring them directly, in hopes that they might pass off some of the “bad” risks to other insurers.
For a description of the Health Insurance Exchange proposed in the House Tri-Committee bill, insert H.R.3200 in the Thomas search box and read Title II:
Most progressive policy wonks observing the reform process taking place in Washington have been quite smug. As the battles take place over a public option, over taxing employer-sponsored plans, or over the eligibility thresholds for government subsidies, these wonks are complacent knowing that the really important reform taking place is the establishment of the Health Insurance Exchange. Or so they believe.
Within the Exchange the regulated private insurance industry will have to provide standard benefit packages, at affordable premiums made possible by competition, and without the intrusive perversities that currently permeate the industry and its products. What could be wrong with this?
President Obama and the Democrats in Congress are currently facing a barrage of criticism for supporting the government takeover of health care. To fend off this criticism, what are the very first words out of President Obama’s mouth? “You can keep the insurance you have!” So much for an insurance exchange market of comprehensive, affordable private health plans.
Why would a phenomenally successful private insurer ever want to compete with itself by offering a heavily regulated Health Insurance Exchange product that has unaffordable premiums because of adverse selection? Because of the requirement of risk adjustment within the Exchange, and because individuals and employers with high health care costs will seek relief in the Exchange, all products offered by the Exchange will be too expensive.
The Health Insurance Plan of California (later PacAdvantage) was designed not unlike the current federal proposals – an insurance exchange especially geared for small businesses. Because of adverse selection, it became a victim of the death spiral, and closed in 2006.
The only way a Health Insurance Exchange could work would be if we moved all existing private plans into the Exchange, and established a system that would effectively pool risk. Even then it would be very expensive, partly because of the profound administrative inefficiencies, and it would still fall short on universality and equity. And at that we would still have to address the problem of the very large sector of our population who would not qualify for subsidies but who still could not afford the high premiums and out-of-pocket expenses of private insurance.
The least expensive, most efficient, and most effective method of ensuring that everyone has affordable access to the health care that they need is a single payer, Medicare-for-all, national health program. There will be a lot of noise on health care reform during the August recess. Just make sure that our noise is the loudest!
Marilyn Clement’s Speech at Celebration Held in Her Honor
June 7, 2009
Closing comments of Marilyn Clement’s last speech:
Keep it up! We’re going to win single payer!
Video of speech (10 minutes):
Marilyn never gave up, though she left us yesterday, August 3, 2009.
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