George Annas on the constitutionality of Medicare

Posted by on Friday, Dec 24, 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.

Can Congress Make You Buy Broccoli? And Why That’s a Hard Question

By Wendy K. Mariner, J.D., M.P.H., George J. Annas, J.D., M.P.H. (corresponding author), and Leonard H. Glantz, J.D. (From the Department of Health Law, Bioethics, and Human Rights, Boston University School of Public Health)
The New England Journal of Medicine
December 22, 2010

The continuing uncertainty over the constitutionality of the Affordable Care Act (ACA), illustrated by conflicting trial court rulings and scholarly commentaries, raises the question of why this constitutional question is so hard to answer. There are at least four reasons.

(The four reasons are discussed in the article.)

A much easier question to answer is why we’re facing this constitutional turmoil. Why, for example, is there no constitutional fuss over Medicare, Medicaid, or veterans’ health care? These programs raise no constitutional issue because they are government benefit programs funded by taxes, and the Constitution explicitly authorizes Congress to tax and spend for the general welfare. Had the ACA expanded Medicare eligibility to everyone, or created a new government health benefit program, there would be no constitutional issue. The constitutional controversy is the direct result of the insistence by conservative legislators that any health insurance reform must preserve the private insurance industry, which necessitated the addition of the individual mandate that is now being fought in the courts by similarly conservative forces.

Although these views on the constitutionality of Medicare have been discussed by others, including PNHP’s leadership, this NEJM article is of prime importance in the continuing health reform debate because it represents the views of respected ethicist George Annas and his colleagues.

The editor’s decision to use broccoli in the title stems from the comments of Florida’s Judge Vinson who questioned whether Congress could require everyone to buy broccoli. Cute. But that distracts from the fundamental issue that should have been selected for inclusion in the title.

Our founding fathers drafted a Constitution that recognizes the primacy of government in the establishment of benefit programs, and explicitly authorizes Congress to tax and spend for the general welfare. That does not extend to taxing and spending for the welfare of the private insurance industry, especially when that is the most expensive and least efficient model of reform – one that leaves so many out, and creates financial hardship for many more.

Is anyone else ready for a national movement to petition Congress to grant us our right to a government health benefit program for everyone – an improved Medicare for all?

Is HHS serious about controlling insurance premiums?

Posted by on Tuesday, Dec 21, 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.

Rate Increase Disclosure and Review

Department of Health and Human Services
Filed December 21, 2010

This document contains proposed regulations implementing the rules for health insurance issuers regarding the disclosure and review of unreasonable premium increases under section 2794 of the Public Health Service Act. The proposed rule would establish a rate review program to ensure that all rate increases that meet or exceed an established threshold are reviewed by a State or HHS to determine whether the rate increases are unreasonable.

Under this approach, if a proposed rate increase equals or exceeds a defined threshold, it would be considered “subject to review.” The review process would then determine if the increase is, in fact, unreasonable.

Rates above the threshold would not be deemed or otherwise determined to be unreasonable in advance of this review. As discussed below, for rate increases filed in a State on or after July 1, 2011, or effective on or after July 1, 2011 in a State that does not require a rate increase to be filed, the threshold for whether rates are subject to review would be whether the average weighted increase in the rate filing, alone or in combination with prior increases in the preceding 12 month period, is 10 percent or more.

In establishing the 10 percent threshold for determining which rates are subject to review, HHS has balanced the wide range of available data on rate and medical trend increases. Our review of the limited data available suggests that the majority of increases in the individual market exceeded 10 percent each year for the past 3 years.

These yearly increases significantly exceed some national measures of medical cost inflation, such as the medical component of the Consumer Price Index, whose inflation has typically ranged from 3.7 percent to 4.4 percent. The Centers for Medicare and Medicaid Services’ National Health Expenditures (NHE) data is another measure of health care cost trends based on overall national health care spending. The five most recent years of available NHE data suggest that overall health care expenditures have increased at an annual rate between 4.4 percent to 6.9 percent. Some commenters suggested using these indices as thresholds for a review of rate increases. Another national index, the Standard & Poor’s Healthcare Economic Commercial Index, also measures insurance rate trends.  The S & P Index measures trends in provider claims costs, which encompasses both unit cost and utilization changes; the trend in that index from September 2009 to September 2010 was 8.5 percent.

The 10 percent threshold established in this regulation exceeds these major indices and in doing so balances industry concerns that any threshold would be over-inclusive with the competing concern that it would subject to review too few rates that may be unreasonable. As we discuss below, when better and more specific data on trends in insurance rates in individual States can be collected, State-specific thresholds would be established.

This approach does not provide for the review of every proposed rate increase, no matter how small, to determine whether it is unreasonable. We recognize that the choice of any threshold makes it inevitable that unreasonable rate increases below the threshold will not be reviewed, and that a proposed increase of less than 10 percent would be unreasonable if the actuarial assumptions underlying the increase were invalid or unreasonable. In proposing this approach, HHS also has taken into consideration the fact that many States, as discussed below, conduct a rate review process for all rate increases without regard to the magnitude of the increase. We expect the number of States conducting such reviews to increase in light of additional resources provided under the rate review grants and passage of State legislation. Therefore, as a practical matter, in a growing number of States, there is even less likelihood that an unreasonable increase below the threshold would be implemented.

In establishing an initial 10 percent threshold for whether a rate increase is subject to review, as discussed below, HHS recognizes that rates, underlying costs, and health care trends vary from State to State.

As discussed below, the State-specific threshold would be based on the same analysis used to develop the initial 10 percent threshold, but would be based on data from the specific State, rather than the national data we analyzed in selecting the proposed 10 percent figure.

Applying this regulation to the large group market would result in a process that is not closely aligned with most State processes upon which the regulation is modeled. In addition, many issuers are not accustomed to submitting proposed rate increases for review in this market. Finally, purchasers in the large group market have greater leverage than those in the individual and small group markets, and therefore may be better able to avoid imposition of unreasonable rate increases. For these reasons, under this proposed regulation, rates in the large group market would not be subject to the rate review process we are proposing.

Proposed regulation (136 pages):

Besides being sure that everyone is covered by a comprehensive system of financing health care, the other important goal of reform was to slow down the intolerable increases in health care costs. The token cost containment measures included in the legislation will likely have little impact, so attention was given to the false proxy of health care costs: the increases in insurance premiums. So how effective will the proposed regulations be in controlling the inexorable rise in insurance premiums?

To begin with, the regulations cover only the individual market, leaving out the much larger market of employer-sponsored health plans. Since the increases in health care costs have placed an undue burden on employers, and indirectly on their employees, this is a serious omission.

As far as setting a threshold for selecting the level of unreasonable premium increases which would be reviewed, Health and Human Services (HHS) has decided that plans with less than 10 percent premium increases would not be reviewed. That is a level well in excess of measures of medical cost inflation. Imagine compounded premium increases of 9.99 percent per year on top of premiums that are already unaffordable. It is true that the 10 percent threshold may be revised, but the change is to be “based on the same analysis used to develop the initial 10 percent threshold.”

Thus, in assuaging the insurance industry’s fears that “any threshold would be over-inclusive,” HHS has made a decision to allow the private insurance industry to keep jacking up its premium rates at unreasonable and intolerable levels. That is no surprise considering the inadequacy of the measures theoretically designed to control the health care spending that the insurers would have to cover.

We can go back and do it right. We can create a beneficent public monopsony that covers everyone with a financing system that slows health care inflation to a tolerable level: an improved Medicare for all. That has to be better than a 9.9 percent compounded increase in premiums that we would be mandated to pay to the perverse, intrusive private insurance industry.

McKinsey: 30 to 40 million could remain uninsured

Posted by on Monday, Dec 20, 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.

Checking In With Dr. Robert Kocher On Who Might Stay Uninsured In Spite Of The Individual Mandate

By Amita Parashar
Kaiser Health News
December 20, 2010

McKinsey and Co., an international consulting company, estimates the number of people residually uninsured will be as high as 40 million in 2016. Dr. Robert Kocher, director of the firm’s Center for U.S. Health System Reform and a former special assistant to President Barack Obama on health care, recently spoke with Kaiser Health News’ Amita Parashar about the center’s estimates and who might not get insured as the health law takes effect.

Q. How did you come up with the figure that 30 million to 40 million people might remain uninsured after the individual mandate kicks in?

A. We built a simulation that allows us to model each county in the country. The model looks at businesses and individuals, coverage flows and changes over time. The model factors in health conditions, incomes, age and can allow one to make forecasts. … It is difficult to predict how big the residually uninsured market will be since it depends on many factors — how effective the individual mandate proves to be, how well auto-enrollment works [a provision of the law that will require large employers to enroll employees in a health plan, unless workers choose to opt-out], and how effectively exchanges and Medicaid programs work to enroll people. Depending on what you believe about these factors leads you to a large range for how many people will be residually uninsured. In some scenarios, that pool may be as large as 30 to 40 million people.

Q. Who are the residually uninsured?

A. There will always be a residual pool of uninsured that includes the following populations: undocumented [foreigners], people between jobs, those who may lose coverage from either changes in income [or from] rolling off of Medicaid. Also, the [people whose employer-based coverage] was dropped but who haven’t yet purchased insurance; those eligible and not enrolled in Medicaid; and those [who have not enrolled in insurance] by choice.

Q. Who do you think will choose to pay the penalty instead of getting insurance?

A. I’m not sure how big that population will be, but I think it’s conceivable that there will be people who are offered employer-sponsored insurance and choose not to take it when they don’t have an alternative and are above the income levels that would allow them to get other options. Naturally, there is going to be turnover, too, as people change jobs or move across state lines. There will be gaps in coverage that will hopefully be easier to remedy than they are today. But there will certainly be people who are in transit in the system, too. And there are some people that ideologically may choose not to get coverage, or to self-insure. While I think that’s going to be a relatively small population, I expect that there will be some that make that choice.

McKinsey and Co. estimates that as many as 30 to 40 million people will still be uninsured after the new health care law goes into affect. Telling people to do something they can’t do – buying subsidized health insurance that they still can’t pay for – will never succeed as a policy to eliminate the uninsured.

Enrollment needs to be automatic for everyone, with an automatic, equitable system of funding that makes it affordable for all – progressive taxes. That’s not such a difficult concept. I’ll bet you could easily solve it right now: an improved (fill in the blank) for all.

A spectacle of the health care crisis

Posted by on Friday, Dec 17, 2010

By Ed Weisbart, M.D.

I get overwhelmed when I try to think about the facts that there are over 50 million Americans without healthcare insurance and millions more with grossly inadequate insurance. I’m just as devastated to know that this kills 46,000 of us every year. I personally find it almost impossible to fully grasp the scale of these numbers, to fully understand the human impact of this ongoing disaster. Even welcoming uninsured patients into my medical practice and seeing them on a daily basis still masks the enormity of the problem to me.

I recently had the opportunity to get more of a sense of the human scale by volunteering at one-day massive mobile clinics sponsored by the National Association of Free Clinics (NAFC), the non-profit organization that supports the 1,200 brick and mortar free clinics across the country. This is the safety net that catches people who can’t afford even the modest fees  charged in the network of community clinics (FQHCs). About two years ago, NAFC began a campaign to bring greater public awareness to the plight of uninsured Americans by sponsoring these  free clinics across the nation. There have now been nine of these events in cities ranging from New Orleans to Washington DC, serving over 11,000 uninsured patients (well over 1,000 each day!) and connecting them up with local resources. If you are fortunate enough to have one come to your community, please volunteer your time at

I’ve had the opportunity to volunteer at five of these now and am overwhelmed by seeing the pride and dignity people have despite needless pain and suffering. I’ve seen countless people with the same story:  their employer doesn’t offer an affordable benefit, or they lost their job and COBRA ran out, and now they can’t afford the $130+ their physician must charge them for care, so they’ve run out of their hypertension/diabetes/lipid/migraine/asthma/whatever meds and just desperately want someone to write some refills. “Please, can you help me stay alive?” Unbelievable to see people choosing between their rent and their insulin, but it’s happening every day in our modern society.

Last week I saw a mother with her uninsured 25 year-old son. He’d told her a few days earlier that he had been hearing voices telling him to hurt someone. She’d tried calling local psychiatrists but couldn’t get an appointment given his lack of insurance. She was terrified but didn’t know what to do for him. She saw a notice about our upcoming free clinic, brought him in, and we were able to get him in immediately to see a psychiatrist who was also donating his day’s work. I’m still trying not to  imagine what would have happened if NAFC’s clinic weren’t there that day. Universal healthcare would protect all of us, even those who are “insured” today.

I saw a diabetic terrified about a two centimeter abscess on her foot. We were able to drain it, put her on antibiotics, and get her in for aftercare in 48 hours. She’d had the abscess for several weeks, knew it was a potential disaster, but couldn’t afford to go anywhere for care. Another few days and the outcome could have been much more grave.

This is simply not the America I grew up believing in. Over 80% of the people we see at these clinics are employed, but at jobs that don’t provide affordable healthcare benefits. I saw a woman who works full time at the US Dept of Agriculture as a chef, but has no benefits as they consider her a contract worker. She “works” for the government, but not really.  Congress may mandate that federal employees have benefits, but then they permit this sort of out-sourcing travesty to go on under the radar. She really works for our government, but has no healthcare benefits.

I have one word for this situation: unacceptable.

There’s just no justification to continue our current deplorable linkage between employment and healthcare. This disconnect greatly reduces quality, skyrockets costs, and puts us in a compromised global status. But if ever we needed a clear statement of the dangers of this linkage, the 9.8% rate of unemployment makes this argument far more clearly than ever.

My stomach turns at the political games going on in DC when I realize that each and every day of delay towards universal care, my neighbors are suffering and dying. And frankly, it’s only a matter of time before it’s me and my own family. Or yours.

Every day that we don’t succeed at getting improved Medicare for all, we’re all at risk. Even those of us with “insurance.”

Dr. Weisbart is a family physician located in St. Louis, MO.

Will the exchange plans be subject to adverse selection?

Posted by on Friday, Dec 17, 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.

Who Are the Uninsured Eligible for Premium Subsidies in the Health Insurance Exchanges?

By Peter J. Cunningham
Center for Studying Health System Change
December 2010

A key provision of the national health reform law is the creation of state-based exchanges to provide more affordable insurance options for people, especially the uninsured. Despite premium subsidies for people with incomes up to 400 percent of the poverty level, or $88,200 for a family of four in 2010, and an individual requirement to enroll in coverage, no one knows who will enroll in the exchanges and who will not, at least initially. Almost 40 percent of uninsured people eligible to receive subsidies through the exchanges have chronic conditions or report fair or poor health, and another 28 percent report recent problems with access to care or paying medical bills, according to a new national study by the Center for Studying Health System Change (HSC). However, about one-third of uninsured people eligible for subsidies have had no recent problems with their health, access to medical care or paying medical bills. Enrolling these apparently healthy uninsured people is likely to be challenging but essential to avoiding adverse selection, or enrolling sicker-than-average people, in the exchanges. Otherwise, health insurance costs in the exchanges could be higher than expected.

Contrary to popular perception, many of these healthy and low-cost uninsured people view themselves as risk-averse, which could motivate them to gain coverage in the absence of health or access problems. Also, most uninsured people believe they need health coverage, although fewer believe that health insurance is currently worth the cost, a situation that could change once premium subsidies are available in 2014.

One concern of the authors of the Patient Protection and Affordable Care Act was that the state insurance exchanges called for in the legislation might be subject to adverse selection. That is, individuals with greater health care needs would buy the government-subsidized plans if they could afford them, whereas healthy individuals might well choose to remain uninsured, feeling that their portion of the premium was too expensive or frankly unaffordable. This would concentrate high-cost patients in the insurance plans, resulting in the death spiral of skyrocketing premiums.

Healthier individuals who tend to be younger – the so-called “young invincibles” – have been perceived to be greater risk takers and thus more willing to go without health care coverage. This study suggests that these healthy individuals are just as risk-averse as uninsured people with health problems. Everyone wants to be insured.

Thus it is not so much the willingness to take risks that causes these individuals to forgo insurance coverage, but rather it is more whether the additional cost of the premium over the penalty provides enough perceived value, or whether they even have enough funds to pay the premium after their other basic needs are met.

In writing the bill, the authors struggled to balance the actuarial values of the plans (what percentage of costs the plans pay), the subsidies for the premiums and out-of-pocket expenses, and the penalties for non-compliance in purchasing the plans. They wanted the premiums to be affordable, so they pushed actuarial values down, shifting more costs to patients in need. They wanted to limit the burden on the federal budget, so they limited the government-provided subsidies for premiums and out-of-pocket expenses. They didn’t want to press too hard on requiring individuals to purchase expensive private plans from an industry in such disfavor, risking public furor, so they kept the non-compliance penalties low.

No matter how much you adjust these variables, you cannot ever get everyone to agree to purchase insurance. The numbers of individuals declining to purchase plans will be significant, and they will be predominantly healthy. It is absolutely inevitable that the exchange plans will experience adverse selection and will need to keep pushing premiums up.

Households with an income of 400 percent of the federal poverty level ($88,200 for a family of four) will feel the full brunt of the premiums inflated by the death spiral. How high? $25,000? $50,000? And should the family need health care, none of their out-of-pocket expenses are subsidized.

Trying to fudge the numbers won’t work in this structurally unsound financing scheme. We should quit playing games simply to keep the middlemen private insurers in play. Instead, let’s go for an improved Medicare for everyone.

Pseudo-market madness: Competitive bidding for medical supplies

Posted by on Thursday, Dec 16, 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.

DMEPOS Competitive Bidding

Centers for Medicare and Medicaid Services

Section 302 of the Medicare Modernization Act of 2003 (MMA) established requirements for a new Competitive Bidding Program for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). The MMA requires that competitive bid payment amounts be used to replace the current Medicare DMEPOS fee schedule payment amounts for selected items in selected areas. The competitive bid payment amounts are determined by using bids submitted by DMEPOS suppliers. The intent of the Competitive Bidding Program is to set more appropriate payment amounts for DMEPOS items, which will result in reduced beneficiary out-of-pocket expenses and savings to taxpayers and the Medicare program.


Despite Objections, Medicare Competitive Bidding Set to Begin

By Miriam Davidson
Muscular Dystrophy Association
December 3, 2010

Competitive bidding among Medicare providers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) is set to begin January 1 in nine regions of the country, despite sharp criticism of the plan by lawmakers, economists, patient advocates and others.

Under the new procedures, DMEPOS providers must go through a competitive bidding process to win the right to serve Medicare recipients. Medicare pays these providers to serve the medical needs of millions of Americans who use medical supplies at home, including oxygen equipment and power wheelchairs.

Medicare officials argue that competitive bidding is necessary to save money and streamline services. Opponents say that, while saving money and streamlining services are laudable goals, this plan could ultimately backfire. They say a lack of proper services and supports may force many people who are now living comfortably on their own into far more expensive institutional care.

A flawed process

Problems that came to light during the testing phase included Medicare beneficiaries being forced to go to multiple, unfamiliar providers for different items and services; nonlocal providers; inexperienced or unlicensed providers; and greater costs to Medicare from more emergency room visits and/or longer hospital stays as beneficiaries lost access to critical services and equipment.

Moreover, dozens of academics and members of Congress have pointed out two major flaws in the way the competitive bidding auction is being conducted. The first flaw is that bidders are not required to sign contracts that reflect their bid, thus encouraging DMEPOS suppliers to submit unrealistic, “low-ball” bids that competitors — and even they themselves — can’t match. Opponents contend that large companies will submit extremely low bids in order to drive smaller competitors out of business, knowing that ultimately, they won’t be forced to provide equipment and services at such low prices.

The second major flaw in the process, critics say, is that Medicare arrives at the price it will pay for a product or service by averaging all the bids it receives, winners and losers alike. Due to the presence of many unrealistically low bids, the final contract price is often lower than the bid submitted by the winning provider. In fact, during tests of the process, half of the bidders who won contracts were offered lower prices than their winning bids.

Critics say these flaws will result in a skewed system that rewards unscrupulous DMEPOS providers, as well as those who skimp on service and quality.


Invacare Analysis Raises New Doubts about Bid Winners

December 6, 2010

Even as CMS moves resolutely toward the Jan. 1 implementation of DMEPOS competitive bidding, industry stakeholders are uncovering increasingly troubling hard data about some of the project’s contract holders.

Nearly 21 percent — or 73 of the 356 bid winners — have limited ability to purchase products from Invacare Corp., the nation’s largest home medical equipment manufacturer, the company said last week in its final report on the credit-worthiness of suppliers awarded Round 1 contracts.

According to the manufacturer’s analysis:

* 8.5 percent of the contract holders have credit limits with Invacare of less than $10,000 (meaning they can buy very little product from the company);

* 5.4 percent are on credit hold (meaning they cannot purchase any product from the company); and

* 6.7 percent are so far behind on their payments with Invacare that their accounts have been turned over for collection or legal process (meaning they cannot purchase any product from the company).


Analysis of the Economic Impact of Competitive Bidding on the DME Market: A One Year Update

By Brian O’Roark, PhD, Associate Professor of Economics, Robert Morris University


* Competitive bidding reduces the number of sellers and thereby reduces competition.

* Competitive bidding concentrates market power, which creates regional oligopolies and reduces quality of patient care. Primary among economic concerns: by eliminating nine out of ten suppliers in the market for durable medical equipment (DME), the industry would become more concentrated.

* The Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees Medicare, misunderstands the structure of the market.

* The competitive bidding program forces an unsustainable business model on the DME industry. Ninety percent of providers were excluded from participating because they could not meet the bid. Those who qualify are forced to sustain prices for three years — an untenable position for any business.

The concept that competition will always bring the lowest prices for comparable value is so thoroughly ingrained in capitalistic societies such as ours that sometimes even the government will abandon administered pricing in favor of market competition. In this instance, the Centers for Medicare and Medicaid Services (CMS) has begun to use competitive bidding to price medical equipment and supplies. Initially, prices will likely be lower, but for how long and at what cost?

To begin with, for three years the CMS business is going to ten percent of the bidders. What does that do to the other 90 percent of suppliers who are excluded? Many of them will exit the market, concentrating the successful bidders into oligopolies or even monopolies.

What will happen to the manufacturers whose products are not distributed by the successful bidders? If the non-government market is not large enough to sustain them, some also will go under.

What will happen to patients’ access to these essential medical products? Inevitably, successful bidders will not be inclined to cover rural and poverty-ridden urban areas. Also, since each category of equipment and supplies is bid separately, services for patients may end up being highly fragmented.

After three years of market concentration, who will be bidding for the new contracts? Certainly not those entities that have already folded. Those suppliers that low-balled the bids the first time around did so to eliminate the competition. Those remaining will certainly jack up their bids. In an oligopoly, collusion is not essential to get higher prices, though some in this industry are certainly not above colluding if it increases profits.

Public stewards who do their homework can obtain optimal value through negotiated administered pricing – paying legitimate costs plus fair profits. All manufacturers and suppliers should be allowed to compete based on the quality and accessibility of their products and services, but always at a fair, predetermined price.

We should replace our public stewards who are foolish enough to dash our health care system onto the rocks, lured by Lorelei’s song of market competition. Let’s start singing the song of social solidarity – a song that won’t lure anyone onto the shoals – and then maybe we’ll attract public stewards who actually care about the patient.

Financial burden of Medigap and Medicare Part D

Posted by on Wednesday, Dec 15, 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.

Funding Savings Needed for Health Expenses for Persons Eligible for Medicare

By Paul Fronstin, Dallas Salisbury, and Jack VanDerhei
Employee Benefit Research Institute
December 2010

This report provides estimates for savings needed to cover health insurance to supplement Medicare and out-of-pocket expenses for health care services in retirement.

Men who supplement traditional Medicare with Medigap and Medicare Part D and who have relatively high prescription drug expenses will need $100,000 if comfortable with a 50 percent chance of having enough savings; to increase their odds to 90 percent, they would need $187,000.

Women who supplement traditional Medicare with Medigap and Medicare Part D and who have relatively high prescription drug expenses will need $131,000 if comfortable with a 50 percent chance of having enough savings, while those who prefer a 90 percent chance of having enough savings would need $213,000.

Persons currently age 55 will need even greater savings when they turn 65 in 2020. Needed savings for men range from $109,000–$354,000, while needed savings for women range from $147,000–$406,000 depending on their source of health insurance coverage to supplement Medicare, any employer subsidies, prescription drug use, and their savings goal related to their comfort level with having a 50 percent, 75 percent, or 90 percent chance of having enough savings to cover health insurance premiums and out-of-pocket health care expenses in retirement.

Nearly 90 percent of Medicare beneficiaries have some form of insurance coverage to supplement Medicare Parts A and B. As employers continue to move away from providing retiree health benefits, more of the retirees who have had subsidized employment-based coverage in the past will have to assume for themselves the financial risk associated with longevity.

Medicare is not a complete program. Individuals turning 65 in 2020 will find that, to have a 90 percent chance of having enough savings to pay Medigap and Part D drug premiums and out-of-pocket health care expenses, they will have to have up to $350,000 (men) or $400,000 (women) in reserves in addition to their basic living expenses and any other expenses they might face in retirement. This does not even cover potential long-term care expenses.

Medicare cost sharing, private Medigap plans, and private Part D drug plans all increase administrative complexities and waste in the Medicare program. Since most seniors do not have enough reserves to meet these potential costs, these programs also create further financial barriers to care (keeping in mind that Medigap and Part D premiums are in themselves financial barriers since they are not prepaid before age 65, but are paid out of retirement funds).

Medicare would be a much better program if we were to 1) eliminate the middleman Medigap plans and roll these benefits into Medicare, 2) eliminate the middlemen Part D pharmacy benefit managers and roll drug benefits into Medicare, and 3) eliminate deductibles, coinsurance and copayments.

This would reverse the current trend of shifting health care costs from large risk pools to individuals who have health care needs, a trend bound to increase in Medicare if the deficit hawks claiming that Medicare is bankrupt have their way.

Yes, that would require more funds for the Medicare risk pool, but there are valid reasons why that would be a much better approach. First, an effective health care financing system should be designed to eliminate financial barriers to care, not create them. So the financing of the system should not be linked to access. Second, it is much easier to finance health care equitably if a single large risk pool is established and funded through equitable (progressive) tax policies. Third, it is not the size of the Medicare budget that matters, but rather it is the total health care spending on the Medicare beneficiaries that is important. The efficiencies of a streamlined Medicare program frees up funds that can be used for beneficial health care that becomes more readily accessible with the removal of the financial barriers. Single payer advocates understand that the savings from streamlining the existing Medicare program would be quite modest compared to the tremendous savings we could attain by replacing our entire health care financing system with a single improved Medicare for all program.

An additional potential benefit is that the administratively complex program for those eligible for both Medicare and Medicaid could be eliminated if long-term care were also folded into Medicare. For those who claim that we can’t afford to do that, we already do once we deplete the reserves of those who need nursing home care.

Some contend that wealthier individuals should pay more in Medicare premiums and cost sharing. That is already beginning to take place. But that unnecessarily increases the administrative complexity of Medicare, and it increases the risk of a two-tiered system as the wealthy turn to private options. Once again, the financing of Medicare should be totally separated from the Medicare benefits program. Higher income individuals can increase their contributions through equitable taxes without disrupting the efficient delivery of Medicare benefits.

These are just some of the more important reasons why we refer to an improved Medicare when we advocate for Medicare as a model for a single payer national health program. Medicare alone, as it is, won’t get us to where we need to be, at least not without $400,000 subsidies.

Ezra Klein on the constitutional single payer path

Posted by on Tuesday, Dec 14, 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 reform advocates have little to fear from judge’s ruling

By Washington Post Staff Writer (Ezra Klein, per Wonkbook)
The Washington Post
December 14, 2010

U.S. District Judge Henry E. Hudson, a George W. Bush appointee (and part-owner of a Republican campaign-consulting firm that fought the health-care overhaul legislation), has, as expected, ruled the individual mandate unconstitutional. So why are reform advocates so unexpectedly pleased?

The individual mandate began life as a Republican idea. Its earliest appearances in legislation were in the Republican alternatives to the Clinton health-care bill, where it was co-sponsored by such GOP stalwarts as Bob Dole, Orrin G. Hatch and Charles E. Grassley. Later on, it was the centerpiece of then-Gov. Mitt Romney’s health-reform plan in Massachusetts, and then it was included in the Wyden-Bennett bill, which many Republicans signed on to.

It was only when the individual mandate appeared in President Obama’s legislation that it became so polarizing on the right. The political logic was clear enough: The individual mandate was the most unpopular piece of the bill (you might remember that Obama’s 2008 campaign plan omitted it, and he frequently attacked Hillary Clinton for endorsing it in her proposal). But as a policy choice, it might prove disastrous.

The individual mandate was created by conservatives who realized that it was the only way to get universal coverage into the private market. Otherwise, insurers turn away the sick, public anger rises, and, eventually, you get some kind of government-run, single-payer system, much as they did in Europe, and much as we have with Medicare.

If Republicans succeed in taking it off the table, they may sign the death warrant for private insurers in America: Eventually, rising cost pressures will force more aggressive reforms than even Obama has proposed, and if conservative judges have made the private market unfixable by removing the most effective way to deal with adverse selection problems, the only alternative will be the very constitutional, but decidedly non-conservative, single-payer path.

Ezra Klein’s Wonkbook:

It would be gratifying poetic irony if conservative legislators and conservative judges pushed us into single payer reform by either repealing or ruling unconstitutional the individual mandate.

As I said on KPFA/KPFK yesterday, “Nobody is going to argue that Medicare is unconstitutional..  We should fix it so it works better and then provide it to everyone.”

Court ruling against the individual mandate

Posted by on Monday, Dec 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.





On careful review, this court must conclude that Section 1501 of the Patient Protection and Affordable Care Act – specifically the Minimum Essential Coverage Provision – exceeds the constitutional boundaries of congressional power.


Accordingly, the court will sever only Section 1501 and directly-dependent provisions which make specific reference to Section 1501.


The Commonwealth appears to concede that if the Secretary is duty-bound to honor this Court’s declaratory judgement, there is no need for injunctive relief. In this Court’s view, the award of declaratory judgement is sufficient to stay the hand of the Executive branch pending appellate review.


In the final analysis, the Court will grant Plaintiff’s Motion for Summary Judgement and deny Defendant’s similar motion. The Court will sever Section 1501 from the balance of the ACA and deny Plaintiff’s request for injunctive relief.

Henry E. Hudson, United States District Judge
December 13, 2010
Richmond, VA

Although this is only the beginning of a protracted legal process, Judge Hudson’s decision defines the nature of the constitutional challenge to the Patient Protection and Affordable Care Act (PPACA). The challenge is limited to Section 1501 which is the mandate for individuals to purchase health insurance. The remainder of the Act remains intact.

This is a serious challenge. Without the requirement that everyone be included, the risk pools are subject to adverse selection (only those with greater health care needs enroll) which cause them to become unstable as premiums skyrocket. Even if Section 1501 survives this challenge, there are so many other flaws in the PPACA scheme that we can never hope to achieve universality and affordability – the two reasons that prompted the reform process in the first place.

Instead of a protracted battle in the courts, our government should pursue an approach that remains within the constitutional boundaries of congressional power and would actually work to provide everyone with affordable health care – an improved Medicare for all. After almost half a century of success, only a fool would challenge the constitutionality of Medicare.

By Thomas Clairmont, M.D.

The Granite State Chapter of PNHP had a great meeting in New Castle, N.H., on Dec. 4, and is gearing up for the debate around health care that that is certain to erupt during the presidential primary campaign, which starts here in about a month. (The primary election itself will take place in January 2012.)

We’ve decided to combine forces with our state’s newly formed chapter of Healthcare-Now to create a grassroots “Health Care Party” (a play on the Tea Party model) – a  nonpartisan, non-electoral alliance whose goal is to educate and disseminate information to the public that will lead to our ultimate goal of an improved Medicare for all.

We’re excited about getting single-payer supporters, particularly PNHP and Healthcare-Now members, to attend the myriad political events here in 2011 to ask the candidates hard questions, somewhat like what the Tea Party forces did at candidate forums in the summer of 2009. And just to be clear: we are not forming or registering as a political entity and we would never endorse any candidates. But we intend to make our voices heard.

Grassroots political activity is on the rise — you might look at the book “Mad as Hell” by Scott Rasmussen and Doug Schoen to see what people are thinking AND no longer suppressing. Keep in mind that single payer has been totally suppressed by the elites, despite the fact that polls show MAJORITY support for our point of view.

Opportunity is knocking. Let’s take advantage of it.

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