Single Payer Would Streamline Medical Practice

Posted by on Wednesday, Jul 18, 2012

By Ed Weisbart, M.D.

“Don’t ask me to do one more thing.”

This is the battle cry heard loud and clear from physicians across the country. Our fragmented way of paying for health care has each private insurance company demanding something just a little different from each other. One insurer wants documentation of our efforts at smoking cessation, another about how we’re treating diabetes this week, and another wants to know when the last mammogram was done. And they each promise to pay me a little bit more if I would give them the right answers.

Sure, these are all examples of good medical care, but many doctors today feel like we work in a discotheque, with a mirror ball reflecting hundreds of ever-moving spotlights that we’re supposed to focus on. Implicit in each of these pay-for-performance schemes is the assumption that we’ll only provide good medical care if we’re paid a little extra to pay attention to today’s featured special.

Turns out, there’s plenty of evidence that these well-intentioned programs actually erode the very quality of care they were intended to enhance. Anyone who has ever tried to raise more than one child at a time knows how precious your sanity feels when you’ve got a bunch of kids all demanding your attention. And that’s if they’re all good kids.

Now stretch the metaphor: Turn the out-of-control children into insurance companies (okay, not much of a stretch), realize that they’re trying to out-compete each other, and that they will never grow up and leave home. You’ll start to understand the demoralized nature of physicians today. It’s overwhelming, and there’s no end in sight. Very few of the discussions about health care reform have addressed this issue.

The Affordable Care Act offers little to simplify the unnecessarily complex demands today’s environment places on medical practice. By preserving the role of the private insurance industry in health care, the ACA guarantees that each physician remains at the mercy of a stream of uncoordinated demands. And that we have to continue to employ legions of staff to help our patients navigate safely through. We waste $215 billion a year just on that, according to MIT economics professor Gerald Friedman writing in Dollars and Sense, April 2012.

It makes much more sense to provide everyone in the country with a single health plan, comprehensive enough to meet our medical needs, fair enough to stop driving people into bankruptcy when they get sick, and American enough to offer us all complete choice among doctors and hospitals. We don’t have any of those things today, and the ACA is not bringing them to us.

Just fix the payment model, give us all an improved version of Medicare, and let doctors practice medicine with patients who chose them because they like them – not because they’re “in network” and affordable. Save lives, save money, and help doctors recover their sanity.

Dr. Ed Weisbart is a member of Physicians for a National Health Program – St. Louis. He resides in Olivette, Mo.

Jack Bernard’s message for his fellow Republicans

Posted by on Tuesday, Jul 17, 2012

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.

Head-in-the-sand ‘solution’ is killing GOP

By Jack Bernard
DesMoinesRegister.com, July 16, 2012

We Republicans have ourselves to blame for the Affordable Care Act, or Obamacare.

Our reaction to the Clinton health reform proposals in the early 1990s was to have conservative think tanks come up with a free competition model based on expansion of private insurance and Medicaid. That idea became Romneycare, which evolved into Obamacare.

It is our baby, ugly or not.

It is the height of hypocrisy for us now to criticize our own idea unless we have something better to replace it. And, the replacement needs to be comprehensive, not just a series of unacceptable statements and proposals based on doing away with traditional Medicare by turning it into a voucher program and gutting Medicaid by making it into a block grant.

Using vouchers for Medicare just dumps the cost problem into the lap of the powerless patient, rather than the federal government that has clout, making the cost escalation problem worse. The block grants for Medicaid idea just shifts the cost issue onto the states rather than the federal government, which once again solves nothing and only makes things worse.

States will just cut services and people from their Medicaid roles, creating more uninsured. Don’t Iowa hospitals serve enough uninsured in their emergency rooms now?

This gets us to what we as Republicans should do: throw out our rule book and be innovative. People my age will remember how we Republicans were 100 percent against recognizing China before Richard Nixon, the anti-communist crusader, came out for it. We must do the same with health care.

There is only one way to control health care costs and insure universal access — and that is by first admitting that the U.S. system has failed and then adopting ideas that have been proven to work elsewhere. We should take a look at how health care is financed and delivered in other developed nations with lower cost and better morbidity and mortality rates.

A Commonwealth Fund study was issued in May 2012 which did just that for 13 countries. The bottom line is that we spend 17.4 percent of our gross national product on health care, far more than other developed nations, which averaged 9.5 percent. Our per-capita spending was $7,960 versus $3,182 for the group as a whole.

Why? One key factor is prices. For example, U.S. pricing on the 30 most commonly prescribed brand name drugs is one-third higher than Canada and double France, both of which have a form of Universal Medicare.

From looking at the international data, if we Republicans really want to dump the Affordable Care Act, the way to go is Medicare for all. Studies show that the nations with universal health care have better overall health care outcomes than we do, not worse.

And, according to the respected Physicians for a National Health Program, www.pnhp.org, yearly savings generated under Medicare for all would be $400 billion. That would go a long way towards paying for universal coverage, versus the Affordable Care Act, which will increase systemic costs because it relies on private insurance.

The canard about waiting times to see doctors is just a tactic to scare the public. If you need a knee replacement for a knee that has been going bad for years, waiting a little longer for an operation should not be a major issue for the patient. Despite the scare tactics, no one who needs immediate care in Canada is ever left to sit in a line. In any case, there should be no waiting lists at all here. Canada spends just $4,363 per capita on health care versus our $7,960.

If we Republicans took the Medicare-for-all approach, it would thrust us into the vanguard of reform. Instead of the Democrats stealing our ideas, we could steal theirs. When it was implemented and turned out to be widely accepted, as was Medicare in the 1960s, we would be the party the public would look to for the future.

Of course, there is an alternative. We can stick our heads in the sand and push for infeasible actions. That approach is killing us regarding immigration and will work just as well for health care.

(JACK BERNARD of Monticello, Ga., is a retired health care executive who worked extensively with Iowa health care providers, including Iowa Health System. He now is a member of the Jasper County (Ga.) Board of Commissioners and Jasper County Board of Health. Contact: bernard_jack@hotmail.com)

http://www.desmoinesregister.com/article/20120716/OPINION01/307160040/

This article should be distributed widely. Although it is written by a Republican, targeting his fellow Republicans, if his party can understand this message, then the Democrats and others who bailed on Medicare for all should be able to understand it as well.

U.S. women face higher health care costs

Posted by on Monday, Jul 16, 2012

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.

Oceans Apart: The Higher Health Costs of Women in the U.S. Compared to Other Nations, and How Reform Is Helping

By Ruth Robertson, David Squires, Tracy Garber, Sara R. Collins, and Michelle M. Doty
The Commonwealth Fund, July 2012

Abstract

An estimated 18.7 million U.S. women ages 19 to 64 were uninsured in 2010, up from 12.8 million in 2000. An additional 16.7 million women had health insurance but had such high out-of-pocket costs relative to their income that they were effectively underinsured in 2010. This issue brief examines the implications of poor coverage for women in the United States by comparing their experiences to those of women in 10 other industrialized nations, all of which have universal health insurance systems. The analysis finds that women in the United States — both with and without health insurance — are more likely to go without needed health care because of cost and have greater difficulty paying their medical bills than women in the 10 other countries. In 2014, the Affordable Care Act will substantially reduce health care cost exposure for all U.S. women by significantly expanding and improving health insurance coverage.

From the Conclusion

When fully implemented, the Affordable Care Act will correct much of the inequity in the U.S. system. A substantial expansion of affordable health insurance options is expected to reduce the percentage of uninsured working-age women from 20 percent to 8 percent.

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2012/Jul/1606_Robertson_oceans_apart_reform_brief.pdf

Over 35 million working-age women in the United States potentially face financial hardship should they need health care either because they are uninsured or because their insurance exposes them to excessive out-of-pocket expenses. That’s not acceptable.

The authors of this Commonwealth Fund report note how the Affordable Care Act “will correct much of the inequity in the U.S. system.” But not enough. Not only will underinsurance remain a problem, 8 percent of working-age women will have no insurance at all. That’s not acceptable either, especially since we already know how to fix our system and can afford to do so. We simply have to do it.

WP’s Richard Cohen on Obama and single payer

Posted by on Friday, Jul 13, 2012

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.

Terror among the rich

By Richard Cohen
The Washington Post, July 9, 2012

I wrote last year that Obama had lost the Hamptons. Nothing has changed. He is roundly denounced for not doing a Heimlich on the economy, for his allegedly socialist ways, for Obamacare, for low employment, for high unemployment, for not returning phone calls, for not asking advice — for being cold, distant and, increasingly, just for being president of the United States. The man, it seems, has to go.

I share some of these sentiments. The economy remains in the doldrums, the occasional good month followed by two or three bad ones. Obama is something of a cold fish, which may be something he cannot help, but he is also a lazy politician, unwilling — not unable — to do the telephoning and backslapping that his job requires.

As for Obamacare, it is both a legal and programmatic mess not because it is even modestly socialist but because it is not socialist enough. A government-run health-care system such as the ones used in virtually all the industrialized world — the so-called single-payer system — would have been the way to go. Instead, we have a system in which private insurance companies will abuse doctors and patients alike in the cause of profit. This, alas, truly is the American Way.

http://www.washingtonpost.com/opinions/richard-cohen-obama-the-ineffable/2012/07/09/gJQA3mcCZW_story.html

Obviously, this quote is being distributed because of the strong endorsement of single payer, a vastly superior model of financing health care when compared to the current “American Way” of using private insurance companies.

Although, in this opinion article, Richard Cohen blasts President Obama for his, shall we say, inaction, he doesn’t include here the difficulties Obama faced from the obstructionism by the opposition party, nor from the inaction of the electorate which suffers from a combination of being uninformed and misinformed, thus unable to advocate effectively for policies that would benefit us all. Of course, the candidate of the opposition party spent the weekend in the Hamptons hauling in millions in campaign donations from the “terrified rich,” thus offering little hope that the November elections would bring us any relief from our political quagmire.

Political leaders do not lead; they follow. We will have to lead by promoting education, coalitions, and grassroots efforts. It will be not be easy, but there is no substitute for massive citizen activism.

Myths about ED use by Medicaid patients

Posted by on Thursday, Jul 12, 2012

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.

Dispelling Myths About Emergency Department Use: Majority of Medicaid Visits Are for Urgent or More Serious Symptoms

By Anna Sommers, Ellyn R. Boukus, Emily Carrier
Center for Studying Health System Change, July 2012

Contrary to conventional wisdom that Medicaid patients often use hospital emergency departments (EDs) for routine care, the majority of ED visits by nonelderly Medicaid patients are for symptoms suggesting urgent or more serious medical problems, according to a new national study by the Center for Studying Health System Change (HSC). About 10 percent of nonelderly Medicaid patient ED visits are for nonurgent symptoms, compared with about 7 percent for privately insured nonelderly people.

Misconceptions

Policy makers and providers frequently point to Medicaid patients’ heavy reliance on hospital emergency departments as a problem that contributes to crowded emergency departments, long wait times and high costs, as well as poor management of chronic conditions. Recent research has dispelled misconceptions linking ED use to crowding, finding that most crowding results from emergency patients admitted to the hospital but waiting for an inpatient bed—so-called ED boarding—not a high volume of nonurgent ED visits. Other research has dispelled the mistaken belief that most ED users have Medicaid coverage, are uninsured or do not have a usual source of care. In fact, people with private insurance account for most ED use, and people with higher incomes and a private physician as their usual source of care are driving ED visit increases over time.

Other misconceptions about Medicaid patients’ ED use continue to drive policy. In response to state budget crises, some Medicaid programs have sought to cut ED use by denying payment for emergency care viewed as unnecessary, increasing patient cost sharing to discourage visits and penalizing patients for too many ED visits—all based on the assumption that Medicaid patients commonly use EDs to evaluate symptoms that could wait for a primary care clinician to treat. Media coverage of so-called frequent flyers—a small number of people with hundreds of ED visits—may have contributed to commonly held views that Medicaid and uninsured patients often use emergency departments inappropriately.

http://www.hschange.com/CONTENT/1302/

In an effort to control health care spending we are seeing efforts to punish Medicaid patients for their excessive use of our Emergency Departments (EDs). This reports adds to the policy literature that confirms that this premise is flat out wrong. Just like privately insured patients, most Medicaid patients use EDs for urgent and emergency conditions.

Rather than penalizing patients for attempting to receive urgent care that they should have, we should direct our efforts to incorporating health system design changes that would improve access to urgent care services, both through EDs and through other community resources such as extended-hour practices and urgent care centers. As an example, EDs could use community physicians during peak hours to provide care for less intensive problems that have been sorted out by triage.

With a single payer system we could adjust incentives to encourage more effective and efficient use of our health care delivery system. Under our current fragmented financing system, dominated by private health plans and perpetuated by the Affordable Care Act, rational coordination of care for urgent conditions is not possible because of conflicting interests, financial and otherwise.

We can do a much better job of getting our priorities straight through a single payer national health program.

Dr. Pippa Abston

A few months ago, I got an email from Jeremy Helton asking if I was interested helping him get the word out about a project from the Recollective, telling real stories about patients abandoned by our profit-driven insurance system.  The stories are intensely moving.  Each vignette shows a still picture with voice-over—Jeremy spent hours with these folks to get the stories down to their essential meaning, and I think he did a marvelous job.

When I talked to some friends in Physicians for a National Health Program(PNHP) about the project, one concern was that the project focuses on patients at a faith-based clinic providing charity care.  I’m sure you’ve heard conservatives say we can care for the uninsured easily with personal charity—we know that’s wrong because we’ve had thousands of years to try it without success.  It would be a terrible injustice to suggest the solution is simply to establish practices like Jericho Road all across the country, mission accomplished.

What’s so wonderful to me about these stories is the honesty that we MUST have systemic reform to create true access to care.  There is no suggestion that charity is fine without reliable insurance.  At the same time, this practice is not waiting for our government to do the needed reforms.  They are doing the best they can for their patients while advocating for change.  They are setting an example for us of how to treat our fellow humans.

We are facing a similar problem in Alabama with Medicaid.  If Alabama doesn’t do the expansion, we will abandon those most in need of relief.  We are even in danger of defunding care for our currently covered children, disabled, and elderly in nursing homes if we don’t solve our 2013 budget trouble.  I heard a PNHP member say recently that “liberals” support Medicaid expansion but “progressives” are in favor of single payer, because Medicaid perpetuates injustice and unequal access to care.  Yes, but.  I do not think we have the right, those of us not on Medicaid or hoping for it, to say this.  The families I talk to who can’t get any kind of care unless they are in immediate danger of death do not agree.  Of course they want full access to healthcare.  Until that time, they would be grateful for temporary though imperfect relief, as long as we are also continuing to push for a truly just system.

Listen to this segment by Dr. Glick.  He gets it.  We need Medicare for All AND we need to see each other more compassionately.  Confronting ourselves with faces and voices will keep us from thinking these uninsured persons are numbers, maybe numbers we can parse down until they don’t seem like much. The longer I watch our country struggle over healthcare reform, the more I believe we will never get what we need until we have a change of heart.  A law alone won’t fix things.  We must become the kind of people who will not compromise in healthcare justice, who believe it is not possible to serve our own self-interest and ignore the needs of our wider community, and who will do whatever it takes to make a national insurance system excellent instead of constantly trying to sabotage or repeal it.

Kudos to Dr. Glick, his staff and patients, and the Recollective team for bringing these stories to light!  Please visit the site frequently as they post new stories, share them on your Facebook page, and help get the word out.

Originally posted on Dr. Abston’s blog.

Administration expands use of exemption from mandate penalty

Posted by on Wednesday, Jul 11, 2012

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.

Letter
July 10, 2012
From: Kathleen Sebelius, Secretary of Health and Human Services
To: State Governors

Excerpt:

As you know, beginning in 2014, the Affordable Care Act provides for the expansion of Medicaid eligibility to those adults under age 65 with incomes up to 133 percent of the federal poverty level who were not previously eligible for Medicaid. The Supreme Court held that, if a state chooses not to participate in this expansion of Medicaid eligibility for low-income adults, the state may not, as a consequence, lose federal funding for its existing Medicaid program. The Court’s decision did not affect other provisions of the law. For example, the decision did not change the fact that the federal government will completely pay for coverage under the eligibility expansion in 2014-2016, and for at least 90 percent of such costs thereafter, or that states have flexibility to design the benefit package for the individuals covered.

Ultimately, I am hopeful that state leaders will take advantage of the opportunity provided to insure their poorest working families with unusually generous federal resources while dramatically reducing the burden of uncompensated care on their hospitals and other health care providers. If any state were to choose not to do so, the Affordable Care Act exempts individuals who Congress determined cannot afford coverage from the individual responsibility provision. As to the very small number of affected individuals who would not quality for the statutory exemption, Congress provided additional authority, which we intend to exercise as appropriate, to establish any hardship exemption that may be needed.

http://capsules.kaiserhealthnews.org/wp-content/uploads/2012/07/Secretary-Sebelius-Letter-to-the-Governors-071012.pdf

It is outrageous that some governors are refusing to provide coverage to low-income adults, even though the Affordable Care Act authorizes the federal government to pay most of the costs of this expansion in the Medicaid program. So what is the Obama administration doing to be sure that these individuals become insured?

Many of these low-income adults who are not yet included in the state Medicaid programs are so poor that they will qualify, under ACA, for an exemption from the “individual responsibility provision” – the penalty or “tax” that must be paid for not being insured. Thus they have the explicit right to remain uninsured without being penalized for being so.

Others are still poor, but fall above the threshold for the exemption from the individual responsibility provision. It is for this sector that the administration is taking action. They are making the generous offer to exercise their authority to provide exemptions for these additional individuals from the penalty or tax that would otherwise be assessed for not being covered by an extension of a Medicaid program that the governors refuse to authorize, or for not purchasing a plan in an insurance exchange that they can’t possibly pay for even with the subsides provided (not to mention that most of these very low-income adults were presumed under ACA to be covered by Medicaid, thus the law seems to lack provisions for them to be allowed to receive subsidies for purchase of plans in the exchanges).

Wow. The most needy population is being left out and all the administration can do is to relieve them of the financial penalties they would owe for being uninsured?

To be fair, this is not simply a response of an uncaring president and his administration. They have an irreparably flawed health care financing system with which to work. But the administration should be lambasted for not just cooperating with but also for leading with the planning and implementation of such an unmerciful system.

This system is beyond repair. We need to replace it with a humane, equitable and efficient single payer national health program that would take care of the health care needs of all of us.

Uninsured seasonal firefighters

Posted by on Tuesday, Jul 10, 2012

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.

Seasonal firefighters face many dangers without health insurance; union seeks federal coverage

By Associated Press
The Washington Post, July 9, 2012

They work the front lines of the nation’s most explosive wildfires, navigating treacherous terrain, dense walls of smoke and tall curtains of flame. Yet thousands of the nation’s seasonal firefighters have no health insurance for themselves or their families.

The National Interagency Fire Center in Boise, Idaho, which coordinates firefighting efforts nationwide, says 15,000 wildland firefighters are on the federal payroll this year. Of that number, some 8,000 are classified as temporary seasonal employees, who work on a season-to-season basis with no guarantee of a job the following year and no access to federal benefits.

In two years, the Affordable Care Act, the new federal health care law, will allow seasonal firefighters the same opportunity to buy health insurance as other uninsured Americans.

http://www.washingtonpost.com/national/health-science/seasonal-firefighters-face-many-dangers-without-health-insurance-union-seeks-federal-coverage/2012/07/09/gJQAUMWHZW_story.html

Very few would disagree with the principle that firefighters and their families should be covered with health insurance, even if only seasonally employed. The question then is, should that coverage be provided by the government as the employer?

The issue of health insurance coverage faces all seasonal employees. If coverage is provided, would it be only during the period of employment? Would off-season employment in other occupations be the source of intermittent and therefore fragmented coverage? Would being unemployed off-season qualify the family for Medicaid, again with fragmentation of coverage?

Does the ability to purchase coverage through state exchanges, to be established under the Affordable Care Act, provide adequate opportunities for coverage in these populations with fluctuating incomes, with varying eligibilities for coverage or for subsidies? Are the rules that allow exemptions, based on income, from the mandate to purchase coverage an adequate solution, since it means that the family would remain uninsured?

With variations in the type of coverage and especially in the composition of provider networks between various employer-sponsored plans when there may be more than one employer during the year, or with intermittent coverage under Medicaid, or with individual plans purchased through the exchanges, or with dependency on charity or safety-net institutions during periods while uninsured, is this disruption and fragmentation an acceptable standard for coverage for these families? No.

It would be less expensive and more efficient to provide one single coverage throughout life – coverage that provides choice of health care professionals and institutions. Employment status should no longer be a factor in determining health benefits, choices in health care, and even whether or not one is covered at all. An improved Medicare that covered everyone would finally bring an end to our irrational current and ACA-pending methods of financing health care.

Private insurers have more administrative services to sell us

Posted by on Monday, Jul 9, 2012

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.

How to split the health care dollar (America’s Health Insurance Plans meeting)

By Emily Berry
American Medical News, July 9, 2012

Payers are well aware that physicians and hospitals need the kind of business expertise that insurers have held almost exclusively until now: how to track claims, coordinate care, administer case management and deploy a new records system.

Health insurers are offering physicians and health systems access to that expertise — for a price. UnitedHealth Group’s enormously profitable Optum subsidiary is one example of that business angle. Indeed, Dr. Safavi said, some hospitals and doctors may be in a position of paying Optum for consulting and information technology expertise so they can be prepared for the demands that United and other insurers will make under new payment models. They will have to pay United before they can get paid by United.

http://www.ama-assn.org/amednews/2012/07/09/bisa0709.htm

What did you expect? As long as private insurers are left in charge, as they are under the Affordable Care Act, they will always figure out a way to work the system to benefit themselves. We really do need to replace them with a single payer system.

Employers considering defined contribution for health care

Posted by on Friday, Jul 6, 2012

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.

With health care law upheld, employers weigh shift to defined contribution insurance plan

By Peter Frost
Chicago Tribune, July 3, 2012

Many Chicago-area employers have remained on the sidelines with their employee health plans, waiting for the U.S. Supreme Court to determine whether the 2010 health care overhaul passed constitutional muster.

But with the court’s decision last week to uphold most of the law, companies may pursue a historic change.

Many employers are quietly considering a move away from traditional defined benefit plans and toward defined contribution plans, which set aside a fixed amount of money each year for employees to use toward health care costs.

Under the structure of defined contribution plans, companies hand an employee a set amount — say $9,000 — and employees use that money to buy or help pay for a health insurance plan they choose themselves.

At the heart of the shift is a desire of companies to reduce their exposure to health care costs by shifting the risk of unpredictable expenses to their workers.

Few employers, particularly large companies, are eager to discuss their internal deliberations on the issue because they don’t want to raise concerns among employees before final decisions are made, said Paul Keckley, executive director of the Deloitte Center for Health Solutions, the health care research arm of consulting firm Deloitte LLP.

“The only thing that’s certain right now is (companies are) doing everything that’s legal to shift cost to employees,” Keckley said.

Employees of companies that pursue the defined contribution route may be funneled into so-called corporate health care exchanges, which function in much the same way as state-run exchanges.

The private exchange market “is really emerging and growing, largely because of all the interest in the state exchanges,” said Michael Thompson, a principal in PricewaterhouseCoopers LLC’s global human resources practice.

Inside the exchanges, employees will be offered more choices on what types of coverage they desire — and how much they’re willing to pay.

“If you value broad access and you’re willing to pay for it, that’s fine,” Thompson said. “If you’re willing to live with a narrower network (of providers) and possibly a higher deductible, you would have the ability to save significant money on your premiums.”

On private exchange GoHealth.com, consumers can shop and ask for advice. Michael Mahoney, GoHealth’s vice president of marketing, said the company has explored a corporate health care exchange for its employees, but it will continue offering its “traditional and robust” health insurance plan for the time being.

His reason? “If you give control to the employees, they could choose to save money and possibly choose something where they’re not completely covered, so they end up in a pinch. Right now, we’re going to overspend on our employees and give them more than they want so they’re always covered.”

http://articles.chicagotribune.com/2012-07-03/business/ct-biz-0703-corp-exchanges–20120703_1_health-care-health-insurance-deloitte-center

Just as they did with employee pension plans, employers are now gearing up to convert employee health benefit programs from defined benefit to defined contribution. What does that mean?

Over the past few decades, employers passed on the risks of their pension plans to their employees by switching from a defined benefit (a guaranteed dollar amount that employees would receive monthly in retirement) to a defined contribution such as 401(k) plans (a set dollar amount contributed to the pension account, but with no guarantee of the amount received in retirement – the employee thus bearing the full risk of the uncertain investment returns on the pension funds).

Now many employers plan to do the same with their health benefit programs. They intend to pay a set dollar amount for the premiums, whereas the employees will have to bear the the costs of health care inflation plus the costs of any benefits in excess of the basic program to be offered  by the employer.

This will be disastrous. Employees are already being stuck with higher deductibles in order to slow the rate of premium increases for the employer. With defined contribution, premiums can be contained further by limiting the benefits covered, by further increasing the out-of-pocket cost sharing of deductibles, copayments and coinsurance, by tiering cost sharing of different levels of products and services, and by further restricting the panels of approved health professionals and institutions.

When the employee uses the defined dollar amount to purchase plans from the choices offered, but must pay the full balance of the premium, most will choose lower cost plans that place them at very high risk for out-of-pocket expenses should they or their family members need health care. This is the disaster that is pending. Employees will not be able to afford the care that they or their families need, in spite of being nominally insured by their employers.

From a policy perspective, we can understand why employers would want to control their overhead expenses, in this case by protecting themselves from health care inflation, but we can’t understand why policymakers would want to keep employers in charge of health care financing for the majority of Americans, and then add further insult by perpetuating regressive tax policies that favor wealthier employees over those with lower incomes.

With this defined contribution threat looming, we should once and for all remove the employer from the equation. Let’s replace our health care financing system with a much more sensible and equitable single payer national health program, which would remove from employers the burden of having the responsibility of supervising health benefit programs.

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

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