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.
What if everyone had Medicare?
By Henry Abrons
San Francisco Chronicle
September 24, 2010
The Census Bureau released its annual report on income, poverty and health insurance coverage in the United States earlier this month, and it’s no surprise to learn that we’re in bad shape. The number of people living in poverty was 43.6 million (14.3 percent), up sharply from 2008, and real per capita income declined 1 percent.
Looking at health insurance, the situation is truly dire. There was a dramatic spike in the uninsured – 4.3 million more, to a record 50.7 million – in spite of the expansion of government health insurance rolls by nearly 6 million.
Those opposing government health insurance should ponder the fact that private health insurance coverage dropped to the lowest level since comparable data were first collected in 1987. On the other hand, those who look to the new health reform law – the Patient Protection and Affordable Care Act (PPACA) – for a solution should be deeply disturbed.
PPACA was not designed to provide universal coverage. In fact, if the new law works as planned, in 2019 there will still be 23 million uninsured. Yet the consequence of being uninsured can be lethal: Research published last year shows about 45,000 deaths annually can be linked to lack of coverage. That number is probably more than 50,000 today.
As Don McCanne, senior health policy fellow at Physicians for a National Health Program, has observed, PPACA is an underinsurance program. Employers, seeing little relief, will expand the present trend of shifting more insurance and health care costs onto employees.
Individuals buying plans in the new insurance exchanges (which won’t start until 2014) will discover that subsidies are inadequate to avoid financial hardship. Inevitably, they will end up with underinsurance, spotty coverage and high deductibles.
And workers who are unemployed or without employment-based insurance will move into Medicaid (Medi-Cal in California), where providers are reimbursed at such low rates that many will not accept patients.
When Congress passed the new law last spring, it based its decision on a faulty assumption – namely, that the rest of the population will have sustainable private health insurance. But between 2008 and 2009, the number of people covered by private health insurance decreased from 201.0 million to 194.5 million, and the number covered by employment-based health insurance declined from 176.3 million to 169.7 million.
If this trend continues, as it’s bound to do under current economic conditions, the ranks of the uninsured will expand and the new law will fall far short of the mark – either the cost will exceed projections, or coverage will be need to be reduced.
The Census Bureau report underscores the urgency of going beyond the Obama administration and swiftly implementing a more fundamental reform – a single-payer national health insurance program – improved Medicare for all.
Improved Medicare-for-all, by replacing our dysfunctional patchwork of private health insurers with a single, streamlined system of financing, would save about $400 billion annually in unnecessary paperwork and bureaucracy. That’s enough to cover all of those now uninsured and to provide every person in the United States with quality, comprehensive coverage.
A single-payer plan would also furnish us with effective cost-control tools, like the ability to negotiate fees and purchase medications in bulk. It would permit patients to go to the doctor and hospital of their choice.
Short of a full national plan, some states, like ours, are eyeing a state-based single-payer model. The new health law allows states to experiment with different models of reform, but not until 2017. Congress should move that date forward. There is no time to waste.
(Henry Abrons, M.D., is a member of Physicians for a National Health Program-California – www.pnhpcalifornia.org.)
Henry Abrons’ message is certainly very familiar to supporters of an improved Medicare for all, but we have to keep repeating it over and over until more people start listening.
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.
Census Bureau Releases 2009 American Community Survey Data
U.S. Census Bureau
September 28, 2010
Median Household Income
Real median household income in the United States fell between 2008 and 2009 — decreasing by 2.9 percent from $51,726 to $50,221.
U.S. Health Care Cost Rate Increases Reach Highest Levels in Five Years, According to New Data from Hewitt Associates
September 27, 2010
According to Hewitt’s analysis, the average total health care premium per employee for large companies will be $9,821 in 2011, up from $9,028 in 2010. The amount employees will be asked to contribute toward this cost is $2,209, or 22.5 percent of the total health care premium. This is up 12.4 percent from 2010, when employees contributed $1,966, or 21.8 percent of the total health care premium. Average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are expected to be $2,177 in 2011—a 12.5 percent increase from 2010 ($1,934). These projections mean that in a decade, total health care premiums will have more than doubled, from $4,083 in 2001 to $9,821 in 2011. Employees’ share of medical costs—including employee contributions and out-of-pocket costs—will have more than tripled, from $1,229 in 2001 to $4,386 in 2011.
Milliman Medical Index
The annual Milliman Medical Index (MMI) reports total annual medical spending for a typical American family of four covered by an employer-sponsored preferred provider organization (PPO) program. The MMI represents the total cost of payments to healthcare providers, and excludes the non-medical administrative component of health plan premiums.
The total 2010 medical cost for a typical American family of four is $18,074.
Think about this. Median household income is now back down to $50,000. The average cost of health care for a family of four with an employer-sponsored PPO plan is $18,000. Premiums for employer-sponsored plans have doubled in the last decade, while the employees’ spending on health care has tripled!
The Patient Protection and Accountable Care Act (PPACA) was specifically designed to leave the large market of employer-sponsored private health plans intact – the “you can keep the insurance you have…” strategy for reform. Most individuals and families will see little change as a result of PPACA since they will continue to receive their insurance coverage through their employment.
Very specifically, employees of larger companies will not see premium subsidies like for those who purchase plans in the state exchanges, nor will they see the subsidies for out-of-pocket expenses. The architects of PPACA decided that employer contributions to the premiums would obviate the need for subsidies – glibly suppressing the fact that employer contributions are actually paid by the employees in the form of forgone wage increases.
The health care financing structure of PPACA is an unmitigated disaster. For most families, health care costs will encroach at increasing percentages on their budgets for basic essentials such as housing, food, and transportation, not to mention education, retirement plans, and other discretionary expenses. The $18,000 in average health care costs for a family of four is already over one-third of the median household income of $50,000.
We desperately need to enact policies that will bring costs under control while establishing an equitable method of financing that makes health care affordable for everyone. PPACA doesn’t even come close. What will work is a single-payer national health program – an improved Medicare that includes everyone.
(Why aren’t people talking about this? Why is all of the media coverage about the tweaks to our fragmented, dysfunctional system – tweaks that will never get us there? Doesn’t anyone care?)
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.
AP Poll: Many think health overhaul should do more
By Ricardo Alonso-Zaldivar and Jennifer Agiesta
The Associated Press
September 26, 2010
A new AP poll finds that Americans who think the law should have done more outnumber those who think the government should stay out of health care by 2-to-1.
The poll found that about four in 10 adults think the new law did not go far enough to change the health care system, regardless of whether they support the law, oppose it or remain neutral. On the other side, about one in five say they oppose the law because they think the federal government should not be involved in health care at all.
2010 Health Care Reform Survey
By Stanford University with the Robert Wood Johnson Foundation
The Associated Press
HC1. In general, do you favor, oppose, or neither favor nor oppose the law changing the health care system that the U.S. Congress passed last March?
9% – Favor strongly
21% – Favor somewhat
30% – Neither favor nor oppose
17% – Oppose somewhat
23% – Oppose strongly
0% – Refused
(Ask if HC1 = oppose strongly, oppose somewhat or neither favor nor oppose):
HC1A. Which of the following best expresses your view of the health care law that Congress passed last March?
28% – I oppose most or all of the changes made by the law
20% – I oppose a few of the changes made by the law
23% – I favor most or all of the changes made by the law, but I think that law doesn’t do enough to improve the health care system
28% – I oppose the law because I think the federal government should not be involved in health care at all
1% – Refused
(Ask if HC1 = favor strongly, favor somewhat or neither favor nor oppose):
HC1B. Do you think that the health care law passed last March by Congress should have done more to change the health care system, or do you not think that?
61% – It should have done more
36% – Do not think that
3% – Refused
HC2. How much, if at all, should the health care system in the United States be CHANGED from what it was like in February, 2010, before Congress passed the law to change the system? Would you say it should be changed…
17% – A great deal
22% – A lot
35% – A moderate amount
16% – A little
9% – Not at all
1% – Refused
PR6a. Do you favor, oppose, or neither favor nor oppose a law that would require every American to have health insurance, or pay money to the government as a penalty if they do not, unless the person is very poor?
8% – Strongly favor
17% – Somewhat favor
25% – Neither favor not oppose
16% – Somewhat oppose
33% – Strongly oppose
8% – Refused
Poll results (32 pages):
Twice as many Americans believe that the Patient Protection and Affordable Care Act should have done more to change the health care system than those who believe that the government should not be involved in health care at all, according to a release this weekend on the AP/Stanford/RWJ poll. Framed this way the statement would lead you to believe that the majority of Americans want more reform, when, according to this poll, only about two-fifths hold that view, whereas only one-fifth believe that the government should not be involved at all.
Another confusing result stems from the fact that those favoring reform and those opposing reform were asked two different questions (HC1A and HC1B), yet those neither favoring nor opposed were asked both questions. It would not be surprising to learn that those favoring reform would want to see more done, but it would have been helpful to know how many of those opposed were opposed because not near enough was done. The number probably would have been fairly small since only 23 percent of those opposed plus those neutral wanted more done.
There are some conclusions that we can draw from the poll that do seem to be valid:
* Nine-tenths of Americans agree that the health care system should be changed from what it was like before the legislation passed.
* Four-fifths favor “making sure that more Americans get the health care they need.”
* Four-fifths favor “reducing the amount of money that patients pay for health care.”
* Half are opposed and only one-fourth favor the individual mandate to either buy health insurance or pay a penalty – an essential element of a system based on private health plans.
* Those polled were split on their understanding of various measures that may or may not have been included in the legislation. Thus these are the opinions of a relatively uninformed electorate.
The reassuring findings in this poll are that Americans do support the goals of reform: 1) Americans should have the health care that they need, and 2) Health care should be affordable for patients.
The poll also shows that the public is not well informed on health policy, so we need to do a much better job in showing them how they can achieve the health care reform goals that they want by enacting an improved Medicare program that covers everyone.
By Claudia Chaufan, M.D.
So today California Healthline reported the “good news” about health reform U.S. style, joining in the celebratory mood with the New York Times, which announced that “For Many, Health Care Relief Begins Today”, because, as California Healthline noted:
These are only a few of the many provisions that take effect as of today, and that as it appears we are supposed to celebrate. But are we?
Not just yet. Let’s look at the “good news” through an alternative, and equally plausible, lens:
Number 1: While insurers may not be permitted to rescind coverage for technical mistakes made on patient applications, they will be able to do so based on other considerations. For instance, based on“intentional misrepresentation”, the number 1 reasons insurers allege to cancel policies.
Number 2: While lifetime monetary limits on insurance coverage will end, these limits apply only to covered services. Uncovered ones will be on patients, as they always have been. And as insurers are permitted to sell policies that cover as little as 60% of covered services (again, only covered services), patients will be extremely vulnerable to financial ruin if they become seriously ill.
Number 3: Yes, your “adult child” will be able to remain on your plan (assuming you have one and you or your “child” pay for the coverage) until age 26. And if you signed up to receive email alerts from Barack’s cheerleaders, Organizing for America, you may have read illustrative stories about the law’s goodness. For instance, you may have read that Kristin, a recent grad living in Scottsdale, Arizona, laments that health reform was not implemented last year, because it would have allowed her to remain on her mom’s plan, something that young folks now are able to do….until they turn 26, of course. But clearly this is only good news compared to the status quo, yet why should this be our standard? If Kristen lived in Canada, or in the UK, or anywhere else in the industrialized world, including Taiwan (and soon in China) she would not be hoping to remain forever young just to have access to her parents’ coverage – at least not for those reasons – because her health care needs would be covered as a matter of right, and for life.
Number 4: Yes, insurers will be required to provide certain no-cost preventive services, but, who do you think is going to foot the bill? You guessed it! All of us in the form of increased premiums — together with the bill for any other provision that affects insurers’ bottom line, such as the provision that insurers spend no more than 20% in administrative overhead.
Indeed, in a less cheerful mood just yesterday, New York Times reporter Robert Pear wrote that “state insurance regulators told the White House…that health insurance markets in some states would be disrupted unless President Obama gave insurers a temporary dispensation from one major provision of the new health care law” – remarkably, that which requires that insurers spend no more than 20 or 30 cents of every premium dollar on paper shuffling or profit rather than on health care (For the record, the Robert Wood Johnson Foundation estimated that insurers’ expenses on physicians and clinical services amount to a mere 21.2%, so insurers are complaining about having to spend no more than roughly the same amount for “administering” our money).
Just getting a tad ahead of us (and of the law), as California Healthline noted earlier this week, Blue Shield of California has ended its “one-year rate guarantee”. This means that Blue Shield will be able to increase health plan rates throughout the year, instead of waiting for the annual renewal period. As a company spokesperson reported, Blue Shield opted to end the rate “because of forthcoming changes under the federal health reform law”. All which, according to the same source, has left Democrats and Republicans scratching their heads, seeking reasons behind hikes in premium costs (really???).
Ok. If depression has not prevented readers to read this far, let’s examine “reason for celebrating number 5″. As it appears, as of today “consumers” (we’re all consumers now) will be allowed to appeal claims decisions through an external review process. Now, assuming that it is good news that the bad guy will be still around yet now we are allowed to defend ourselves from him, the downside is that it is unclear who will be in charge of those appeals, or more importantly, who will pay for them. Indeed, just days ago, the same California Healthline announced that “state agencies have limited resources to implement reform law”.
Should we be surprised? Not at all. Indeed, the law was not passed to make ordinary Americans happy, although that was certainly the rhetoric. It was passed to satisfy the real constituency of the folks in Washington, a corporate lobby that has hijacked American democracy. In fact it was drafted by a member of that lobby, a WellPoint executive, himself. And they surely have reason to celebrate, now that they’ve been given at least $447 billion in taxpayer money to subsidize the compulsory purchase of their shoddy products.
Can we do something about it? Yes we can. We can, and must, demand a public single payer system that streamlines administration, stops wasting money in paper pushing or inflated prices, puts back medical decisions where they belong — in the hands of providers and patients — and allows us to make badly needed improvements in the health care delivery system – increasing the number of primary providers, emphasizing primary care, and so forth.
We need a new civil rights type movement. We need to demand health care justice for all.
The Perennial Quest to Lower Health Care Spending
By Uwe Reinhardt
The New York Times
September 24, 2010
… the nation bravely set upon the mission of reducing the left-hand side of the dreaded health care equation — that is, National Health Care Spending = National Health Care Incomes — without the temerity of touching its right side. For obvious reasons, touching the right side always turns out to be the third rail of health reform.
Last year, health care spending in the United States absorbed slightly more than 17 percent of G.D.P. (For most other industrialized nations, the figure is still around 10 percent or less.)
What would the critics have the president and Congress do?
To explore that question, let us deconstruct national health spending, as shown in the chart below. Here we artificially assume that there is a well-defined thing called “health care,” measurable in standard units that have a defined single price per unit. Thus the rendering is merely conceptual, a guide to order the discussion.
NHE = Pg x Qg x Ng + Pp x Qp x Np
NHE = national health expenditures
Pg = prices for health care paid by public insurers
Pp = prices for health care paid by private insurers
Qg = volume of health care used per capita under public insurance
Qp = volume of health care used per capita under private insurance
Ng = number of persons served under public insurance
Np = number of persons served under private insurance
What, then, can any president and Congress do to the variables on the right side of that equation to reduce the future trajectory of national health spending on the left-hand side, especially in the current political climate?
As we have learned in the last year, any attempt to bend down the future trajectory of public-sector fees (Pg) will be met with outcries:
(1) that hospitals and doctors will be driven into bankruptcy;
(2) that publicly-insured individuals will lose access to physicians who will refuse to work for the low public-sector fees;
(3) that doctors, hospitals and other providers who do treat publicly-insured patients have no choice but to recover more of their costs from private payers, who are assumed to have little countervailing market power to resist such increased charges.
Therefore, strike Pg from a strategy of bending the cost curve.
The future trajectory of the volume variable, Qg, might possibly be bent down ever so slightly through cost-effectiveness analysis of alternative therapeutic approaches, or by more widespread use of living wills – an idea once actively promoted by Newt Gingrich.
But those ideas were met in the past year by dark allusions to “rationing,” to Nazi-style death panels and to “killing Granny.” Therefore, strike lowering Qg, as well, from a strategy for bending the cost curve.
Another option is to reduce the time path of the number of people served by public insurance (Ng).
This could be done by raising eligibility thresholds for Medicaid, or raising the eligibility age for Medicare, or partially privatizing Medicare through Medicare Advantage plans, or by converting the program from a defined benefit to a defined contribution program. But any of these options would merely move health spending off the books of government and into private-sector health spending.
There is no robust empirical evidence to suggest that such a shift would lower national health spending, unless the move increased the number of uninsured Americans for whom, on average, per capita health spending is less than half of the spending incurred on similarly situated insured Americans.
In fact, shifting Medicare beneficiaries out of traditional Medicare into private Medicare Advantage plans in past years is known to have increased the burden on taxpayers and is apt to have increased overall health spending. Therefore, strike Ng as well, unless we want the number of uninsured to climb.
In sum, any attempt to reduce health spending on the public-spending side (Pg x Qg x Ng) is limited by powerful political constraints and is unlikely to reduce overall health spending – especially if the providers of health care have the market power to recoup from private payers any reductions in public health spending coming their way.
This leaves private-sector spending as a potential source of reductions in health spending. But what control does any president or Congress have over those variables (Pp x Qp x Np)?
The last president with the temerity to control spending in the private sector directly was Richard Nixon, who imposed outright price controls on the sector the mid-1970s. One can only imagine what storm of protest that approach would unleash today.
Can private insurers or patients be counted on to bend down the future path of private-sector health care prices Pp? I doubt it.
For one, neither has left a stellar record in this regard over the last three decades. Furthermore, the cost-shift argument alluded to above suggests that in most local health care markets, private payers have rather limited power to exert much downward pressure on the prices they are charged for health care.
Thus, if the future path of private-sector health spending will be deflected downward at all, it will most likely come through reductions in the per-capita utilization (Qp). That may be achieved through ever-higher cost-sharing by patients at point of service – that is, through ever-higher deductibles and ever-higher coinsurance, if not outright lack of health insurance.
Some analysts think that higher cost-sharing will also force down prices (Pp), as patients, using their own money, shop around for a deal. But that could happen only if the veil of secrecy that has traditionally kept private-sector prices opaque from patients could be lifted.
So far the quest to get this done has had only limited and temporary success.
One should, of course, not labor under the illusion that reducing use of health care (Qp) through higher cost-sharing by patients would avoid rationing health care. As every economist knows, using price and ability to pay is merely one of several approaches to rationing scarce resources among unlimited wants.
Thus, absent some miracle – for example, that bundled payments per episode of illness to so-called Accountable Health Organizations will actually serve to bend down the future time path of health spending noticeably – the nation is likely to rely in the years ahead on rationing more and more of health care by income class.
Perhaps this is what the legendary “median voter” now wants.
Of course, other nations do provide all of their citizens with health care at a much lower level of national health expenditures (NHE). So what is there in this conceptual rendering (Professor Reinhardt’s formula) that other nations have discovered and applied that we haven’t?
In his May 8, 2009 blog, Professor Reinhardt provided a taxonomy of public and private financing and health insurance. Essentially all other nations have found success by using some form of social insurance. Even when private insurers are used, they function much more in the G (government) portion of the equation than they do in the P (private) portion.
Professor Reinhardt also co-authored a landmark article titled, “It’s the Prices, Stupid.” Thus the secret of other nations: Even if they use private insurance plans, they control national health expenditures through various means of government control of prices. In contrast, the volume of health care and number of persons remain relatively fixed. Private control of prices (market control) has played a negligible role in controlling NHE.
Although Professor Reinhardt can describe several models through which this can be accomplished, some of us remain convinced that the simplest and most efficient model would be a single payer national health program – an improved Medicare that covered everyone. Regardless, the Patient Protection and Accountable Care Act won’t get us there.
States Ask for Phase-In on Insurance Change
By Robert Pear
The New York Times
September 22, 2010
State insurance regulators told the White House on Wednesday that health insurance markets in some states would be disrupted unless President Obama gave insurers a temporary dispensation from one major provision of the new health care law.
The provision requires insurance companies to spend at least 80 cents of every premium dollar on medical care, rather than administrative expenses, executive salaries and profits.
State officials said they feared that some companies would withdraw from the individual insurance market next year because they could not meet the 80 percent requirement.
Kevin M. McCarty, the Florida insurance commissioner and vice president of the National Association of Insurance Commissioners, said the new law was causing “a paradigm shift” in the insurance industry, and he predicted: “Some companies’ business plans simply will not be successful. There will be some casualties. They either have to adjust their business plans or perish.”
Distribution of National Health Expenditures, by Type of Service, 2008
30.7% – Hospital care
21.2% – Physician and clinical services
10.0% – Prescription drugs
5.9% – Nursing home care
2.8% – Home health care
12.9% – Other personal health care
16.5% – Other health spending
CMS, Office of Actuary, National Health Statistics Group:
It is mind-boggling to think that 21 percent of our national health expenditures (NHE) are directed to physicians and clinical services, whereas many private insurers are now protesting that they cannot survive on 20 percent of the funds which they control – the insurance premiums that they collect.
Taking a closer look at those numbers, one-fifth of all health expenditures go to physicians and clinical services, whereas these insurers who are having difficulties complying with an 80 percent medical loss ratio are consuming over one-fifth of the funds used only for benefits covered by their plans – not one-fifth of the NHE. In fact, 30.9 percent of private insurance premiums do go to physicians and clinical services.
Since these numbers are more comparable, let’s look at them to see the value that we are receiving.
Physicians make most of the decisions on what care their patients receive, thus they are controlling much of spending of the insurance premiums. Not only are they making these spending decisions, they are also providing their professional expertise and clinical skills for which they are compensated – 31 percent of the premium dollars. In a sense, the physicians are making the business decisions of health care spending as an uncompensated additional service – decisions which are very important for the patients’ health.
What about these insurers who need more than 20 percent of the premiums for their own intrinsic needs? They are using two-thirds as much of the premiums as physicians are receiving, but for what? It’s not for making decisions on how the funds will be spent; physicians are doing that. Do they really need that much just for claims processing? What other important services do they provide? Taking away our choices by establishing restrictive provider networks? Why should we be paying for a detrimental service that we don’t even want?
What’s the solution? What will give us greater value? Shall we pay these insurers half again as much and throw out the doctors and have the insurers take over the practice of medicine? Or shall we throw out the insurers and replace them with public stewards who can provide better administrative services at a small fraction of the cost?
What will the White House decide? Let the insurers have as much as the physicians are receiving? Right now they’re listening to the whining of the insurers, and single payer advocates are still not welcome.
Products at Risk
Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.
Editorial, The New England Journal of Medicine
September 19, 2010
In this issue of the Journal, we publish the results of a clinical trial investigating step-up control in adult patients with asthma whose disease was not well controlled by low-dose inhaled glucocorticoids. This study, which compared the utility of treating such patients with inhaled tiotropium bromide, inhaled salmeterol, or higher doses of inhaled glucocorticoids, was conceived and implemented by the National Heart, Lung, and Blood Institute’s Asthma Clinical Research Network (ACRN). The study constitutes comparative effectiveness research, in which the products of a number of different companies are compared in a well-defined clinical setting. Simply put, the companies’ products are put “at risk” in a trial to determine whether the various treatments are superior or noninferior to one another.
The study design, a three-way crossover, required that the investigators have active drug and placebo for tiotropium and salmeterol. As is common is such situations, the investigators took a mature version of the study protocol to the manufacturers of these drugs and asked them to supply active drug and matching placebo inhalers. Boehringer Ingelheim (the manufacturer of tiotropium) agreed to provide the materials, but GlaxoSmithKline (the manufacturer of Salmeterol) refused. Because of Glaxo’s refusal, the investigators had to spend $900,000 from the National Institutes of Health (NIH) — and therefore from taxpayers — to repackage the active drug and to create a visually identical placebo for use in the trial. The NIH deserves credit for providing the funds to obtain the Glaxo drug when the company declined. In the end, the study results provided the truth — that tiotropium is not inferior to salmeterol for this indication.
Many drug companies realize that it is in their best interest to provide these materials, not only because the research that is completed by an independent group may show findings in their favor, but also because it is part of their responsibility to the community to allow their products to be tested against the competition by legitimate third parties. They recognize that their mission, like GlaxoSmithKline’s stated goal, is “to improve the quality of human life” rather than to simply increase market share.
The most precious commodity that drug manufacturers possess is the trust of their research subjects, and to maintain this trust they need to be willing to put their products at risk. When they refuse to provide their drugs to legitimate investigators, the researchers will get their studies done without company help. It will take more time and cost more money, but in the end, the research will be done and the company will be perceived as having acted in its own self-interest rather than having worked to enhance the health of the community.
Everyone agrees, or should agree, on the need for more comparative effectiveness research. We need more information about which medications provide greater benefit to patients, and which ones provide greater value – lower costs without compromises in therapeutic benefit.
During the process of creating the Patient Protection and Affordable Care Act (PPACA), it was not only the private insurance industry that was given carte blanche by the White House, but it was also the pharmaceutical industry. The representatives of both industries professed to supporting solutions that would benefit the American patient, and, in return, they were given legislation that will infuse hundreds of billions of dollars into their own coffers.
GlaxoSmithKline now gives us a hint of their sincerity. Although they state that their mission is “to improve the quality of human life,” it is clear that increasing market share is a much higher priority for them. They will not participate in a study that potentially could dent the sales of a blockbuster product.
The pharmaceutical firms and the private insurance industry got a great deal from President Obama and Congress, and patients got a bad deal. We desperately need to set aside the health care financing structure of PPACA, and enact a program that would benefit patients first – an improved Medicare for all.
Originally published in the Berkshire Eagle.
“Employers pushed costs for health on workers,” The New York Times revealed this month, citing a survey released by the Kaiser Family Foundation, a non-profit research group. Although the cost of an average insurance policy rose 3 percent, the worker’s share of the cost of a family policy jumped 14 percent. Workers are absorbing more of the costs of health insurance premiums as well as facing higher deductibles, thus paying a larger share of their overall health care costs.
Helen Darling, president of the National Business Group, says that companies expect their costs to go up more under the new health care law, the Patient Protection and Affordable Care Act (PPACA), which requires them to provide more benefits. She says businesses “can’t afford to subsidize what’s happening.” Meanwhile, in 2009, profits increased 56 percent for the nation’s five largest health insurers to $12.2 billion. Insurance company CEO compensation keeps rising as well. Stephen Helmsley, CEO of United Health Group, received an income of $107.5 million last year.
Not only are health insurance companies squandering our hard-earned health care premiums on profits, they are often doing so illegally. The California Department of Insurance is seeking fines from PacifiCare, a subsidiary of United Health Group, for nearly one million violations of state law from 2006-2008. The attorney for the Department of Insurance stated, “It’s a story of intense corporate greed.”
With the passage of the new health care law (PPACA), health insurers can only spend 15 percent of premiums from large groups, and 20 percent of premiums from individual policies on administrative expenses. As might be expected, health insurers are gaming the system by pushing as many of their administrative expenses as possible to the medical side so they can preserve CEO salaries and profits, while beleaguered businesses and struggling workers continue to fill the coffers of the health insurance industry.
The for-profit private insurance system, with its multiple insurance plans and micro-management, creates an additional administrative burden for providers of health care, consuming another 12 percent of the premium dollars, which brings total administrative costs up to 32 percent of insurance premiums. Doctors spend hours on paperwork every day.
A national single-payer health insurance program, like an improved Medicare system for everyone, would save $400 billion a year by eliminating the private health insurance industry. According to a recent report from the U.S. House Committee on Energy and Commerce, Medicare administrative expenses are less than 1.5 percent, which means that 98.5 percent of premiums are actually spent on health care. Businesses would be freed from paying rising health insurance costs or passing them on to their workers, because health insurance coverage would not be tied to employment. Everyone would have health insurance coverage, paid for by a modest payroll tax, which would be less than current health care premiums.
In 2009, President Obama stated, “I want to cover everybody. Now the truth is unless you have a single-payer system in which everyone’s automatically covered, you’re probably not going to reach every single individual.” He’s right. Official estimates this week from the Census Bureau show a dramatic spike in the number of Americans without health insurance in 2009 to a record 50.7 million. The rise in the number of uninsured was almost entirely due to a sharp decline in the number of people with employer-based coverage, which has declined for the ninth consecutive year.
In 2014, when PPACA is finally implemented, 23 million Americans will remain uninsured. In Massachusetts, 295,000 citizens still do not have insurance four years after the passage of our own state reform bill. Health insurance must be divorced from employment, and a single-payer program established to cover everyone in a cost-effective manner.
In Massachusetts, there will be a non-binding referendum on the ballot in 14 districts in November, including districts 2 and 4 in the Berkshires. Question 4 reads, “Shall the representative from this district be instructed to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?”
By voting “yes” on question 4, voters will send a clear message to our state government, proclaiming their support for single-payer health care reform.
Susanne L. King, M. D., is a Lenox-based practitioner.
Wrangling over ‘wrapping': Insurers raise rates for employers who use cost-cutting plan
By Jay Greene
Crain’s Detroit Business
September 19, 2010
Some health insurers in Southeast Michigan are beginning to charge higher premiums to employers who offer high-deductible employee health plans and then “wrap” the plans by buying gap insurance or giving workers subsidies to cover the deductibles.
The reason? Insurers say usage of health care services is going up because employees bear little or no responsibility for health care costs.
“Often, employers go the high-deductible route and then cover the deductible by funding an employee’s (health savings account) to a point where the employee no longer has any skin in the game,” said Steve Selinsky, director of sales and marketing with BeneSys, a Troy-based third-party administrator of insurance services.
Wrapping refers to when employers increase their health plan deductible, which lowers premium costs, and then reimburse employees for all, or a part, of their health expenses falling under the increased deductible.
This differs from the original concept of high-deductible plans, in which employees were responsible for deductibles of up to $5,000, but typically $1,000-$2,500, and so had a financial incentive to eliminate unnecessary care and seek lower-cost, higher-quality treatments. John Dunn, vice president of middle- and small-group sales for Blue Cross, said Blue Cross data shows that there is a 4 percent to 8 percent difference in utilization and expenses between those plans that are wrapped and those that are not.
He said Blue Cross in January will start charging employers that wrap between 4 percent and 8 percent more to account for the expected higher utilization.
Don Whitford, vice president of sales with Priority Health, said the health plan earlier this year began charging higher rates — 12 percent to 18 percent more — for companies that wrap their high-deductible health plans.
(Jon Clement, vice president of finance of Health Alliance Plan) said HAP decided five years ago to price its high-deductible plans to assume a higher utilization rate that would accommodate employer decisions to wrap their plans.
As more employers are moving to high-deductible health plans to take advantage of the lower premiums, private insurers, being the market innovators that they are, were not going to stand by as they watch potential premium dollars move into health savings accounts or other options such as flexible spending accounts or health reimbursement arrangements.
From the insurers’ perspective, the high deductible is for the purpose of creating financial barriers to health care access. If the patient is forced to pay a significant amount out of pocket – the deductible – before insurance coverage kicks in, then the patient is going to forgo health care, much of it beneficial, simply because it is too expensive. Since it is less likely that the deductible threshold would be met, that reduces the chances of the insurer having to pay out any benefits at all.
The rationale of the health savings accounts, which pay health care costs before the deductibles are met, is that patients would be better shoppers since they are using their own funds from the accounts which they own, achieving the same purpose as the deductibles alone. In theory, the health savings accounts are funded by the premium savings – savings that reduce insurer revenues.
Now the insurers contend that the accounts allow patients to be spendthrifts. They insist that patients are much more likely to spend the funds if they come from a delegated savings account than they would if they came from other personal savings or current income. They are using this as an excuse to recover the premium discount for the high-deductible plans – in essence, reaching into the health savings accounts and stealing the employees’ own funds (though indirectly through higher premiums paid by the employee in payroll deductions or forgone wage increases).
Although this is yet one more addition to the litany of reasons that high-deductible plans with health savings accounts are a highly flawed method of financing health care, it is much more a further indictment of the private insurance industry which will always find a way to make another buck off of our health misfortunes.
An improved Medicare for all would eliminate these thieves.
Shumlin – Picture of Health
“… Vermont needs a single payer system. Get the insurance companies out of the picture. Let health benefits follow you, not depend on your employer, and reward doctors for making you better. As governor, I’ll deliver real health care reform.”
Peter Shumlin, candidate for Governor of Vermont
Brian Dubie: Pure Vermont
“… set priorities, reduce regulations, roll the economy so that we can continue to make opportunities happen in our state.”
Brian Dubie, candidate for Governor of Vermont
On the Money, Sept. 15: Dubie has $410,269 in cash; Shumlin has $61,965 on hand
By Anne Galloway
September 16, 2010
The numbers are in, and Lt. Gov. Brian Dubie, the Republican candidate for governor of Vermont, is the winner in the money race. Dubie has raised nearly three times more money than his Democratic opponent in the last campaign finance reporting period.
Dubie’s supporters donated $150,215 to his campaign in the last month; Sen. Peter Shumlin, D-Windham, who recently emerged as the winner of a five-way Democratic primary race after a two-week recount, has raised $58,964 in the last 30 days.
Peter Shumlin for Governor:
Brian Dubie for Governor:
PNHP does not endorse political candidates.
Today’s message is of significance because it demonstrates once again that the single payer message can be carried beyond the party primaries and into the general election. Just as U.S. Senator Bernie Sanders (I-VT) has never abandoned the single payer message, so now Vermont State Senator Peter Shumlin is carrying the single payer message forward in his campaign for governor.
Peter Shumlin already had a track record on single payer, having been an original sponsor of S.88, a bill that would have established a single payer system in Vermont. He continued to support S.88 when it was modified to authorize a study on comprehensive reform for Vermont (Act 128), including an evaluation of the single payer model. That study is currently under way by Harvard Professor William Hsiao and his colleagues, and will be reported out in the near future.
In the money race for the campaign, Sen. Shumlin is well behind his opponent, Lt. Gov. Brian Dubie, since Democratic funds were split amongst five candidates in the primary, followed by a period of uncertainty because of a recount. This election provides the citizens of Vermont the opportunity to express their views on single payer reform, whether in support or opposed. It would be a shame if lack of funds prevented the voters from knowing that single payer is an important issue in this election.
Although we are very excited that the issue of single payer is moving further into mainstream politics, it must be emphasized that THIS MESSAGE IS NOT AN ENDORSEMENT NOR A SOLICITATION OF FUNDS FOR ANY POLITICAL CANDIDATE. Rather it is a plea for us to make every effort we can to be sure that we have a fully informed electorate.
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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