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.
Undocumented Immigrants, Left Out Of Health Reform, Likely To Continue To Grow As Share Of The Uninsured
By Stephen Zuckerman, Timothy A. Waidmann and Emily Lawton
Health Affairs, October 2011
The increase in undocumented immigration between 1999 and 2007 contributed to an increase in the number of uninsured people in the United States. During this period, the number of undocumented immigrants increased from an estimated 8.5 million to 11.8 million, leading to an estimated additional 1.8 million uninsured. These uninsured and undocumented immigrants were estimated to represent 27 percent of the overall increase of 6.9 million uninsured people during this period. Undocumented immigrants accounted for one in seven of the uninsured in 2007, up from one in eight in 1999. These undocumented immigrants will not be eligible for public insurance or any type of private coverage obtained through exchanges under the Affordable Care Act of 2010. As a result, members of this group will eventually constitute a larger percentage of the uninsured population, unless other policy actions are taken to provide for their coverage, or their immigration status is changed.
Under a properly designed single payer national health program, the financing of the health care system and the delivery of care are totally separated. Everyone contributes funds to the system based on ability to pay, including undocumented immigrants. Everyone who needs health care receives health care, including undocumented immigrants.
During the national dialogue on health care reform, a vociferous component of our society opposed including health insurance coverage for undocumented immigrants, and Congress complied with their wishes. The reason often given was that they were “illegals” (an unfortunate pejorative term). They committed the crime of coming to this country illegally, so they shouldn’t receive the benefit of health care, so the argument goes.
But is denying health care to those who commit crimes really our national policy? Hardly. Individuals who commit crimes severe enough to result in imprisonment are automatically granted health care. Anyone who shows up at an emergency room in need of urgent care is given that care, regardless of immigration status.
From a practical standpoint, in a microsimulation study that we did as part of the California Health Care Options Project, we showed that, under a single payer model, providing comprehensive care for absolutely everyone, including undocumented immigrants, would actually reduce our total health care spending. All immigrants, documented or not, would participate like everyone else – paying into the system and receiving care when needed.
Regardless of all this, what should be the overriding principle is the concept of social justice, specifically health care justice. No person in the community should be singled out for any reason whatsoever to be excluded from gaining access to the practitioners of the healing arts. A just society would guarantee that access for everyone, regardless of ability to pay or immigration status.
Although many may think today that we have always had employer-sponsored health insurance (ESI) in this country, that is not the case. While some companies offered coverage in the 1930s, the basic concept gained momentum only after the start of World War II. The war effort required a rapid buildup of industrial capacity in the face of a severe labor shortage as many men went off to war. Employers needed a healthy workforce, and needed to compete for workers. Federal wage and price controls made it difficult for them to offer higher pay, so that ESI became an important recruitment tool. Employers were helped by an IRS ruling that made their costs of ESI tax-deductible; these benefits also were not taxable for employees. (Somers, AR, Somers, HM. Health and Health Care: Policies in Perspectives. Germantown, MD. Aspen Systems Corporation, 1977, pp 109-11)
We have had about a 75-year experiment with ESI, but its track record is one of continued decline over the last 30 years—fewer people covered, less coverage for more costs, and less value of that coverage. ESI was more an accident of history than a well-planned financing system for health care. Today, rapidly accelerating costs are the Achilles heel for ESI, both for employers and employees, as they are for the entire market-based ‘system’ itself.
ESI arose at a very different time than today. Beyond the labor shortage, American business was dominant with little concern about foreign competition, and labor unions were strong. Many workers could reasonably expect to hold their jobs for their working life.
But those days are long gone. Most workers these days have multiple jobs, even careers, over their working years. By 2002, only about one-half of employed men or women could claim to have held their job for ten years. (Tejada, C. A special news report about life on the job—and trends taking shape there. Wall Street Journal, September 25, 2002: B5) Loyalty between employers and employees has dropped way off in recent years, part-time workers are not eligible for benefits, and union membership hovers around 10 percent of the workforce.
These markers show a long decline of ESI, as well as the decreasing benefits to enrollees:
• In 1980, more than 70 percent of employees working more than 20 hours a week were covered; that number fell to 56 percent by 2005, with coverage already unraveling as employers shifted from defined-benefits to defined-contributions. (Mishel, L, Bernstein, J, Allegretto, S. The State of Working America 2004/2005. Ithaca. Cornell University Press, 2005)
• Over the 13-year period that Kaiser Family Foundation has been tracking premiums for ESI, employee contributions have increased by 168 percent as compared to increased wages of 50 percent and inflation of 38 percent. One-half of employees of companies with fewer than 200 workers now have a deductible of $1,000 or more for single coverage as compared to 16 percent five years ago. (Altman, D. Rising health costs are not just a federal budget problem. Kaiser Family Foundation, September 27, 2011)
• Premiums for family plan ESI coverage have gone up by 9 percent this year, triple the increase in 2010; family premiums now total $15,073 on average, of which $4,129 is paid by employees (consider that these costs may have little to do with what employees end up paying for their health care, especially those who are older or have one or more chronic diseases!). (Appleby, J. Costs of employer insurance plans surge in 2011. Kaiser Health News, September 27, 2011)
• In 2012, average annual employee premiums for health insurance are expected to go up by another 10.6 percent. (Japsen, B. Companies pass on more of health costs to workers. New York Times, October 3, 2011: B3)
• Many of the so-called ESI plans cannot really be called insurance, since they now pass along so much of the costs of care to enrollees even as the extent of coverage withers away. Retiree and disability coverage are being cut by many companies, and their employees are increasingly being herded into lower-cost networks of providers with quality of care in question. As Dr. Don McCanne, Senior Health Policy Fellow for Physicians for a National Health Program, sums up: “The new national standard in health insurance is unaffordable under-insurance”. (McCanne, D. Quote-of-the-Day, September 13, 2011)
Beyond the increasing unaffordability of ESI for employees, employers—big and small—have the same problem with no end in sight. General Motors says it spends about $5 billion on health care expenses each year, adding between $1,500 and $2,000 to the sticker price of every car out the door. That burden is many times higher than what neighboring competitors just across the border in Canada pay for health care, rendering GM much less competitive in global markets. (Johnson, T. Healthcare costs and U.S. competitiveness. Council on Foreign Relations, March 23, 2010) Small business (with fewer than 100 employees), accounting for about 40 percent of the private U.S. workforce, cannot keep up with the growing cost of ESI coverage. The small employer market has been one of the most profitable for private insurers, with premiums climbing by 74 percent between 2001 and 2008.
The so-called health care reform legislation, the Affordable Care Act of 2010, will not fix this problem. Having handed over a combined employer and individual mandate to the private insurance industry, with minimal regulatory clout, the bill (if and when it is implemented) lacks any semblance of cost containment measures. Federal waivers already give employers whatever they want, as illustrated by a recent HHS ruling that allows McDonald’s Corp. to keep its very low limits of annual coverage of just $2,000 a year. (Adamy, J, Johnson, A. Rules eased for some health plans. Wall Street Journal, November 23, 2010: B1) Whereas President Obama promised that the average American family would save $2,500 a year on health insurance premiums, the Congressional Budget Office later projected that their cost would only increase. (Hemingway, M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner on line, March 10, 2010)
M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner
Adding all of this up, we can only conclude that employer-sponsored health insurance, and the overly expensive, wasteful private insurance industry upon which it is based, is in its death throes. As the Vice chairman of Ford Motor Co. said in 2004: “Right now the country is on an unsustainable track and it won’t get any better until we begin—business, labor and government in partnership—to make a pact for reform. A lot of people think a single-payer system is better.” (Downey, K. A heftier dose to swallow. The Washington Post, March 6, 2004). Some 50 years ago, Walter Reuther, as the national president of United Auto Workers, saw the future this way:
“When American corporations reached the point where they couldn’t make their business more efficient without making it less profitable, when their dependency ratios soared to unimaginable heights, when they got tens of billions behind in
their health-care obligations, when the cost of carrying thousands of retirees forced them to stare bankruptcy in the face, they would come around to the idea that the markets work best when the burdens of benefits are broadly shared.” (Reuther, W. as cited by Gladwell, M. The risk pool: What’s behind Ireland’s economic miracle and GM’s financial crisis? The New Yorker, August 28, 2006, p 35)
We have to move beyond denial of this problem, and rein in markets that fail the public interest. We can no longer afford ESI or the private insurance industry. Unless we move past political gridlock on this big issue toward a new partnership between labor, business and government, they can bankrupt us all!
There is an answer, of course, in plain sight—not-for-profit, improved Medicare for All, funded by broadly shared progressive taxes that cost patients, families and business less than they are now paying while assuring universal coverage in a less bureaucratic and more accountable system.
John Geyman, M.D.
Professor emeritus of Family Medicine
University of Washington
Author of Do Not Resuscitate: Why the Health Insurance Industry is Dying and How We Must Replace It and Hijacked! The Road to Single-Payer in the Aftermath of Stolen Health Care Reform (Common Courage Press, 2008 and 2010)
To buy books from John Geyman visit: http://www.copernicus-healthcare.org
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.
New rankings make choosing health insurance easier
By Steven Findlay
Consumer Reports Health.org, October 4, 2011
When it comes to health insurance, a familiar name and lots of members don’t guarantee quality or customer satisfaction, according to new rankings of health-insurance plans from the National Committee for Quality Assurance that we published today.
Our analysis of the NCQA rankings found that the five largest national insurers—Aetna, Cigna, Humana, Kaiser Permanente, and United Healthcare, plus the mostly state-based Blue Cross Blue Shield plans—account for about 75 percent of the 390 ranked private plans, but only 36 percent of the top 50.
Biggest isn’t best. United is the nation’s largest health-insurance company, but none of its private plans rank among the top 100, and most occupy the bottom half.
NCQA Health Plan Report Card
The big health insurers that are dominating most of the markets fall short on NCQA quality standards, except for Kaiser Permanente. No surprise. What is surprising is that we continue to tolerate this mediocrity merely because an improved Medicare for all is not politically feasible. How about changing the politics?
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
The Effects of Public Health Insurance Expansions
The National Bureau of Economic Research
NBER Digest OnLine, October 2011
In the United States, public health insurance programs cover over 90 million individuals. Changes in the scope of these programs, such as the Medicaid expansions under the recently passed Patient Protection and Affordable Care Act, or in the generosity of these programs, may affect physician behavior.
In “The Doctor Might See You Now: the Supply Side Effects of Public Health Insurance Expansions” (NBER Working Paper No. 17070), Craig Garthwaite finds that after the 1990s implementation of the State Children’s Health Insurance Program (SCHIP) – a partnership between federal and state governments intended to increase insurance coverage for low-income Americans under the age of 19 – more physicians participated in the program, but their total number of hours spent with patients declined as a result of shorter office visits.
Garthwaite finds that there were fewer visits that lasted more than 10 minutes after this public program expansion. The evidence on shorter office visits is consistent with economic models of physician behavior in a system with both public and private payers.
The negative effects of reductions in physician labor supply, such those observed in this study, may be particularly important for Medicaid patients because they are covered by a program that is increasingly not accepted by physicians.
Most of us who support a single payer national health program do so primarily because it would provide high quality, comprehensive care for everyone. Although the Affordable Care Act will not cover everyone, much of the expansion in coverage that it does accomplish is through increased eligibility for the Medicaid and CHIP programs, chronically underfunded welfare programs. This study demonstrates that such an approach does result in a system with at least two tiers, the lower tier patients facing shorter visits and a decline in access to participating physicians.
There is already enough money in our health care system to provide a single level of comprehensive, high quality care for everyone. We should reject the concept of a separate, underfunded, lower tier program for low-income individuals and families, with a higher tier of great care for the rest of us (though the Affordable Care Act certainly doesn’t ensure that either).
The Consequences of Risk Adjustment in the Medicare Advantage Program
The National Bureau of Economic Research
NBER Digest OnLine, September 2011
Since the 1980s, people eligible for Medicare have been able to choose between the regular fee-for-service plan, under which the federal government pays a set fee to health care providers for each service provided, and Medicare Advantage (MA), whereby the government pays private health plans a fee for each individual they enroll. Almost one quarter of Medicare beneficiaries are currently enrolled in Medicare Advantage plans.
Paying the same amount for every person enrolled in a health plan encourages plans to enroll low-cost people and to avoid high-cost ones. Because of this, the federal government historically overpaid for MA enrollees relative to their costs in traditional Medicare. So, in 2004 the Medicare program began to adjust its payments to private plans for enrollees health status. As a result, a plan would, for example, receive a higher “risk-adjusted” payment for a recipient with diabetes or heart disease than for an otherwise identical person without these conditions.
In “How Does Risk Selection Respond to Risk Adjustment? Evidence for the Medicare Advantage Program” (NBER Working Paper No. 16977), Jason Brown, Mark Duggan, Ilyana Kuziemko, and William Wollston study individual-level data for 55,000 people in the Medicare Current Beneficiary Survey (MCBS) from the period 1994 to 2006. Prior to risk adjustment, insurers simply had an incentive to enroll individuals with low costs. After risk adjustment, insurers instead had an incentive to enroll individuals with low costs conditional on their medical conditions. The main reason for this is that the risk adjustment formula pays the plans the average cost of the average person in a particular risk category. The authors demonstrate that, because individuals with less costly cases of diabetes and other health conditions enrolled in MA plans after the move to risk adjustment, overpayments to these plans actually increased.
The risk adjustment formula that is used also explains only 11 percent of an individual’s fee-for-service costs in the year after risk is assessed. The formula systematically over-predicts costs for those with below average costs, and systematically under-predicts costs for those with above average costs. The authors find that individuals who are more expensive than the average person to insure are less likely to enroll in Medicare Advantage plans. So on balance, the government ends up paying the average cost for people who, had they stayed in fee-for-service Medicare, would have cost the government much less.
Before risk-adjustment began in 2004, switching from fee-for-service Medicare to Medicare Advantage increased average individual Medicare spending by $1,800. The authors calculate that using risk adjustment formulas on the population that enrolled before 2004 would have reduced Medicare Advantage overpayments by more than $800 a person. But when the reimbursement formula changed, so did the pattern of enrollment in Medicare Advantage plans. After 2004, switching from fee-for-service to Medicare Advantage increased Medicare spending by approximately $3,000 per person. Thus the shift to risk adjustment actually increased Medicare spending.
Although Medicare Advantage plans did enroll people with higher “risk scores” after risk adjustment was instituted, those people still tended to be significantly below the average cost in their risk category. Furthermore, both before and after risk adjustment, MA enrollees in poor health expressed greater dissatisfaction with their medical care relative to their counterparts in traditional Medicare. This pattern suggests that MA plans invest more resources in their relatively healthy enrollees, perhaps to differentially retain them. Thus the authors conclude that the Medicare Advantage program both increased total Medicare spending and transferred Medicare resources from the relatively sick to the relatively healthy, and that risk-adjustment was not able to address either of these problems.
How does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program
By Jason Brown, Mark Duggan, Ilyana Kuziemko, William Woolston
NBER Working Paper No. 16977, April 2011
We close by returning to the potential distributional consequences of our results. Regardless of how the surplus described above is split, the MA program appears to expand the cost of Medicare while also transferring relative expenditures from the FFS population toward the financing of care for the MA population. As those switching into MA have, throughout the sample period, lower baseline costs and better self-reported health than do those remaining in FFS, the MA program transfers Medicare expenditure to those who likely have less need for it.
Moreover, as we show in Section 7, the gradient of satisfaction with one’s health care is a more positive function of self-reported health for MA enrollees than FFS enrollees, consistent with MA plans treating their healthier (and thus more profitable) enrollees better so as to differentially retain them. Indeed, exit rates out of MA plans are differentially higher among those in poor health. Therefore, the MA program appears not only to transfer aggregate Medicare expenditures from the relatively higher-cost FFS population to the relatively lower-cost MA population, but it seems to effect a similar transfer within the MA population.
These results suggest that governments may wish to take special care in “contracting out” social insurance. Imperfect pricing – whereby the government overpays a private firm relative to the cost and quality of in-house production – is, of course, a potential concern every time governments contract with a private party and has received great attention in the literature (see, for example, Hart et al. 1997). In the case of, say, paving a road, the consequences of imperfect pricing would seem limited to whatever amount the government overpaid. With social insurance programs, however, imperfect pricing can induce private firms to cream-skim, exacerbating the utility consequences of the underlying inequality the program was initially intended to mitigate. At least in the case of Medicare, we find little evidence that risk adjustment has solved this problem.
Never underestimate the ability of the private insurance industry to stick it to us. This shocking study on risk adjustment in the Medicare Advantage program should have been a front page story across the nation. It shows us how the private insurers have used risk adjustment – designed to correct their cheating through favorable selection – to further reap their own rewards by upending the adjustments so that they steal even more funds from us!
How could this be? Some history.
Congress was sold on the concept that private insurers could provide higher quality at lower costs than could the traditional, government-run Medicare program. The Medicare + Choice program was established to do this. Even though the plans were able to selectively enroll healthier, lower-cost patients (favorable selection), the concept still was a failure and plans began withdrawing from the markets. They could not fulfill their promise of lower costs for comparable care.
The conservatives would not give up. It was essential that a robust market for private Medicare plans be established as an initial step toward privatizing the entire Medicare program (a concept still very much alive in the Paul Ryan proposal which was approved in the House of Representatives). They were successful in passing legislation that gave private Medicare plans (now Medicare Advantage) a new life by paying them about 13 percent more per beneficiary than it costs to provide care for them in the traditional fee-for-service program.
As is that weren’t enough, the plans continued to selectively enroll healthier, less expensive patients, further expanding their margins. To counter this, risk adjustment was applied to the payment rates. If the plans’ beneficiaries were healthier than average, they would be paid less. If they were subject to adverse selection – enrolling a greater portion of sicker patients – they would be paid more.
Enter this study. Although it is 55 pages of a very heavy read, seriously testing your math skills, the conclusions can be gleaned from the summary and excerpts above. The plans continued to favorably select their patients, not only by enrolling the healthy, but even more by selecting fairly healthy patients that had just a touch of illness that would allow the insurers to move them into intensified diagnostic groups that increased their payments much more than the level of illness would warrant.
The authors explain that firms have been able to decrease “extensive-margin” selection and increase “intensive-margin” selection. These terms might be obscure to us, but what isn’t obscure is that this chicanery on the part of the insurers allowed them to escape the risk adjustments that would have reduced their overpayments from $1,800 to $800 per beneficiary (still an overpayment), and replace it with a $3,000 per person overpayment!
The authors conclude that “governments may wish to take special care in ‘contracting out’ social insurance.” They are far too kind. We need to throw the damn crooks out, fix our traditional Medicare program, and then provide it for everyone.
We saw in our last post how the intensifying class war in America over the last 30 years has hollowed out the middle class and led to the widest gap between the haves and have nots in our country’s history. In this Second Gilded Age, the right has been winning the war by its promotion of deregulated markets and its attacks on government, thereby sacrificing the public interest to the benefit of the politically elite and the few at the top. In this new landscape, Social Darwinism increasingly prevails—sink or swim, take care of yourself, don’t expect any ‘handouts’.
We now have to wonder what has happened to our sense of fair play, our self-proclaimed egalitarianism that has been part of our character for a long time. We need to ask whether we care anymore for our fellow citizens, and whether we can mount the collective political will to reverse course toward a kinder, gentler society?
Today’s mean-spirited political debate across the wide divide between the Tea Party and progressives stands in sharp contrast to previous times in the last century. Through the leadership of a strong and caring president, FDR brought us Social Security in the 1930s, the 1950s was a time of prosperity widely shared across our society, and the 1960s brought Medicare and Medicaid.
We are now seeing some interesting writing on this subject that helps us to understand how we got here and how we might get past these dark times.
In his classic recent article on the subject, Robert Kuttner, founder and co-editor of The American Prospect and co-founder of the Economic Policy Institute, draws a comparison with the failures of civic institutions of Germany in the late 1800s that prevented a national consensus with later global consequences. As he observes:
“One of our major parties has turned nihilist, giddily toying with default on the nation’s debt, reveling in the dark pleasures of a fiscal Walpurgisnacht. Government itself is the devil… Whether the target is the Environmental Protection Agency, the Dodd-Frank law or the Affordable Care Act, Republicans are out to destroy government’s ability to govern… The administration, trapped in the radical right’s surreal logic, plays by Tea Party rules rather than changing the game… The right’s reckless assault on our public institutions is not just an attack on government. It is a war on America.” (Kuttner, R. The war on America. The American Prospect 22 (8): 3, 2011)
In his new book Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It, Don Peck compares our times today with those in the First Gilded Age in this country in the late 1800s. The gulf between rich and poor was also very wide in those years. The Depression of 1893 led to a run on banks that crippled the financial system, extended families broke apart, communities became more transient, and the social fabric of society was shattered. (Peck, D. Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It. New York. Crown Publishers, 42-5, 2011)
Theodore Marmor, professor emeritus of public policy at Yale and Jerry Mashaw, professor of law, also at Yale, note how the language of our political leaders has changed from the 1930s to today—from “a morally resonant language of people, family and shared social concern to the cold technical idiom of budgetary accounting.” As they further observe:
“ In 1934, the government was us. We had shared circumstances, shared risks and shared obligations. Today the government is the other—not an institution for the achievement of our common goals, but an alien presence that stands between us and the realization of individual ambitions. Programs of social insurance have become “entitlements”, a word apparently meant to signify not a collectively provided and cherished basis for family-income security, but a sinister threat to our national well-being.” (Marmor, TR, Mashaw, JL. How do you say ‘economic security’? New York Times, September 23, 2011)
Henry Giroux, author of another new book, Education and the Crisis of Public Values: Challenging the Assault on Teachers, Students and Public Education, sheds further light on how all this has come about:
“As the left slid into organizing around mostly single-issue movements since the 1980s, the right moved in a different direction, mobilizing a range of educational forces and wider cultural apparatus as a way of addressing broader ideas that appealed to a wider public and issues that resonated with their everyday lives. Tax reform, the role of government, the crisis of education, family values and the economy, to name a few issues, were wrenched out of their progressive legacy and inserted into a context defined by the values of the free market, an unbridled notion of freedom and individualism and a growing hatred for the social contract.
…At issue here is the need for a new vocabulary, vision and politics that will unleash new, democratic movements, institutions and a formative culture capable of imagining life and society free of the dictates of endless military wars, boundless material waste, extreme inequality, disposable populations and unfounded human suffering.” (Giroux, HA. Corporate media and Larry Summers team up to gut public education: Beyond education for illiteracy, vulgarity and a culture of cruelty. Truthout, September 27, 2011) So we have some big questions here: who are we today, are we the country that we want to be, do we care about each other anymore, and do we have the collective will to assert ourselves against the bigoted interests of the few?
John Geyman, M.D.
Professor emeritus of Family Medicine, University of Washington School of Medicine, and author of Falling Through the Safety Net: Americans Without Health Insurance (Common Courage Press, 2005)
To buy a book from John Geyman, M.D., visit http://www.copernicus-healthcare.org
As the Great Recession rolls on after three years, without signs of relief on the horizon, a growing army of many millions of Americans is finding it impossible to gain access to necessary health care that is affordable. Meanwhile, class warfare is gaining intensity with a widening gulf between the left and right over the major issues of the day, including the future of U.S. health care. As political gridlock continues, the battlefield is littered with many preventable deaths, many lives wounded by the ravages of untreated or under-treated disease, and growing stress in affected families.
The public discourse is reaching new levels of ugliness, as illustrated by an audience at a GOP campaign event cheering the idea that that those without health insurance should just be left to die. (Krugman, P. Free to die. Op-Ed. New York Times, September 16, 2011: A23). GOP presidential hopefuls have no solutions to offer except the “freedom to choose” (your own fate!) and the private marketplace (which increasingly excludes those who cannot pay its rapidly increasing costs). In fact, they exacerbate the problem, under the guise of fiscal responsibility and austerity, by cutting government safety net programs while at the same time trying to exploit Medicare and Medicaid by further privatization.
These are some markers that show some of the impacts of this war:
• According to the U.S. Census Bureau, in 2010 49.9 million Americans were uninsured (which understates the problem since anyone with insurance for even a small part of the year was considered insured), the median household income was $49,445 (a drop of 2.3 percent from 2009), and 46.2 million people (including 22 percent of the nation’s children) were in poverty (the highest number in the 52 years for which estimates have been tracked). (U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States, 2010)
• In his recent editorial in The Progressive, Matthew Rothschild notes that, over the last 40 years, the top 0.1 percent of the population (152,000 people making more than $5.6 million a year) skyrocketed by 385 percent while the income of the bottom 90 percent (about 137 million people) dropped by 1 percent.(Washington Post) In the last ten years, the median income of working-age households has dropped by more than 10 percent (Economic Policy Institute). (Rothschild, M. Enlist for class warfare. The Progressive, September 20, 2011)
• According to a Gallup poll, 18.2 percent of Americans state they did not have money to buy food at all times in 2010. (Gallup, Washington, D.C.)
• The median household wealth of white families has fallen by 16 percent since 2005; Hispanic families dropped by 66 percent. (Pew Research Center Social & Demographic Trends project. Washington, D.C.)
• Three-quarters of the increase in U.S. corporate profit margins over the last ten years have come from depressed wages. (J. P. Morgan, New York City) (Harper’s Index 323 (1937): 15, 68, October, 20ll).
• U.S. corporations pay only 10.5 percent of their profits in taxes today (vs. 40 percent in 1961, with some paying no taxes. (Institute for Policy Studies, Washington, D.C.)
• Based on a definition of the middle class of those between the 30th and 70th percentiles of the income distribution, one-third of Americans dropped out of the middle class over the last 30 years. (Acs, G. Downward Mobility from the Middle Class: Waking Up from the American Dream. Economic Mobility Project. Pew Charitable Trusts, September, 2011).
• The average annual premium for health insurance for a family of four reached $15,073 in 2011, 9 percent higher than 2010 (Abelson, R, Bernstein, N. Health insurers push premiums sharply higher. New York Times, September 28, 2011: A1) (an unaffordable level about 30 percent of the median family income, or twice the proportion of income that seniors paid for health care when Medicare was enacted in 1965!).
• In the most recent study of mortality amenable to health care in 16 high-income nations, the U.S. ‘led’ the field with the most preventable deaths, and with the least improvement over a ten-year period; the authors concluded this poor
showing is likely due to “the lack of universal coverage and the high costs of care.” (Nolte, E, McKee, M. Variations in amenable mortality—Trends in 16 high-income nations. The Commonwealth Fund, September 23, 2011)
• The consumer confidence level is now only 45 percent. (Vital signs. Wall Street Journal, September 28, 2011: A1) Despite all this pain and suffering, the political process continues to ignore this national catastrophe in the name of austerity as the debate continues over the budget deficit, targeting federal spending for education, health care and other important public programs (but avoiding bigger issues, such as major defense cutbacks, real financial reform, campaign finance reform, and tax increases for the wealthy). The extreme right-wing of the Republican Party, activated and hobbled by the Tea Party, continues to hold Congress and the Obama Administration hostage as it pursues its nihilistic agenda, focused on winning further power in 2012 despite its lack of a plan to address these kinds of problems.
The present situation in health care boils down to a human and moral crisis that seems beyond the reach or concern of our current political leaders, conflicted as they are by enormous amounts of corporate cash that perpetuates our present, increasingly cruel market-based system. In our next post, we will explore whether we still can draw on a long-standing self-image that we as Americans care about each other.
John Geyman, M.D.
Professor emeritus of Family Medicine, University of Washington School of Medicine and author of Hijacked! The Road to Single Payer in the Aftermath of Stolen Health Care Reform (Common Courage Press, 2010)
To purchase a book by John Geyman, visit copernicus-healthcare.org
Some Common Ground for Legal Adversaries on Health Care
By Adam Liptak
The New York Times, September 29, 2011
The 2010 health care overhaul law has provoked an unprecedented clash between the federal government and 26 states, dividing them on fundamental questions about the very structure of the federal system. But the two sides share a surprising amount of common ground, too, starting with their agreement in briefs, filed on Wednesday, that the Supreme Court should resolve the clash in its current term.
Their briefs also reflect agreement on matters of substance. The two sides, along with the judges in the majority in the appeals court decision most likely to be reviewed by the justices, all said the dispute is about means rather than ends. There are other ways, they said, for Congress to achieve near-universal health coverage, some of them more expansive than what was enacted.
“Both sides agree that Congress has the constitutional power to enact a national health care system that raised taxes to support a single government agency that pays all medical bills, just like Medicare,” said Walter Dellinger, who served as acting solicitor general in the administration of President Bill Clinton and supports the law.
Randy E. Barnett, a lawyer for some of the plaintiffs who on Wednesday sought Supreme Court review, made essentially the same point. “What I’ve said from Day 1,” he said, “is that if Medicare is constitutional then Medicare-for-everyone is constitutional.”
The Affordable Care Act represents the most expensive model of reform and yet falls short on universality and affordability, and now it is being challenged as a violation of the Constitution. Why are we defending it when the least expensive model that actually would accomplish our goals has been declared by all parties to be compliant with the Constitution?
Fast tracking the decision is great. Once the legal issues are dispensed with, we can look at the mess we have left, reject it, and move on to enacting an improved Medicare for all.
Additional comment from Merrill Goozner:
What’s interesting about rising insurance premiums is that they are way out of line with the rise in costs, which was only around 4% last year in nominal dollars, which in inflation-adjusted dollars would be just a 2% increase. Both Medicare total expenditures and insurance total expenditures rose (which, after adjusting for inflation was the same rate as economic growth; GDP rose 2.6% in 2010). It was one of the lowest increases in decades, as health care’s share of the economy did not increase for the first time in many years.
So why the hike in premiums. A Goldman Sachs analyst quoted in the WSJ story earlier this week attributed the outsized premium increases to insurance
companies padding their bottom lines.
I blogged on it here: http://gooznews.com/?p=3215
Editorial: Pointing fingers over health costs
The Denver Post
September 29, 2011
When critics insist the growth of this nation’s health care burden is unsustainable, this is what they mean: The average cost of an employer-provided family insurance plan soared by 9 percent in 2011. That’s far higher than the rate of inflation or the average growth of wages.
Nor is this year’s increase out of line with recent history.
In a word, it’s a looming disaster. And yet our political leaders mostly still refuse to come to terms with it.
Some Republicans immediately sought to blame the Affordable Care Act, which critics call Obamacare, for the latest news, although unsustainable health-care inflation predated the legislation and indeed was one of the main arguments offered in support of its passage.
But many Democrats appear equally determined to sidestep reality when discussing health care costs, insisting — in the face of all early evidence — that the Affordable Care Act will restrain costs over time, if we are patient enough.
We opposed that legislation because we were convinced — and have seen nothing since to change our opinion — that it will not, unfortunately, rein in costs to any major extent. The Congressional Budget Office certainly doesn’t think so, either.
Although both parties are still largely in denial on health care, there are exceptions. Democrats who favored a single-payer system understood that it would have a better chance of achieving cost control than most alternatives, given the experience in other countries. And other Dems have prioritized cost containment.
Some Republicans also understand the need for fundamental reform, with Rep. Paul Ryan, chairman of the House Budget Committee, leading the charge. We take issue with elements of Ryan’s approach — block grants to states for Medicaid and premium subsidies for Medicare coverage that patients would then purchase in the private market — but at least he appreciates the necessity of revamping incentives.
“At its core,” Ryan said in speech this week at the Hoover Institution, “the health care problem is one of inflation, driven by the over-utilization of services, dramatic underpayments, and massive inefficiency.”
And if nothing is done to address those issues, this nation’s future will be bleak indeed.
The Kaiser Family Foundation report on the 9 percent increase in family health insurance premiums brought back to the front pages the issue of unsustainable health care cost increases. The Denver Post had previously opposed the Affordable Care Act (ACA) because they “were convinced — and have seen nothing since to change our opinion — that it will not, unfortunately, rein in costs to any major extent.” So what do they see as our options?
They dismiss the political battle between the Republicans who are blaming ACA for this year’s premium increases, and the Democrats who are defending ACA as a (certainly dubious) vehicle for cost restraint.
They do give credit to Republican Paul Ryan for recognizing the problem, but they “take issue with elements of Ryan’s approach.”
And Democrats? The Denver Post editors state, “Democrats who favored a single-payer system understood that it would have a better chance of achieving cost control than most alternatives, given the experience in other countries.”
The Denver Post falls short of endorsing single payer, but it’s the only truly effective option that they seem to offer.
The better people understand the single payer model, the greater the support that we’ll see. Keep spreading the word.
Higher Fees Paid To US Physicians Drive Higher Spending For Physician Services Compared To Other Countries
By Miriam J. Laugesen and Sherry A. Glied
Health Affairs, September 2011
Higher health care prices in the United States are a key reason that the nation’s health spending is so much higher than that of other countries. Our study compared physicians’ fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians’ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries’ national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians’ counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.
Alliance of Specialty Medicine
September 26, 2011
To: Glenn M. Hackbarth, J.D., Chairman
Medicare Payment Advisory Commission
The Alliance of Specialty Medicine (Alliance) and its member organizations are writing to express our opposition to the Chairman’s recommendations on the Sustainable Growth Rate System (SGR) proposed at the MedPAC meeting of September 15, 2011.
The Alliance recognizes that MedPAC has called for repeal of the SGR repeatedly and we welcome your understanding of the critical need to rationalize physician payment to assure stability of patient access to quality physician care. However, we were dismayed to hear the Chairman’s first recommendation to slash the conversion factor for specialist services by 5.9 percent each year for three years to be followed by a freeze for seven years. The cumulative cut to specialty physician payments would be 18 percent over the first three years. The recommendations seek to shield a small percentage of primary care services furnished by primary care specialties by imposing only a 10-year freeze rather than an absolute cut on these services.
Furthermore, while the Alliance understands MedPAC’s desire to support primary care, we have serious objections to the recommended proposal to essentially hold primary care “harmless” while cutting specialty physicians’ reimbursement.
Private Contracting with Physicians Under Medicare
The Alliance strongly supports empowering patients with the ability to obtain medical services from the physician of their choice. To that end, we believe that patients and physicians should be allowed to privately contract for Medicare services without penalty.
American Academy of Facial Plastic and Reconstructive Surgery
American Association of Neurological Surgeons
American Gastroenterological Association
American Society of Cataract & Refractive Surgery
American Society of Plastic Surgeons
American Urological Association
Coalition of State Rheumatology Organizations
Congress of Neurological Surgeons
Heart Rhythm Society
North American Spine Society
Society for Cardiovascular Angiography and Interventions
Today’s message on physician income does not delve into the important topics of fee-for-service, capitation, salary and other such considerations, but rather is intended to provide a perspective on how much money physicians should take home. Having said almost nothing in this first sentence, just opening the topic undoubtedly has already provoked controversy, but we do need to take a look at this.
Before discussing physicians’ net incomes, we should first stipulate that our health care system should be designed to provide all necessary care to everyone. Since health care now is so expensive, that means that we must have some method of pooling funds, and the financing must be progressive. Medicare is an example of pooled funds with progressive financing.
Some of us can remember when Medicare was first established, physicians were allowed to set their own fees. The cost of the program skyrocketed far beyond even the highest cost projections. Medicare was forced into a system (under continual refinement) that controlled fees. Likewise, escalating costs in the private sector forced the insurers into provider contracting as a means of controlling fees. Even the plans that expose patient/consumers to the costs of health care still have limits on how much the physicians can receive.
We need to learn from other nations that have been successful in covering essentially everyone, while spending far less than the United States. The Health Affairs article demonstrates that one important difference between us and those other nations is that we pay physicians more, even with our current private insurance and public program controls on spending.
What is even more alarming is that procedure-oriented specialists are paid much more than primary care physicians. The Health Affairs study cited above looked at orthopedics as a proxy for procedure-oriented specialists. Other studies have shown that very high fees also apply to most other such specialties.
Unfortunately, this is setting up a battle between the primary care and specialty sectors of medicine. The letter to MedPAC (Medical Payment Advisory Commission) sent by the professional organizations representing high-fee specialists states, “we have serious objections to the recommended proposal to essentially hold primary care ‘harmless’ while cutting specialty physicians’ reimbursement.” It’s war.
Worse, the specialists want Medicare rules changed so that they can set their own fees and collect from the patient the full balance beyond the Medicare allowed fees. If you have looked at any Medicare payment statements recently, you know that the amounts that the patient would be responsible for are staggering. Yet this unreasonable demand is from a sector of physicians that are already paid far more than similar specialists in other nations.
How much should physicians be paid? Under our current fragmented system, Medicare is not able to determine the costs of providing care to the beneficiaries since such costs are not segregated, and it is difficult to determine how much of the practice costs should be paid by the private insurers and by cash-paying patients. If Medicare were the only payer (single payer) then pricing could be based on legitimate total practice costs and fair profits (physician net income). This method would provide the greatest value in our health care purchasing – paying enough to be sure that physicians would be there when you need them, but not paying egregiously excessive profits.
Although it would be foolish to try to specify here precise levels of physicians’ incomes for the United States, we can say that adopting an efficient system of financing health care would bring us far closer to getting the levels right. This is partly what we mean by “improved” in an “improved Medicare for all.”
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.
PNHP Chapters and Activists are invited to post news of their recent speaking engagements, events, Congressional visits and other activities on PNHP’s blog in the “News from Activists” section.