Continued insurer discrimination assured

Posted by on Monday, Oct 5, 2009

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.

Discrimination by Insurers Likely Even With Reform, Experts Say

By David S. Hilzenrath
The Washington Post
October 4, 2009

If insurers are prohibited from openly rejecting people with preexisting conditions, they could try to cherry-pick through more subtle means. For example, offering free health club memberships tends to attract people who can use the equipment, says Paul Precht, director of policy at the Medicare Rights Center.

Being uncooperative on insurance claims can chase away the chronically ill. For people who have few medical bills, it is less of a factor, said Karen Pollitz, research professor at the Georgetown University Health Policy Institute.

And to avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania’s Wharton School.

At a more nuts-and-bolts level, AHIP has been trying to shape the legislation in ways that could help insurers attract the healthy and avoid the sick, though it has given other reasons for advancing those positions.

By itself, a ban on discrimination would not eliminate the economic pressure to discriminate.

“It would probably increase the incentive for cherry-picking,” Pauly said.

No matter how tightly regulated, investor-owned private insurers will always find ways to avoid enrolling those with greater health care needs. To fulfill their business responsibilities they are mandated to control costs in any way possible. To remain competitive and survive, nonprofit insurers must follow their lead.

A public insurance program has a mission of assisting individuals in getting the care they need. It is especially important to include those who have greater needs.

What does this say about a stand-alone “public option” that competes with private plans on a level playing field by being fully funded by the beneficiaries? Adverse selection would drive the premiums sky high, and the program would fail.

Would we really want our government to engage in the same injustices of the marketplace in which the public administrators would devise schemes to exclude higher cost patients from the government program, just so they could keep the premiums competitive? Of course not. Almost everyone agrees that the government should serve as the safety net, and yet the proposed public option safety net is all holes and no mesh.

If the government were in charge of our health insurance, we would expect it to provide all of us with the coverage that we need. Yet when the private sector is in charge, we reward it richly for devising ways of preventing us from having the coverage that we need.

Maybe before we do anything else, we need to address our pervasive cognitive dissonance.

by Kip Sullivan, JD

October 2, 2009

Douglas W. Elmendorf
Congressional Budget Office
US Congress
Washington, DC 20515-6925

Dear Mr. Elmendorf:

I write to ask for information about the methodology the CBO used to analyze the impact of the public plan (“public option”) in the Affordable Health Choices Act (drafted by the Senate health committee) and HR 3200 (drafted by three committee chairs in the House), and the health insurance cooperatives in America’s Healthy Future Act (drafted by Sen. Max Baucus). The CBO’s discussion of the public plan called for by the Senate health committee bill and HR 3200 assumes the public plan would be available throughout the country. In contrast, CBO’s discussion of the health insurance co-operatives called for by the Baucus bill assumes the co-ops would be unlikely to thrive, or even survive, in many parts of the country.

I can find no information that indicates what evidence, if any, CBO used to reach these conclusions. My statement is based on five letters from you:

July 2 letter to the late Sen. Ted Kennedy, chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee;

July 14 letter to Rep. Charles Rangel, chairman of the Ways and Means Committee;

July 26 letter to Rep. Dave Camp, ranking member of the Ways and Means Committee;

September 10 letter to Sen. Michael Enzi, ranking member of the Senate HELP Committee;

September 16 letter to Sen. Max Baucus, chairman of the Senate Finance Committee.

Although you have written other letters about these three bills, I believe the five letters I listed above are the ones in which you presented conclusions about the “public option” and the health insurance cooperatives that required that you determine, or at least make an assumption about, whether they could survive and participate in all, some or no US health insurance markets.

In Part I of the addendum to this letter, I quote examples of such conclusions. Here I offer a summary of the conclusions that require, in my view, an explanation of your assumptions about the viability of the “option” programs and the co-ops:

• The “public option” in the HELP Committee bill will have premiums roughly equal to those of the insurers it competes with, will enroll few people, will allow its enrollees greater freedom to choose providers, and will utilize few or none of the managed care tactics widely used by the insurance industry.

• The “public option” in HR 3200 will be able to induce a substantial number of providers throughout the country to participate in the public plan, will be able to set its premiums 10 percent below those of the plans it competes with, and will be able to enroll roughly 10 million people.

• The health insurance co-ops under the Baucus proposal will probably not survive in many markets, and where they do they will enroll relatively few people.

Obviously the first two conclusions rest on the premise that “option” insurance programs will start up and succeed in all or most American health insurance markets. The third conclusion (the one about the co-ops) rests on the premise that there is something different about co-ops from the “option” programs that warrants more pessimism. These conclusions raise these questions:

Did the CBO make an explicit determination that the “public option” program in the Senate health bill and HR 3200 will be able to establish itself in all or even some insurance markets in the United States, and if so, what evidence led you to that conclusion?

Did the CBO determine that the health insurance co-ops in the Baucus bill will not be able to survive in some or most US markets, and if so, what evidence led you to that conclusion?

Upon what basis did you determine that the public plan in the Senate HELP Committee bill will not limit enrollees’ choice of provider and will not use managed care tactics or will use them less frequently than the insurance industry does? (Enrollees will, of course, prefer these features, but these features will make it more difficult for the Secretary of the Department of Health and Human Services (HHS), who will be in charge of setting up the “public option,” to break into any given health insurance market.)

The barriers to market entry for a new insurer are very high in the vast majority of American health insurance markets. These barriers would not melt away simply because the potential entrant calls itself a “public option” (or anything else). These barriers apply to insurance companies, co-ops, “public options,” employer coalitions, and all other entities. The most important barriers are the high degree of consolidation that exists in nearly all health insurance markets and the necessity, in the age of managed care, of creating networks of providers (as opposed to simply letting enrollees see any licensed provider).

Here in Minnesota the market has been virtually impenetrable to new entrants for two decades. Numerous observers and industry insiders have said the reason for that is the high level of concentration within the health insurance industry and the need for insurers to create or rent provider networks (see Part II of the addendum to this letter for examples of such statements).

Members of Congress and the CBO cannot assume that entry into all or most of today’s health insurance markets is automatic or even feasible. Proponents of any proposal that relies on that assumption have an obligation to explain and document their assumption. To my knowledge, that has not been done. I realize the failure of the proponents of the “option” and co-ops to document that assumption makes CBO’s job very difficult. Nevertheless, I believe CBO has an obligation to call attention to the barriers the Secretary of HHS and the co-ops will face in trying to create new insurance plans and to attempt to determine whether those barriers can be overcome.

To remain silent about those barriers – to assume them away without notifying the recipients of your letters that that’s what you’ve done – strikes me as a substantial deviation from CBO’s standards.


Kip Sullivan, JD



Part I. Excerpts from five letters from CBO to members of Congress

The new draft [of the Senate HELP Committee bill] also includes provisions regarding a “public plan,” but those provisions did not have a substantial effect on the cost or enrollment projections, largely because the public plan would pay providers of health care at rates comparable to privately negotiated rates – and thus was not projected to have premiums lower than those charged by private insurance plans in the exchanges. (Letter to Sen. Kennedy, July 2, 2009, page 3)

Another significant feature of the insurance exchanges [in HR 3200] is that they would include a public plan that largely pays Medicare-based rates for medical goods and services. CBO estimates that the premiums for …. the public plan would be about 10 percent cheaper than a typical private plan offered in the exchanges. (page 5) …. Enrollment in the public plan would also depend on the number of providers who chose to participate in it. Providers would not be required to participate in the public plan in order to participate in Medicare, and CBO assumed that some providers would elect not to participate in the public plan because its payment rates would be lower, on average, than private rates. Even so, CBO’s judgment is that a substantial number of providers would elect to participate in the public plan, in part because they would expect a plan run by HHS [the Department of Health and Human Services] to attract substantial enrollment. … CBO estimates that roughly one-third of the people obtaining subsidized coverage through the insurance exchanges would be enrolled in the public plan—so enrollment in that plan would be about 9 million or 10 million once the proposal was fully implemented. (page 6) (Letter to Rep. Rangel, July 14, 2009)

… CBO … assumed that [under HR 3200] only firms with 50 or fewer employees would be permitted to buy coverage through the exchanges, and we estimated that about 6 million workers and their dependents would obtain coverage in that way. We also estimated that about one third of those enrollees would choose the public plan…. (Letter to Rep. Camp, July 26, 2009, page 5)

Under [the Senate HELP Committee] proposal, the public plan would… pay negotiated rates to providers of health care…. CBO’s assessment is that premiums for the public plan would typically be roughly comparable to the average premiums of private plans offered in the insurance exchanges…[A] public plan as structured in the introduced bill would probably attract a substantial minority of enrollees (in part because it would include a relatively broad network of providers and would be likely to engage in only limited management of its health care benefits). (Letter to Sen. Enzi, September 10, 2009, pages 5 and 6)

(The proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments.) (Letter to Sen. Baucus, September 26, 2009, page 5)

Part II. Evidence supporting the conclusion that the Minnesota health insurance market is extremely difficult to enter

In 1988, the Minnesota Department of Health reported, “It is becoming increasingly difficult to ‘crack’ the Minnesota health plan market.” The reason, said the Department, was that new entrants found it very difficult to assemble the critical mass of enrollees and providers needed to compete with the largest insurance companies in Minnesota (Minnesota Health Plan Markets, 1987, February 1988, page 18).

Scholars at George Washington University visited the Twin Cities area in 1991 and reached the same conclusion. They reported, “There is now little chance of market entry by a small newcomer plan unless it is sponsored by one of [the] giants” (National Health Forum, Where Does Marketplace Competition in Health Care Take Us? Impressions, Issues, and Unanswered Questions from the NHPF Site Visit to Minneapolis-St. Paul, January 1991, June 1991, page 5). The “giants” referred to in the preceding quote were Blue Cross Blue Shield of Minnesota and four HMOs that dominated the Twin Cities by 1991. Since 1991, the four HMOs have consolidated into two – HealthPartners and Medica.

In 1994 Prudential fled Minnesota’s managed care market even though Prudential enjoyed excellent name recognition, insured 30,000 Minnesotans, and had contracts with 800 primary care physicians and 1,500 specialists. As the Minneapolis Star Tribune put it,

Prudential did not grow large enough or fast enough in the Twin Cities market to maintain a substantial lead, analysts said. The firm was easily overshadowed by heavyweights such as HealthPartners and Medica…. And these bruisers and others like them are merging or forming alliances that kept welterweights like Prudential Plus on the ropes. (Dee DePass, “Prudential to discontinue managed care health plan,” Star Tribune, July 9, 1994, 1D).

Prudential’s own management and other analysts agreed with this explanation.

Five months after Prudential left, American Family Insurance pulled out. (Glenn Howatt, “American Family medical business leaving state,” Minneapolis Star Tribune, December 9, 1994, 1D).

In a 1993 article for the National Journal about the Minnesota market, Julie Kosterlitz quoted Alan Baumgarten, a health policy expert then with the Citizens League:

“In this market, the barriers are very high,” … Baumgarten said. …. New plans … face a catch-22, he said: Unless they have lots of patients, it’s hard to attract doctors and hospitals at competitive prices. But without an extensive network of doctors and hospitals in place, it’s tough to attract patients. (“Monopoly medicine,” July 10, 1993, page 1748)

Other insurers have left Minnesota since 1994. The Minneapolis Star Tribune reported just last week (September 25) that Minnesota’s oldest HMO, FirstPlan of Minnesota, will close its doors at the end of this year for the same reasons Prudential left. Although FirstPlan had been in operation since 1944, and although it insured 18,000 people in a fairly small area (the Duluth-Two Harbors area), it was too small to survive competition with Minnesota’s larger plans. The article went on to report, “FirstPlan isn’t the only one to go under in recent years.” Mayo Health Plan (an HMO run by the Mayo Clinic) and Altru Health Plan in northwestern Minnesota both shut down in 2000. No insurance company, either new or existing, has challenged the dominance of the Big Three in Minnesota – Blue Cross, HealthPartners and Medica – since the mergers that created HealthPartners and Medica in the early 1990s.

Minnesota’s market is not the only highly concentrated health insurance market. High concentration levels characterize the health insurance industry in every state in the country. Eleven other states have more concentrated markets than Minnesota does.

Kip Sullivan, JD is a member of the Steering Committee of the Minnesota Chapter of Physicians for a National Health Program.

Two unacceptable policy flaws

Posted by on Friday, Oct 2, 2009

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.

Panel Finishes Work on Health Bill Amendments

By Robert Pear and Jackie Calmes
The New York Times
October 2, 2009

Under Mr. Baucus’s bill, which would require most Americans to carry health insurance, “the consequence for not maintaining insurance would be an excise tax,” up to $1,900 a year for a family.

By a vote of 22 to 1, the committee adopted an amendment delaying and reducing that penalty. The maximum penalty for a family would start at $200 in 2014 and rise to $800 in 2017.

At the same time, the committee decided to exempt a greater number of people from the requirement to have coverage, known as an individual mandate. Under Mr. Baucus’s bill, people would have been exempt if they had to pay more than 10 percent of their adjusted gross income for the cheapest available insurance plan. The amendment lowers the threshold to 8 percent of income.


What Portion of Premiums Should Insurers Pay Out in Benefits?

By Uwe E. Reinhardt
The New York Times
October 2, 2009

In March 2008, the Council of Affordable Health Insurance took aim at state regulations that would require companies selling health insurance in the non-group market to spend at least 70 percent of collected premiums on direct health benefits — a fraction insurers call their “medical loss ratio,” also known as the “health benefit ratio.” In its March 2008 newsletter, the council wrote:

insurers need to have enough money to pay claims. In most states, individual coverage faces [medical] loss ratios between 55 and 65 percent.

On its Web site, the council describes itself as “a research and advocacy association of health insurance carriers active in the individual and small group market.” In effect, the organization tells us here that unless its member companies are allowed to burn 35 to 45 percent of premiums on marketing, broker commissions, administration, other expenses, and profits, they cannot thrive in the non-group market for health insurance.

It is a remarkable statement.

Two difficult issues that stem from using private health plans as the model for reform include: 1) Can you mandate individuals to buy an insurance plan they can’t afford?, and 2) Can you allow insurers free rein on using premium dollars for their own purposes rather than spending them on health care? Let’s see how the Senate Finance Committee approached these.

1) The concern should be about the affordability of health care, but the problem being addressed is the affordability of health plans. The committee has decided that the tier level plan that would be mandated for purchase would provide benefits with an actuarial value of 70 percent. That means that the individual would be responsible for the 30 percent balance, which can make actual health care unaffordable for many (even with subsidies and spending caps). Making plans more affordable makes health care less affordable (bad policy).

Many would decide that the premiums of these inadequate plans would still be more than they would want to pay. To force these individuals to buy the plans a financial penalty would be assessed on those who fail to do so. The closer the penalty is to the premium, the more likely it is for the individuals to buy the plan. The committee recognized that many of those who could not afford the premium would not be able to afford the penalty either. Thus a decision was made to reduce the penalty for non-compliance. Since the numbers who will decline to purchase insurance is inversely related to the amount of the penalty, many more will elect to pay the penalty and remain uninsured (bad policy).

Recognizing that many truly cannot afford the premium the committee decided to exempt those for whom the premium would exceed a given percentage of their income. It was recognized that, for many, 10 percent of income was still too high of a price for the cheapest plans, so the committee reduced that threshold to 8 percent. Lowering the threshold increases the numbers qualified for the exemption, leaving more individuals uninsured (bad policy).

2) Private health plans spend far too much of the premium on administrative services, leaving much less for spending on actual health care (a uniquely American approach to health care financing). Some of the proposed changes in regulation of the private insurers theoretically should reduce administrative spending, but there is no requirement for the insurers to do so.

Sen. Jay Rockefeller introduced an amendment that would limit insurers’ administrative spending to 15 percent of the premium so that 85 percent would have to be spent on health care. When you think of our horrendous level of health care spending, 15 percent is still an outrageous amount to remove from the health delivery system (bad policy). Yet both Republican and Democratic committee members were so incensed at the prospect that the government might tell the private insurance industry how it would have to spend its money, that Sen. Rockefeller had to withdraw his amendment. (Even Democrats believe that our money held in trust in an insurance risk pool somehow becomes the property of the insurer to do with as they please.)

Making people buy a product that they can’t afford and that wastes their health care dollars is really bad policy. Really, really bad. And there is absolutely no way that the House, or the Senate, or the Joint Conference Committee can change the framework of the private insurance model to make it work for all of us.

We can’t walk away from reform, but we need to dump this turkey and move on with an improved Medicare for all. That’s the change in policy direction that we need. Change we can believe in.

Will the insurance exchange be as effective as FEHBP?

Posted by on Wednesday, Sep 30, 2009

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.

Employees Face Big Hike in Health-Care Costs

By Steve Vogel
The Washington Post
Federal Diary
September 30, 2009

Employees enrolled in the Federal Employees Health Benefits Program will pay an average 8.8 percent more in health-care costs, according to figures released by the Office of Personnel Management.

Blue Cross Blue Shield rates will increase 15 percent for self-only coverage and 12 percent for family coverage, the company said. Enrollees will have to pay more thanks to a wider range of benefits and the company’s wide network of providers, said Jena Estes, vice president of Blue Cross Blue Shield’s federal employee program.

“We have a very strong commitment to managing the costs and managing that trend. You’ll see a real strong focus on coordinating the care and managing the total care,” Estes said.

“This is an enormous increase that erodes federal employees’ standard of living,” Colleen M. Kelley, president of the National Treasury Employees Union, said in a statement.

The American Federation of Government Employees expressed “grave concern” at the news. “FEHBP is getting more and more unaffordable for more people,” said Jacqueline Simon, AFGE public policy director.

Members of Congress are promising reform that will give us choices of coverage, just like they have in the Federal Employees Health Benefits Program (FEHBP). They will do this by establishing an FEHBP-like insurance exchange for the purchase of health plans.

Blue Cross Blue Shield is the most popular program selected by federal employees. They promise to continue with their “very strong commitment to managing the costs.” And how well are they doing? This year’s rate increases are 15 percent for individuals and 12 percent for families.

FEHBP, as an example of an insurance exchange, is proof that a financing system based on private insurance plans is an obsolete model that “is getting more and more unaffordable for more people.” Yet Congress is moving forward with this model.

What about a government financing system? At the Senate Finance markup yesterday, when asked by Sen. Chuck Schumer if Medicare is a good program, Sen. Chuck Grassley replied, “I think that Medicare is part of the social fabric of America.” But then he said that government is not a fair competitor, “it’s a predator.”

Ask federal employees insured by Blue Cross Blue Shield whom they think the predator is. Then ask Medicare beneficiaries.

Medicare should be a part of the social fabric that weaves all of us into its egalitarian patterns, forming an indestructible fabric based on social solidarity.

Are physicians fleeing Medicare?

Posted by on Tuesday, Sep 29, 2009

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.

Utilization Trends Indicate Sustained Beneficiary Access with High and Growing Levels of Service in Some Areas of the Nation

Medicare Physician Services
August 2009

GAO found that Medicare beneficiaries experienced few problems accessing physician services during its period of study. Very small percentages of Medicare beneficiaries–less than 3 percent–reported major difficulties accessing physician services in 2007 and 2008. The proportion of beneficiaries who received physician services and the number of services per beneficiary served increased nationwide from April 2000 to April 2008. Indicators of physician willingness to serve Medicare beneficiaries and to accept Medicare fees as payments in full also rose from 2000 to 2008.

In the debate on health care reform we hear that physicians are leaving the Medicare program because they cannot continue to accept the low fees paid by the government. Not true, according to this new GAO report. Physicians are more willing to serve Medicare beneficiaries and to accept Medicare fees as payments in full.

Some might use this finding to support a public option paying Medicare rates, but it is a much more powerful argument when used in support of a single payer, Medicare for all, national health program. Unlike the private insurance plans, Medicare pays enough, but not too much, though appropriate revisions are a continuing work in progress – as it should be.

By Kip Sullivan, JD

Advocates of a “public option” have been extremely critical of the health insurance cooperatives proposed by Sen. Kent Conrad last June and incorporated in the draft legislation released by Senate Finance Committee Chairman Max Baucus on September 16. “Option” advocates claim the co-ops either will not survive or will be so small they will be unable to force the insurance industry to lower its premiums. This is legitimate criticism.

But “option” advocates should level the same criticism against the “option.” The “option” is no more likely to survive and thrive than the co-op program. A comparison of the legislation that would create “option” programs with the provisions in the Baucus bill that would create co-ops indicates there is only one reason to be less pessimistic about the “option,” namely, the “option” legislation requires that someone (the Secretary of the Department of Health and Human Services) attempt to get the “option” program going. There is no similar requirement for the co-op program.

Review of the “option” and co-op proposals

I have described the “option” programs in the Senate Health, Education, Labor and Pensions (HELP) Committee bill and HR 3200 in previous papers.

The Senate HELP Committee “public option” will be multiple “options,” and these will be run by insurance companies

“Public option” advocates circle their wagons around two useless sentences in HR 3200

HR 3200’s “public option” will not resemble Medicare

As I demonstrated in those papers, there is no meaningful difference between the “options” in the two bills. Both bills use vague language and provide few details. Both authorize the Secretary of Health and Human Services (HHS) to hire corporations to set up insurance programs (“options”) that will sell health insurance to the non-elderly. The “options” will be available for sale to only a small percent of the population, namely, that portion which will be eligible to shop for insurance within one-stop-shopping centers called “exchanges” and which will be eligible for subsidies. Both bills call for an “option” program that will consist of numerous insurance companies, not a uniform national program like Medicare. Neither bill gives the Secretary the tools necessary to guarantee that these “option” insurance companies will survive in most markets, much less become large enough to influence the behavior of the insurers in their areas.

The description of the co-ops in Sen. Baucus’ draft bill, which is entitled America’s Healthy Future Act of 2009, is just as vague as the “option” language in the HELP Committee bill and HR 3200. The co-op program – which the Baucus bill calls the Consumer Operated and Oriented Plan program – is described in a two-page section that begins on page 36. Here are the features of the co-op program described in these two pages:

  • Six billion dollars will be available to co-ops around the country as either loans or grants that will be authorized by the Secretary of HHS. In making these loans and grants, the Secretary is to give high priority to ensuring that at least one co-op begins in each state and the District of Columbia.
  • Co-ops must be non-profit.
  • They cannot be sponsored by government agencies or insurance companies.
  • “Substantially all” of the insurance it sells must be to small employers (as defined by state law, typically employers with 50 or fewer employees) and to individuals.
  • Co-ops may not band together to negotiate with providers, but may band together to negotiate with businesses selling goods and services (such as computers and actuarial services) related to the co-ops’ administrative tasks.

That’s it.

One difference between the co-op and “option” programs

As sparse as this description of the co-op program is, it is no sparser and no vaguer than the language describing the “options” in the HELP Committee bill and HR 3200. In none of the three bills are readers told who will step forward to create the co-ops/”options,” how they will do that, or what the co-ops/”options” will look like. We know only that the Secretary will be making loans (and in the case of the co-ops, grants as well) to unidentified entities which will in turn create co-ops/”options.” Will the people who set up the co-ops/”options” create limited networks of clinics and hospitals, or will they let patients see any provider they want? Will clinics and hospitals agree to work for the co-ops/”options” for less money than they get from the insurance industry? There is no point in asking these and numerous other questions about the logistics of creating the co-op/”option” programs and what they will look like because the bills offer no answers.

There is one difference between the co-op provision in the Baucus bill and the “option” provisions in the HELP Committee bill and HR 3200 that could turn out to be significant. The Baucus bill does not require anyone to attempt to create co-ops, while the HELP bill and HR 3200 instruct the Secretary of HHS to hire corporations to create “option” programs throughout the country. But this difference is probably meaningless. Under all three bills as they are currently written, the task of creating insurance companies from scratch will be so difficult (this will be true whether we call the insuring entities “co-ops” or “options”) that it may not matter whether someone is ordered to attempt it or is merely encouraged to do so. To use a military analogy, if Hamburger Hill cannot be taken, it doesn’t matter whether we put a general in charge of ordering the troops to storm the hill or we simply wait for soldiers to rush up the hill on their own initiative. In either scenario, the hill remains in enemy hands.

The mote in Baucus’ eye

“Option” advocates do not share my conclusion that there is little difference between the Baucus co-ops and the “option.” The leaders of the “option” movement, including Sen. Jay Rockefeller, Howard Dean, and Jacob Hacker, excoriate the co-op proposal and, in the same breath, lionize the “option.” The following statements by Sen. Rockefeller illustrate the “option” movement’s tendency to project onto the co-op proposal the very criticisms they should be leveling at the “option”:

These little tiny entities [referring to the co-ops] that will be starting up in states where there have never been any before — remember, there aren’t any in the South, there aren’t any in the Northeast, there aren’t any in the Mid-Atlantic, there aren’t any in the Southwest. They’re only in the upper Midwest and the Northwest. They’re not a good idea. They’re untested. They are unlicensed. They’re unregulated. They’re unstudied.

Why would we even think about putting them in as a control on this massive insurance industry instead of the public option? (Interview with Ed Schultz on MSNBC, July 30

I feel very strongly about that [the “option”] as a discipline on the private health insurance market. The public health insurance option doesn’t have to make a dime. It doesn’t have to make Wall Street happy or shareholders happy. It just has to sell a product at cost. That will put pressure on private insurance companies to bring down their premiums. … My staff has done extensive research on co-ops and everyone says they can’t do health insurance. The best health care co-op exists in the state of Washington, and both of Washington’s senators are adamantly for a public option. That ought to tell you something. (Interview with Ezra Klein in the Washington Post, September 18

Rockefeller’s criticisms of the co-op model – the co-ops will be very small compared with the insurance companies they will compete with, they are untested, and they have not been studied as a national model – apply with equal force to the “option.” Conversely, Rockefeller’s praise of the “option” programs – they won’t “have to make a dime,” they won’t have to “make Wall Street happy” – is equally applicable to the non-profit co-ops.

Explaining the double standard

What accounts for this strange behavior, this willingness to see no problems in the “option” proposals and to see calamity in the co-op proposal? The explanation lies, at least in part, with the failure of the “option” movement’s leadership to acknowledge that the puny version of the “option” written up in the HELP Committee bill and HR 3200 does not resemble the large version originally proposed by Jacob Hacker.

The most important difference between Hacker’s original model and the version drafted by congressional Democrats is that Hacker solved or at minimum greatly reduced the start-up problem by pre-enrolling tens of millions of Americans in the “option” before it opened for business.

If “option” advocates had acknowledged this important difference and had discussed it publicly, obvious questions would have arisen, such as, If the “option” can’t be guaranteed a large customer base on day one as Hacker originally proposed, where will the customers come from, who will recruit them, and at what cost? But the very significant differences between Hacker’s original version of the “option” and the Democrats’ version were never acknowledged by the “option” movement’s leaders. In fact, leaders of the movement have aggravated their failure to discuss the watered down version of the “option” by routinely comparing that version to the highly successful Medicare program. This combination of tactics – the failure to acknowledge how weak the Democrats’ “option” is compared with Hacker’s original version, and the constant comparison to Medicare – induced sloppy thinking by leading “option” advocates. It induced them to project onto the co-op model the doubts they should be having about the “option.” It facilitated groupthink.

Rockefeller, Dean, Hacker and their colleagues in the “option” movement are doing a great job of leveling legitimate criticism against the co-op proposal. Their criticisms are aimed squarely at the question of how the co-ops will get started and whether they will ever grow large enough to take substantial market share away from the insurance industry. But they adamantly refuse to level the same criticism at the “option.” They should tell us why. I doubt they will do that. I doubt it because there is no rational explanation for this double standard. And no one likes to admit to behaving irrationally.

Kip Sullivan is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. He is the author of The Health Care Mess: How We Got Into It and How We’ll Get Out of It (AuthorHouse, 2006).

Does the U.S. have the best health care?

Posted by on Friday, Sep 25, 2009

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

How Does the Quality of U.S. Health Care Compare Internationally?

By Elizabeth Docteur and Robert A. Berenson
Urban Institute
August 2009

This brief brings together available evidence on how quality of care in the United States compares to that of other countries and comments on the implications of the evidence for the health reform debate. By exploring how the quality of our care compares internationally, we can address the underlying attitudes and concerns that people have about health reform.

While the evidence base is incomplete and suffers from other limitations, it does not provide support for the oft-repeated claim that the “U.S. health care is the best in the world.” In fact, there is no hard evidence that identifies particular areas in which U.S. health care quality is truly exceptional.

Instead, the picture that emerges from the information available on technical quality and related aspects of health system performance is a mixed bag, with the United States doing relatively well in some areas — such as cancer care — and less well in others — such as mortality from conditions amenable to prevention and treatment. Many Americans would be surprised by the findings from studies showing that U.S. health care is not clearly superior to that received by Canadians, and that in some respects Canadian care has been shown to be of higher quality.

Like other countries, the United States has been found to have both strengths and weaknesses in terms of the quality of care available, and the quality of care the population receives. The main ways in which the United States differs from other developed countries are in the very high costs of its health care and the share of its population that is uninsured.

This paper (14 pages) brings together numerous credible studies on the quality of health care in the United States, as compared with other nations. Anyone reading this message already knows that the United States is paying enough for exceptional care for everyone, but many of us are not receiving it. On average, our health care is mediocre.

This resource can be useful in informing those who would reject efforts at reform because we already have “the best health care in the world.” It would be a shame if we continued to waste funds to preserve a system that provides high quality care for a few when an improved financing system would enable us to improve the allocation of those funds so that we could provide high quality care for everyone.

Where are the price controls?

Posted by on Thursday, Sep 24, 2009

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.

Mandate minus price controls may increase healthcare costs

By Noam N. Levey and James Oliphant
Los Angeles Times
September 24, 2009

In the drive to bring health coverage to almost every American, lawmakers have largely rejected restrictions on how much insurers can charge, sparking fears that consumers will continue to face the skyrocketing premium increases of recent years.

The legislators’ reluctance to control premium costs comes despite the fact that they intend to require virtually all Americans to get health insurance, an unprecedented mandate — long sought by insurance companies — that would mark the first time the federal government has compelled consumers to buy a single industry’s product, effectively creating a captive market.

“We are about to force at least 30 million people into an insurance market where the sharks are circling,” said California Lt. Gov. John Garamendi, a Democrat who served as the state’s insurance commissioner for eight years. “Without effective protections, they will be eaten alive.”

But Democrats have shied away from regulating premiums in the face of charges from business leaders and Republicans that controlling what insurers charge would be meddling too much in the private sector.

As a result, while states have long supervised what companies charge for mandated automobile and homeowners insurance, the idea has been largely banished from the healthcare debate.

“That would be a very substantial additional intervention in the marketplace,” said Sen. Jeff Bingaman (D-N.M.), a member of a bipartisan group of lawmakers who worked with Senate Finance Committee Chairman Max Baucus (D-Mont.) on his healthcare bill. “I just don’t think the support would be there for that kind of a change.”

Nor are lawmakers seriously considering any proposals to regulate what doctors, hospitals, drug makers and other healthcare providers charge — a strategy used by several European countries to control healthcare spending.

But even the insurance industry’s leading representative in Washington acknowledged that those reforms may not slow the rising cost of premiums soon.

“You can’t restrain premiums unless you restrain medical costs,” said Karen Ignagni, president of America’s Health Insurance Plans, on the industry’s view of the problem. “So far, members of Congress have been allergic to that.”,0,2139648,full.story

“It’s the Prices,Stupid:”

One of the more unique features of the health care system in the United States is that we spend far more on care even though our use of health care services is comparable to other nations. The difference is in the prices. Other nations use government regulation to improve pricing, but the United States persists in refusing to intervene in market pricing.

Does the current model of reform under consideration by Congress do anything to alleviate the upward pressure on prices? They propose an exchange of competing private plans to control prices, while explicitly excluding a public plan with “administered pricing.” So the answer is “no.” Market competition of private plans has had no impact on controlling health care spending in the past, and there is no private sector mechanism that would have any beneficial impact in the future.

Think of the regulatory changes proposed. Congress would require insurers to accept those who they currently exclude because of preexisting disorders. They would place a limit on out-of-pocket expenses, requiring the balance to be paid by the insurers. They would remove the lifetime cap on coverage, requiring insurers to pick up the costs of those with very expensive medical problems. These and other measures would result in significant increases in private health insurance premiums, making the plans even less affordable.

Since insurers would be required to compete with each other, they would have to continue to pay our comparatively high prices if they are to attract enough physicians and hospitals to guarantee adequate provider networks. That’s the way the market works. Thus the current model of reform is a guarantee that we will continue to see unaffordable pricing throughout our health care system.

In a remarkable moment of candor, the insurance industry’s chief lobbyist, AHIP’s Karen Ignagni, states that Congress has been “allergic” to restraining medical costs. Since the private insurance industry has been in charge for the past several decades, obviously they are hopelessly allergic as well – incurably so.

Do we want to be a captive market of the private insurance industry? Or do we want to be captives of a public insurance program like Medicare? Just ask our seniors what they thought on turning 65.

Insurance and Equity in Primary Care and Specialist Office Visits

Posted by on Wednesday, Sep 23, 2009

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.

Universal Health Insurance and Equity in Primary Care and Specialist Office Visits: A Population-Based Study

By Richard H. Glazier, MD, MPH, Mohammad M. Agha, PhD, Rahim Moineddin, PhD and Lyn M. Sibley, PhD
Annals of Family Medicine
September/October 2009

Universal coverage of physician services should serve to reduce socioeconomic disparities in care, but the degree to which a reduction occurs is unclear. We examined equity in use of physician services in Ontario, Canada, after controlling for health status using both self-reported and diagnosis-based measures.

CONCLUSIONS After adjusting for health status, we found equity in contact with primary care for educational attainment but inequity in specialist contact, frequent visits, and bypassing primary care. In this setting, universal health insurance appears to be successful in achieving income equity in physician visits. This strategy alone does not eliminate education-related gradients in specialist care.

Much of the discussion on health care reform centers around financing reform, with goals of achieving universality and affordability. Effective reform that would actually accomplish that (i.e., single payer) would be a crucial first step toward the even more important goal of reducing the socioeconomic disparities in care. The record on disparities in the United States is shameful.

This study looks at inequities in a country that has already established an equitable, universal financing system for health care: Canada. Three important conclusions: 1) Physician visits for both primary care and specialists were equitable regardless of the income level of the patient, 2) Physician visits for primary care were equitable regardless of the level of the educational achievement of the patient, and 3) Patients with a higher level of educational achievement had greater contact with specialists, often bypassing primary care.

Think of how Canada must struggle with this policy issue. They must determine whether more educated individuals are obtaining an excessive quantity of specialized services, or if those with less education are being deprived of specialized services they should have. Then they have to decide on policies that would improve access or reduce waste, as appropriate.

Compare that to the policy issues we face in the United States. We have a financing system that creates personal financial hardships, results in physical suffering and sometimes even death, and wastes hundreds of billions of dollars that could be redirected to paying for health care services that people need and are not receiving. Canada has passed that hurdle long ago.

Wouldn’t it be nice if we could also be working on the minutiae of health policy instead of the most fundamental changes that we desperately need? Unfortunately, Congress, in moving forward with tweaking the private insurance industry, has decided to work on the minutiae and ignore the basics. Tweaks can never fix a fundamentally flawed financing structure that must first be replaced before it can be tweaked.

Lessons from California on the insurance mandate

Posted by on Tuesday, Sep 22, 2009

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.

Insurance Mandates Don’t Work

By Jamie Court
The Washington Post
September 21, 2009

A cornerstone of President Obama’s health-care plan is, as he said in his speech to Congress, “individuals will be required to carry basic insurance, just like most states require you to carry auto insurance.” But the tarnished history of such laws shows that making insurance mandatory, and even making it more affordable, does not compel the uninsured to buy it.

In California, the car capital of America, the injustice of mandatory insurance laws sparked one of the great voter revolts of modern history — and that still didn’t solve the uninsured motorist problem. In 1988, the people of California passed Proposition 103, which required auto insurance companies to seek permission through an elected insurance commissioner for premium increases. It created an intervener system that allows members of the public to challenge unnecessary premium hikes. The law also made auto insurance pricing fairer in various ways, including banning ZIP-code based auto insurance.

The Consumer Federation of American reported in 2008 that Proposition 103 had saved Californians $62 billion on their auto insurance. The market is competitive, prices are down, and the number of uninsured motorists has decreased some from pre-Prop 103 levels. Yet in the most competitive auto insurance market in the nation, the uninsured motorist rate is still 18 percent, among the highest. That’s true even after California took more punitive measures against uninsured motorists. Stiffer fines, the impounding of cars and the loss of legal rights for uninsured motorist have not significantly impacted the uninsured motorist rate.

The health care reform proposal before Congress would increase regulatory oversight of the private insurers, mandate individuals to purchase their plans, and penalize those who fail to do so. The experience with auto insurance in California should provide us with at least a hint as to whether that is a rational response to the health care crisis.

True, auto insurance and health insurance are not the same thing, but the mandate to purchase either type of insurance applies to the same individuals. Why should we expect a change in behavior merely because the unaffordable insurance product is designed to protect the individual’s health? Even with the proposed subsidies, a very large number of individuals will not have enough funds to pay the premiums and will remain uninsured.

California’s mandate to purchase more highly regulated auto insurance was a success, at least according to the incrementalists. The insurance market is more competitive, the number of uninsured has decreased, and Californians saved $62 billion on their premiums. The fact that 18 percent of California motorists are still uninsured is merely a technical parameter that we’ll work on later.

Come on! We can get it right! We can establish a separate health care risk pool and fund it equitably through the tax system based on ability to pay, and we can provide automatic enrollment for everyone.

We must achieve reform. The last thing that we want to do is to defeat the current proposal and then walk away with nothing. But it is even more imperative for us to reject the current proposal and immediately move forward with reform that will provide affordable care for all of us.

Frankly, I’m sick and tired of listening to those who say that PNHP needs to get on board and support the public option, which is really saying that we need to support an individual mandate to purchase unaffordable plans. Those of you who were duped into supporting this model that can’t possibly work need to abandon that ship and get on board with us and our colleagues who will accept nothing less than health care justice for all.

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

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