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 AMA Health Insurer Report Card Finds Need For More Accuracy
June 14, 2010
The American Medical Association (AMA) today announced that one in five medical claims are processed inaccurately by health insurers, according to the AMA’s third annual check-up of the nation’s commercial health insurers and the systems they use to manage and pay claims. This was the key finding of the AMA’s 2010 National Health Insurer Report Card.
The AMA estimates that $777.6 million in unnecessary administrative cost could be saved if the health insurance industry improves claims processing accuracy by one percent. Increasing the health insurance industry’s accuracy rating to 100 percent would save up to $15.5 billion annually that could be better used to enhance patient care and help reduce overall health care costs.
National Health Insurer Report Card
The private insurance industry is selling us administrative services at an outrageously high price. This report card confirms that we certainly are not receiving value. Not only are we paying them too much, but they also continue to do a lousy job at their most important function – claims processing. Their error rate results in an additional $15 billion annually in administrative waste that could be used for patient care, according to this AMA report.
This year the AMA did not report Medicare’s error rate, but, in the 2008 report card, Medicare’s compliance rate was vastly superior to all of the private insurers – over 98 Percent.
But the greatest argument for changing to an improved Medicare program that covers everyone is not the reduction in waste caused by private insurer claims processing errors which would save about $15 billion, rather it is the replacement of our dysfunctional, fragmented, private/public financing system with a single payer system which would save us about $400 billion annually.
Even if the private insurers could match the claims performance of Medicare, that wouldn’t fix our problems. It’s the financing model that needs to be changed. The $4 trillion that we could recover over the next decade would pay for the needed care for the uninsured and the growing numbers of underinsured. We would have solved our health care financing problems, and that would allow us to direct more of our attention and effort to much needed health system reform.
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 premium hikes hit small business hard
By John Gonzales
San Francisco Chronicle
June 12, 2010
California small-business owners expected to be early beneficiaries of health care reform, with billions of dollars in federal tax relief becoming available this month to help them purchase medical coverage for their employees.
The credit is worth up to 35 percent of a small business’ premium costs.
But many said the tax credits granted under the legislation have run up against a new hurdle: a spate of rate increases by insurance companies, including 58 to 75 percent hikes levied recently by Blue Shield of California.
The company offered other coverage without the high rate increase, but included similar deductibles and added co-pays of about 20 percent. The Blue Shield hikes are in line with increases from all major insurers on small business health savings plans, said (Tom Epstein, vice president of Public Affairs for Blue Shield of California).
“Anthem Blue Cross offered this first,” he said. “Health Net followed us. Aetna and United offered products like this. Every one of these insurers had very substantial rate increases.”
“That money is going right back to the insurance companies,” said Brad Wing, co-owner of the San Francisco Advertiser, who received notice of his 58.3 percent increase in April.
“Normally, rates go up 10 to 15 percent and you can swallow it,” he said. “But at 58 percent, there’s just no way.”
The Patient Protection and Affordable Care Act (PPACA) is supposed to make health care affordable, primarily by subsidizing private insurance plans. It begins immediately by offering small businesses a credit worth up to 35 percent of premium costs. With Blue Shield of California increasing rates by as much as 58 to 75 percent, how is the small business owner going to find relief when the insurer takes the full subsidy and charges what amounts to another 23 to 40 percent surcharge?
Several individuals who no longer want to hear our single payer message tell us that PPACA is now the law of the land, that private plans are here to stay, and that we need to quit attacking the private insurers and get on with making PPACA work.
When non-profit Blue Shield of California is the best the industry has to offer, how can we possibly ever make that work? We can’t. We need to quit supporting PPACA and get on with making an improved Medicare for all work!
By Chris Gray
If President Obama and the Democrats in Congress won’t get behind single payer, perhaps there’s a different, more Canadian-style approach to getting universal health care: get a system designed, passed, signed into law and set up in just one state, and the rest will follow. The health care savings for employers in one state could force the other states to fall like dominoes and make the switch.
“I think you always like to push at the national level; that’s where our heart is,” said Dr. Walter Tsou, a PNHP leader in Philadelphia. “[But] We saw at the last debate how hard it is to even get considered. That’s led us to consider a less encompassing approach, and that’s a state-by-state approach.”
Canada’s single-payer system began in a single province, Saskatchewan, and then went national as the other provinces soon saw the fiscal benefit that this approach had to health care delivery. In the United States, California has passed single-payer bills twice, only to have Gov. Arnold Schwarzenegger veto the bills both times.
Minnesota has a strong grassroots campaign that has won the support of that state’s leading Democratic candidates for governor, and other states such as Vermont and Hawaii are moving through economic studies that could crystallize the superiority of a single-payer health care system in the eyes of the American public.
Tsou said the current reforms that passed through Congress will fail in a few short years as the plan proves unaffordable. “It behooves us to find a viable state single-payer system when this system collapses,” he said.
Insurance industry campaigns attack health reform as taking away patients’ choice — of health insurance companies. But Tsou’s associate on the Health Care for All Pennsylvania campaign, executive director Chuck Pennacchio, said single payer can be pitched as the system that is truly “consumer-driven,” in that it opens up the system for health care consumers to have a real choice of doctors and medical care. Under the current system, of course, patients often only have a choice of health insurance companies, if they have any choice or any health care access at all.
A single-payer health care bill has gotten traction in Pennsylvania in a way that other states have not, Pennacchio said: Not only does single payer have unanimous support of the Democrats, but at least eight Republicans like it, too.
“What sets Pennsylvania apart from other states is that we’ve been able to get Republican buy-in,” Pennacchio said. “Republican participation is important.”
Pennsylvania House Bill 1660 currently has the support of seven Republicans and all 104 Democrats, while its counterpart in the upper house, Senate Bill 400, has won over one Republican and 20 Democrats. Grassroots activists pushed a state single-payer resolution at a meeting of the Pennsylvania Democratic State Committee, where it received the Dems’ unanimous support.
If the bill passes the Legislature, term-limited Gov. Ed Rendell, a Democrat, has promised to sign the Pennsylvania single-payer measure into law.
Health Care for All Pennsylvania has even more support for an economic impact study. A bipartisan resolution supported by 17 Republicans and 20 Democrats would authorize health care researchers at the Lewin Group to outline the costs, savings and economic benefits of single payer. The study needs to pass just one of two houses of the Legislature and would take about five or six weeks to complete.
But even with such strong support for the study, Pennacchio only puts its chance of passage at 50-50. The Legislature still is working hard to get a budget past for the next biennium, and in election year, he’s not willing to count his chickens before they’re hatched.
The chief proponent of single payer in the U.S. Senate is Vermont’s independent Sen. Bernie Sanders. He successfully amended the new federal health insurance law to allow for states to experiment with single-payer systems, but that part of the health bill won’t take effect until 2017.
This could pose a serious obstacle for state single-payer bills. Even if a state is successful at establishing single-payer system, the state law could prove null and void. Such states would need to seek a waiver or the law would have to be changed for the amendment to take effect in say, 2014, when the bulk of the federal legislation is enacted. Sanders has said he is working on a solution to this problem, along with Sen. Ron Wyden, D-Ore.
On the House side, longtime single-payer supporter Dennis Kucinich, D-Ohio, is also working to change this amendment to let states pursue single payer sooner. Activists in several states have been trying to coordinate with his office.
“States will pass this thing — then they’ll go for the waiver,” said Don Bechler, an activist with Single Payer Now, a California group. Bechler said it would be easier to change the law or get the waiver if a state had already made it law. This could convince cautious politicians in Washington to give it support.
Vermont pressed ahead with health care reform, passing a bill on May 12 that will study three health system proposals for the state, including single payer. The bill does not require that any of the three systems actually get implemented, but the Legislature will be given a recommendation.
Former PNHP president Dr. Deb Richter said her current goal is to make sure that the single-payer study is conducted by someone who understands the cost savings of single payer and can give the system a fair shake.
Richter wants the state to hire William Hsiao, the Harvard economist who designed the highly effective single-payer system in Taiwan. The odds are in her favor: Hsiao has testified before the Vermont legislative committees, and he was brought in by Senate Pro Tempore Peter Shulman, who is a leading candidate for governor.
Some of the loudest rhetoric about single payer this fall may come out of Minnesota. The governor’s race is marked by contrast.
On one side, the Minnesota Universal Health Care Coalition has gotten the two leading DFL candidates for governor to endorse the Minnesota Health Act, which provides for a health care system that will cover all Minnesotans.
On the other side, he current governor, Tim Pawlenty, a Republican, is vocally anti-single-payer. In a speech at the state Republican convention that nominated his possible replacement, Pawlenty said the Democratic-Farmer-Labor Party’s noted support of a government-managed universal health care system would ensure its defeat in the fall.
The Republican nominee, Tom Emmer, a state representative, has introduced the Minnesota Health Care Freedom Act, which would ban single-payer health care and perpetuate the for-profit private insurance system. Emmer is a member of the American Legislative Exchange Council, the right-wing, industry-financed national legislative group that has proposed state constitutional amendments that would prohibit single-payer systems in states such as Arizona.
Emmer has even gone so far as to speak out in support of the freedom to stick with private health insurance on the news commentary show “Fox & Friends.”
But PNHP activist Dr. Susan Hasti thinks any attempt for politicians to try to make a campaign issue out of single payer support will backfire.
“I don’t think it’s going to be a negative,” Hasti said. “We can’t tinker with the system; we have to change it.”
Hasti said factors such as the fear of losing health care and the ever-escalating rise in health care premiums have built strong grassroots support for the universal coverage bill.
The sponsors of their legislation have gone up from 62 in 2008 to 74 this year. The bill must pass through a number of committees, and Hasti said it could probably not become law until at least 2012, even with a favorable governor.
Minnesota activists have worked to build the movement, keeping the bill alive until it might be signed into law. As it passed through each committee, this Minnesota coalition has rallied constituents in committee member districts.
“We know we have an uphill battle, but we have made progress,” Hasti said.
The Minnesota legislation was initially modeled after a bill that has passed California’s Legislature twice: The California Universal Health Care Act, now referred to as Senate Bill 810.
The proposal by state Sen. Mark Leno, D-San Francisco, authorizes $1 million to establish a commission that would decide how to pay for the system. Voters would then have to approve funding for it through a state ballot initiative.
The San Francisco Chronicle reports, “The proposal, which is estimated to cost $200 billion, would eliminate private health insurance in California and replace it with a state-run system, which would be provided to every California resident. That system would be overseen by a new state agency that also would ultimately decide what services the coverage would entail.”
But activist Don Bechler said the proposal would save $30 billion compared to what Californians currently spend on health care. From the savings, California would spend $22 billion to cover the uninsured and offer more comprehensive care. In the end, the California economy would spend $8 billion less on health care while providing a higher quality and more equitable level of care.
Single payer has passed twice in California; The current version, SB 810, passed through the state senate in January and the bill awaits a third vote from the General Assembly. Gov. Schwarzenegger vetoed both of the first two versions of the bill.
“He’ll probably veto it again,” said activist Don Bechler. “We keep coming back and keep building the movement. Next year, we’ll get a governor who can sign it.”
That governor is likely to be Jerry Brown, a former governor, mayor of Oakland and the current attorney general. Brown has wholeheartedly endorsed single payer in the past, but Bechler said he was now on the fence, citing cost concerns.
The costs of single payer have risen in California since the legislation was first estimated several years ago, but so has all health care. Bechler said his state, like others, needs a fresh economic analysis of single payer to give more weight to the argument that a government-managed system would save money by cutting administrative costs.
Bechler said the grassroots movement has grown, anticipating Brown’s eventual approval of single payer for all Californians. The movement is strongest in the Bay Area of Northern California, so Single Payer Now recently added a new director in Los Angeles. PNHP has also recently hired an executive director for its California chapter.
In some ways, the bill has been easy to pass, since legislators assume Schwarzenegger will just veto it. If bill gets passed next year, California legislators will have to stick behind something that may actually become law. Bechler said this concerns him, but he is not too worried.
“A majority of the Democrats are co-authors of the bill,” he said. “It’s on the Democratic state platform.”
Meanwhile, far off in the middle of the Pacific Ocean, America’s 50th state, Hawaii, could quietly become the first state to have single payer. Hawaii has been at the forefront of progressive health care for decades. Its one-of-a-kind law, the Prepaid Health Care Act, requires that all employers offer health care benefits to employees working more than 20 hours a week.
Thanks to that law, Hawaii already has one of the lowest uninsured rates in the country, but it still doesn’t cover everyone. Not everyone works 20 hours, for instance. And the increased cost of private health insurance has strained employers in Hawaii just like everywhere else.
Last July, the Hawaii Legislature created the Hawaii Health Authority, which has been ordered to study and implement a system that will provide health care to all Hawaiians. The Legislature had to override the veto of Gov. Linda Lingle, who has continued her defiance of the legislation by refusing to nominate members for the authority.
Dr. Stephen Kemble said that supporters will just wait until she leaves office. Her successor is likely to be a Democrat, and at least one of the candidates, former U.S. Rep. Neil Abercrombie, is an ardent single-payer supporter.
HB 1504, which created the Hawaii Health Authority, makes no mention of the term “single payer” anywhere, but Kemble said that’s what he expects to come out of it.
“My best guess for a politically feasible scenario would be that Hawaii would create a single-payer plan” with a nonprofit administrator, wrote Kemble in an e-mail. “That is my dream anyhow.”
House Bill 1273, sponsored by Rep. John Kefalas, was withdrawn in April 2009. Kefalas pulled the measure after it was made apparent that it lacked the support of Democratic Gov. Bill Ritter. Bill had 18 co-sponsors as of February 2009 and passage was hoped by 2011.
The bill was unfortunately derailed after fierce opposition from Golden, Colo.-based Independence Institute and their stealth blog, “Patient Power Now.”
The legislation would have created a 23-member authority charged with making recommendations about how to implement a single-payer health care system to the Legislature and the governor.
“SB 120 which would have provided Delaware citizens and out-of-state residents working at least 20 hours a week a government-run single payer health care system, sadly did not pass.” (Progressive States Network)
The Health Care for All Illinois Act passed favorably out of committee 8-4 in 2008. Rep. Mary Flowers, D-Chicago, has introduced it again, but the bill didn’t make it out of committee this session. Flowers has promised to re-introduce the bill in 2011, naming it in honor of the late PNHP senior research associate Nicholas Skala.
“We have bills in both the Maryland Senate (SB-682) and House of Delegates (HB-767),” Dr. Eric Naumburg of PNHP told Op-Ed News. “The Senate Bill has 12 co-sponsors and the House Bill 38; that’s approximately 1/4 of each chamber. So far we have only Democrats on board. The leadership has not taken serious notice yet but there are some good signs and we are really just getting started. Also, between the state’s budget problems, the upcoming election and the health insurance reform mess in Washington, we hear lots of excuses for why not this year.
“The reality is that our bill, which is modeled after the one that has passed twice in California, has only general language about funding. We are raising money for an economic impact study on the effects of single payer. Key areas would include the effect on the state budget and economic growth within Maryland. This will help us with the best ways to fund the system. We continue to build our grassroots movement. This summer we are planning a concerted effort to talk to as many legislators as possible.”
“Mass-Care was launched in 1995 as a coalition of organizations sharing a deep concern about the inequities of our health care system. We now act as the grassroots organizing umbrella for more than 100 groups in Massachusetts, representing over 500,000 residents in the state fighting to make health care a right. Massachusetts HB 2127 has active opposition from the Massachusetts Medical Society, but HB 2127 does have 11 Senate sponsors, 38 sponsors in state House.” (from the Mass-Care, The Massachusetts Campaign for Single-Payer Health Care, website).
Missouri Universal Health Assurance Act or SB 18:
“The Missouri universal health assurance program is hereby created for the purpose of providing a single, publicly financed statewide program to provide comprehensive necessary health care services, including preventive screening, for all residents of this state. This program shall have as its goals: (1) Timely access to health services of the highest quality for every resident of the state so that all may benefit; (2) The provision of adequate funding for health care; (3) Lower health care spending through streamlined administration, a single bill, and uniform payments.”
SB 18 only orders a study and has only one sponsor, Joan Bray D-St. Louis.
N.H. house passed HCR 2, which endorsed HR 676, the national single-payer bill. HCR 2 died in the state Senate.
The New Mexico Health Security Act, HB 339 & SB 281, has been introduced. Current Gov. Bill Richardson (D) does not support single-payer, but State Senator Jerry Ortiz y Pino, a longtime supporter of single-payer health care, is running for Lieutenant Governor. The Health Security Plan is a staged, three-year plan that begins with financing studies and completes with actual implementation of universal coverage.
New York has a state single payer bill in each house, A2356 and S2370. A study ordered by former Gov. Eliot Spitzer was conducted by the Urban Institute and showed significant cost advantages in a single-payer system. Gov. David Paterson has supported single-payer health care but not campaigned for it. The bills also have 76 sponsors, and in the General Assembly, A2356 has had more sponsors than votes needed to pass the legislation. The Senate, until recently dominated by Republicans, has been cooler to its proposal. A resolution passed the lower house, in 2008 which endorsed the federal single-payer bill, HR 676. The Senate, now in the hands of Democrats, similarly endorsed HR 676 in 2009.
Candidate plans to introduce single-payer legislation if elected.
Health Care for All Ohioans Act — HB 159, with 17 co-sponsors.
SB 51 “Healthy Wisconsin” passed in 2007 by Democratic state Senate; failed in general assembly. Governor only openly supported expansion of Medicaid system. Attacked by outside groups such as arch-conservative Wall Street PAC “Club for Growth” and WSJ editorial page. No mention of reintroduced bill in 2009-10 term.
Washington Health Security Trust Bill was first introduced in the 2007 session, with 23 co-sponsors. The legislation never made it out of committee. The bill was apparently re-introduced in 2009 session, with fewer sponsors, but there was very little action as state maneuvers severe budget crisis.
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.
Bringing Comparison Shopping to the Doctor’s Office
By Claire Cain Miller
The New York Times
June 10, 2010
The lack of price information in health care has been a big driver of ballooning health care costs, analysts say, because costs are opaque to patients and heavily subsidized by employers. The patient has no incentive or responsibility to keep costs down. But many employers are switching to health plans that require patients to pay more out of their own pockets.
A start-up financed by prominent venture capitalists and the Cleveland Clinic, Castlight Health, aims to change that by building a search engine for health care prices. Patients using Castlight could search for doctors that offer a service nearby and find out how much they will charge, depending on their insurance coverage.
Castlight has received money from investment firms including Venrock, Maverick Capital, Oak Investment Partners and from an unlikely source, the Cleveland Clinic.
Ideally, transparency in health care pricing could lead to higher-quality, lower-cost health care, and more patient involvement in buying health care, said Delos Cosgrove, chief executive of the Cleveland Clinic. “Because they begin to realize that a trip to the doctor is not free, they might stay home and take the aspirin instead of getting the neurologic work-up.”
Castlight sells its service to employers and charges by employee per month.
Safeway, the grocery chain, with 200,000 employees, has signed on as its first customer.
Safeway has been experimenting with ways to cut health costs, including by using Castlight. “I’m a big believer in trying to create market forces wherever you can and then let personal accountability really drive the result,” said Steven A. Burd, the chief executive of Safeway.
Castlight is working on a mobile version of the service to introduce next year so people can access the information from the exam table.
Price transparency could significantly change the way health care is bought in the United States. The notion “seems ridiculously simple and obvious, and in any other industry, you would say, ‘Duh, we already have that.’ But in health care, it’s revolutionary,” said Alan M. Garber, a professor of medicine and the director of the center for health policy at Stanford, as well as an investor in Castlight.
Our highly dysfunctional, fragmented health care financing system has opened innumerable opportunities for entrepreneurs to glom onto funds that should be going for health care, especially by diverting them to profoundly wasteful administrative services. One of the latest iterations is Castlight, an entity that is capitalizing on the perverse notion, promoted by the right-wing element in the policy community, that we can control health care costs by making patients more sensitive to prices.
The fact that there is much more money to be made in wasteful administrative services is supported by the faith that the venture capitalists have expressed in Castlight. They have put up the financing because they believe that creating a price shoppers portal can suck up more funds out of our health care system. Our entrepreneurs are there to be sure that the United States remains the world’s leader in blowing up health care budgets through administrative waste.
Castlight’s model begins with the flawed theory that price sensitivity will control health care costs. About four-fifths of health care is provided to the one-fifth of individuals who have the greatest health care needs. Price awareness by these individuals does not influence spending much since most of their care is provided after their deductibles and maximums are met. For the other one-fifth of individuals, only a small portion of their care would be amenable to price shopping, and the discounts that they would receive would have a negligible impact on our total national health expenditures.
Of more concern, requiring out-of-pocket spending as a consequence of accessing health care has been proven to cause individuals to forgo beneficial health care services. A policy that disincentivizes beneficial care should be rejected, especially when it is a policy that wouldn’t help much in our efforts to control spending anyway.
Prices are important. The two most significant reasons that we spend much more on health care in the United States than do other nations are our profound administrative waste, and our prices that are much higher than in all other countries. Did other nations price their health care more appropriately by exposing patients to prices? Of course not. They did it by using the monopsonistic power of their governments in setting prices that were fair for patients and yet adequate to ensure that the health care delivery system receives the funds it needs to function. For controlling administrative costs, they simply adopted sane methods of financing health care.
Perhaps the greatest concern over the Castlight start-up involves ethical issues. Let’s look at Delos Cosgrove, Steven Burd, and Alan Garber.
Although Cleveland Clinic is often touted as an efficient health delivery model, it seems appropriate to criticize it for investing in an entity that is going to profit by providing more excessive administrative services that would expand application of the flawed policy of shifting more costs to patients in need. Of particular concern is the position of their chief executive, Delos Cosgrove, who glibly suggests that price sensitivity could cause a patient to decline a neurological work-up and to go home and take an aspirin instead. Such an important decision should hardly be made on the basis of price shopping.
Steven Burd, chief executive of Safeway, has a track record of touting savings through “personal accountability.” He glosses over the fact that his savings resulted from switching his employees to high-deductible health plans. Now he is becoming a customer of Castlight thereby solidifying the policy that his employees may not receive care that they should have because they have a price barrier between them and health care.
But what about the ethics of Alan Garber, a professor of medicine and the director of the center for health policy at Stanford? Although very knowledgeable about the impacts of health policy, he is personally investing in a company that wastes more resources on excess administration and that he says is “revolutionary” in bringing transparency in support of the inappropriate price barriers that are being erected on the path to health care. Is that an ethical compromise for a health policy expert? As he says, “Duh.”
The following remarks were presented at a workshop at a PNHP meeting in Chicago on May 22. Comments and suggestions are invited.
Rather than starting with a tired debate over whether the new health law – the Patient Protection and Affordable Care Act, or PPACA – is a step in the right or wrong direction, let’s consider the question at the heart of that debate: Will the reform bill result in the health insurance industry becoming stronger or more vulnerable?
The short answer to that question is that both scenarios are possible. We can then list ways in which we believe the industry may benefit and ways in which they may become more vulnerable.
|Make them stronger?||More vulnerable?|
|The millions of new customers the mandate gives them||Anger over the mandate|
|The $358 billion taxpayer subsidy for premiums||The loss of $136 billion in Medicare Advantage subsidies|
|The ‘Citizens United v. FEC’ Supreme Court decision, good for corporate power||Make common cause with the Fair Elections Now movement and others|
|The attempts at insurance regulation in PPACA will surely fail||PPACA regulations will shed light on their secrets and expose them to risk|
|No real cost controls in bill||Medical inflation will cause Congress and the people to turn on the insurance industry to save money|
|Bill will incentivize more consolidation in the industry||As the behemoths grow, we will see them as an “insurance bubble”|
|They will game the system as they have in the past||There are lots of uncertainties, all of which make investors nervous|
From this perspective it doesn’t matter where you think the balance lies between them becoming stronger or more vulnerable. All the arguments for them becoming stronger are therefore arguments why we must keep working and growing our movement for single-payer national health insurance – an improved and expanded Medicare for All. All the arguments for vulnerability open up avenues for attack.
There are a variety of ways to make our case against the big health insurers. By criticizing them directly – by drawing attention to inherent problems they cause our health care system and all of us – we aim to weaken them. In their Securities and Exchange Commission filings (Form 10-K), the insurers list bad publicity as a risk to their future stock price, and they take this issue very seriously.
Here, then, are some suggested avenues for confronting the corporations:
1. Direct actions. This can range from old-fashioned letters to the editor to civil disobedience at regional or national corporate offices. Dr. Margaret Flowers and others have engaged in a wide variety of actions, including nonviolent civil disobedience. Kay Tillow (All Unions Committee for Single Payer Health Care) and others occupied the lobby of Humana’s corporate headquarters in Louisville last year; Humana, presumably fearing bad press, refrained from having them arrested. The activists still managed to get media attention that put Humana in a bad light. It was an inspiring action.
2. Shareholder actions. In 2006, my spouse Karen and I bought five shares in WellPoint (Ticker: WLP), which were then selling for about $65 per share, so we could attend the company’s annual shareholder meetings in Indianapolis and “speak truth to power.” You only need one share to attend, and since that time some additional single-payer advocates have acquired shares. Even though WLP is No. 32 on the Fortune 500, their annual meetings each May are typically boring and seldom attended by more than a handful of shareholders. It’s basically a formality. The agenda is simple. The board is introduced and a few of its members are re-elected, some other routine announcements are made, and the CEO makes a brief statement about how great a year the company had and how bright the future looks. At WLP meetings, there has been a time for Q&A once the business part of the meeting concludes, and an increasing number of us have used that time to shine light on the company’s problems and ask difficult questions. There is always some media presence there, and the press sometimes reports on our concerns. Incidentally, the price of admission for WLP is $55 a share today.
3. Shareholder resolutions. There is a long history of shareholder activism, and our own Dr. Quentin Young played a key part in developing this strategy, which I have written about in “Napalm, Big Health Insurance, and Divestment.” In 2008 and 2009, AFSCME and the Connecticut State Employees Pension Fund sponsored what is called a “Say on Pay” shareholder resolution on the WLP proxy, and despite the WLP board’s recommendation to vote against it, it polled over 40 percent in favor both years. That inspired me to write a resolution for this year’s meeting calling upon WellPoint to return to its nonprofit, Blue Cross roots. We successfully placed it on the WLP proxy: “WellPoint/Anthem Shareholders Revolt!” At the May 18 meeting, Say on Pay passed and our resolution received an amazing 9.4 percent of the vote: “30 Million WellPoint Shares Voted: Return to Non-Profit!”
Clearly, the real goal here was not for WLP to return to nonprofit status. The vote on our resolution could only be interpreted as a rebuff to the company’s management and board, and the amount of bad publicity was worth the effort we put into it, and then some. I think there are all sorts of resolutions that one might create aimed at any or all of the other Big Insurance Behemoths. There is a minefield of SEC regulations to navigate [SEC rule 14a-8], and there are those who can help you. A good starting place is this web site.
4. Proxy access. I informed the WLP board that next year I hope to receive a proxy access nomination as a candidate for their board. We will see how that plays out, as the regulations concerning it are still up in the air. More about it can be found in the “30 Million Shares” article linked above. This could generate some interesting stories.
5. The socially responsible investing (SRI) community. SRI is a small but very significant part of the investing world, and the potential impact here is tantalizing. Right now almost all mutual fund companies give some lip service to “corporate responsibility” (e.g. T Row Price) and most offer at least one “socially responsible” mutual fund for interested investors. A look at WLP’s investor list reveals that TIAA-CREF, the financial services company that mainly serves the academic community, is the 12th largest investor in WLP. Twenty different TIAA-CREF funds hold WLP stock, including three as specifically SRI funds. Their “Social Choice Account” holds over $25 million in WLP stock. Currently, as far as I have yet been able to determine, the SRI community doesn’t yet have the health insurance industry on its radar. Up to now they have been interested in whether companies are green, or into tobacco or weapons, etc. Wendell Potter speculates that insurance stocks may actually tend to be OVER-represented in SRI mutual funds because they are nonpolluting companies who up until now have skated by the “screens” used to determine “social responsibility.” There is a huge potential impact here.
6. The faith community. As you know, many national religious groups have official positions supporting single payer, and most have offices looking at faith-based investing, which is another way of saying SRI. The Presbyterian Church USA is headquartered in Louisville, and they recognize “Mission Responsibility Through Investment.” I am working with the Rev. David Bos, a Presbyterian minister from Louisville, to gain support for our resolution and the idea of divestment. It will be a slow process, but Rev. Bos has told me that he thinks we can gain their support. Not only are they already on record supporting single payer, they have taken a controversial stand for divestment from some firms doing business with Israel, specifically those involved with building the partition wall in Palestine. Divesting from health insurance companies seems relatively noncontroversial in comparison.
There are so many projects here for PNHP and Healthcare-Now members, so many churches, local and national. I have not had time to pursue any of these possibilities. I think the Methodists, Episcopalians, and the United Church of Christ are real possibilities to reach, not to mention the Quakers and Unitarians. Rev. Bos says that the churches will be watching each other, and so every bit of progress we make with one will help with the others.
7. Public employees (including teachers). Dr. Alice Faryna of PNHP/SPAN-Ohio in Columbus, is the leader here. She has mined data in Ohio on teachers and public employee pension funds. She would love to share her findings and ideas with others around the country. You can contact her by writing to firstname.lastname@example.org. A look at the WLP list again shows a number of state pension funds listed, but many pensions are invested through institutional investors like BlackRock, No.1 on the WLP list.
8. A South Africa-style health insurance divestment campaign. This is the ultimate goal, admittedly ambitious, but potentially so powerful. I’ve discussed it more in the “Napalm – Divestment” article linked above. It will take time and work to build. University endowments hold huge amounts of health insurance stock, but it may not be easy to get that information (another research project for someone). A look at the WLP investor list below shows that most stocks are held in the name of the mutual fund or institutional investor (referred to as “street name”) rather than the ultimate owner of the stock. Getting college students to challenge their university endowment’s holdings could be an avenue to involving a demographic we would love to get involved in the single-payer movement
9. The business community – the sleeping giant. One potential result of these actions might be to gain the attention of businesspeople, the group we have the most trouble reaching and yet have the most to gain from a single-payer system.
As for additional resources on these ideas, I hate to keep pushing my Huffington pieces, but they do cover a lot of the background and include many links to other articles. One other background piece of mine not already cited above is “Fightin’ The Blues.”
To track the Big Insurance Behemoths, and to access loads of data from SEC filings, log onto a site like Yahoo Finance. Click on My Portfolios and set up a list of the large publicly traded insurance companies. Begin exploring all the information. I follow the seven largest, listed here with their name and market “ticker” abbreviation:
Health Net, HNT
The PNHP web site, of course, has lots of material, e.g. “The Case For Eliminating Private Health Insurance” by Len Rodberg and Don McCanne.
A more recent Los Angeles Times piece, “What do we need health insurers for anyway?” is worthwhile.
That the insurance industry faces a potential “death spiral” remains a potent argument, most recently articulated by Paul Krugman in the New York Times, “California Death Spiral.” From a purer single-payer perspective, Dr. McCanne comments on how health insurance exchanges will risk the death spiral as well, “Health Insurance Exchange? Lessons from California.”
This has become plenty long, but hopefully will serve as a starting point for those interested in going deeper into this unexplored territory. I can’t overemphasize how new this project is, and how it can go in as many directions as we can think of to take it. It has the potential for coalition- and bridge-building, for involving new audiences, and for some old fashioned fun.
Remember: health care reform: We’re STILL FOR IT… and we’re not done yet!
 This debate has been and will continue to be contentious and divisive between on the one side PNHP, Healthcare-Now, and others, and on the other the HCAN coalition, many Democratic Congresspeople, etc.
 I heard Allan Hubbard speak at Indiana University last April on PPACA. He is a wealthy Indiana businessman, former top Bush administration advisor, and former WellPoint board member, and he spoke from an explicitly Republican perspective on the bill. Near the end he bemoaned the likely medical inflation that would result and predicted [direct quote]: “My guess is that in 15 years we will have a single-payer health plan, Medicare for All.” He explained that we don’t really appreciate what the insurance companies do for us, and that Congress and the people will turn on them as an obvious way to cut spending.
 We see this already with Warren Buffett announcing last month that he has sold all his stock in WellPoint and UnitedHealth, a million shares of each. Will they be deemed “too big to fail” is the real question.
Plain Talk: Medicare for all still the best idea
By Dave Zweifel, Cap Times editor emeritus
The Cap Times
June 9, 2010
But what’s still so befuddling is that health care reform could have been so much better — and easier for everyone to understand.
In fact, following the 2008 presidential election, the opportunity to finally get the United States to adopt a universal single-payer health care system seemed at hand.
Many of the Democrats who had been swept into office that fall had campaigned for single-payer and there were strong indications that the congressional leadership was ready to introduce legislation that, in effect, would reduce the eligibility for Medicare from age 65 to 0.
People were beginning to understand that there’s enough administrative waste in the existing system that extending health coverage to every American from birth to death could be accomplished without substantial added cost. Yes, the Medicare payroll tax would need to be increased, but that increase would be more than offset by the elimination of insurance premiums for both employers and employees.
Further, single-payer isn’t some kind of experimental, untested idea. It’s working all around us, has been for years. For decades the Canadians, the British, the French, the Germans and countless other so-called advanced countries have had a universal health care system that covers all of their citizens.
Yet by the time Congress fiddle-faddled its way through a bunch of meetings and pro-insurance company legislators were placed in key positions to come up with a bill that would somehow appeal to Republicans as well as so-called Blue Dog Democrats, single-payer didn’t even make it to first base. The entrenched interests — those with money to throw into campaign coffers and into lobbying — succeeded in shoving it aside.
Just because Congress passed and the President signed a bill labeled “health care reform” doesn’t mean that the policy debate has been retired. Single payer Medicare for all is “still the best idea.”
The public will soon understand that “passing reform” did not guarantee insurance for everyone, it did not guarantee that insurance benefits will be adequate to prevent financial hardship, and it did not prevent insurers from denying patients choice by restricting care to their limited networks of providers.
But what will really convince everyone that we didn’t get real reform is that individuals, employers and the government will continue to see intolerable increases in the costs of health care. Skyrocketing insurance premiums for low actuarial value products that fail to protect personal household finances will drive the demand for the reform we need.
We don’t have to wait until 2020 or later to fix it. Before the November elections, let the candidates know that we want an improved Medicare for all now.
Few Health Reform Options Would Have Covered More People at Lower Cost Than New Law
June 8, 2010
The recently enacted federal health care reform law provides health insurance coverage to the largest number of Americans while keeping federal costs as low as reasonably possible, according to a new analysis from the RAND Corporation.
The only alternatives that would have covered more Americans at a lower cost to the federal government were all politically untenable—substantially higher penalties for those who don’t comply with mandates, lower government subsidies and less-generous Medicaid expansion, according to research published in the June edition of the journal Health Affairs.
Researchers simulated more than 2,000 different policy scenarios using the RAND COMPARE microsimulation model, which was designed by RAND to provide independent analysis about how different reform proposals would impact the American health care system.
“Of all the proposals on the table that would expand health insurance to more Americans, the final health reform law included those that covered the largest number of people at the lowest cost to the federal government,” said Elizabeth A. McGlynn, the study’s lead author and a senior researcher at RAND, a nonprofit research organization.
RAND article in Health Affairs:
Prior qotd on RAND COMPARE:
RAND created a microsimulation model called RAND COMPARE that was designed to “provide independent analysis about how different reform proposals would impact the American health care system.” Using this model, Dr. Elizabeth McGlynn concludes, “Of all the proposals on the table that would expand health insurance to more Americans, the final health reform law included those that covered the largest number of people at the lowest cost to the federal government.”
On a RAND Webinar event held in January of last year announcing the release of RAND COMPARE, I noted that a single, public insurance model (single payer or Medicare for all) was not an option available on the RAND COMPARE website. Dr. McGlynn then assured me that it was a model that should be added. In followup, others also contacted RAND to request that this model be added, and they received assurances that the matter was being addressed.
If you check the RAND COMPARE website, you will find that they did add well over 100 legislative proposals before Congress. They marked each proposal as to whether or not they addressed specific policies evaluated by the RAND COMPARE model. Some of the policies considered included individual mandate, employer mandate, tax credits, Medicaid eligibility, high deductible health plans, bundled payment, comparative effectiveness, and others. In the chart, H.R. 676, John Conyers’ Medicare for all bill received no marks whatsoever, as if it did absolutely nothing under the RAND COMPARE model.
Everyone who understands the single payer model knows that the final health reform law will not cover “the largest number of people” since single payer would have covered tens of millions more – that is, everyone. Also the single payer model would be far more effective in slowing health care cost increases than would the legislation enacted. RAND dodges this by repeatedly stating that the bill represents the “lowest cost to the federal government,” but it is our total national health expenditures and not the federal budget that matters.
The slogan for RAND COMPARE on their website is “Facts you can use, analysis you can trust.” Well, that sounds “Fair and Balanced.” It’s only people who need health care that are being victimized.
A conversation with Howard Dean
By André Picard
The Globe and Mail
June 7, 2010
On Monday (June 7), a group of prominent American and Canadian physicians (debated), in Toronto, the question: “Be it resolved that I would rather get sick in the U.S. than in Canada.” One of the panelists is Howard Dean.
Q. Health-care reform dominated the headlines for a long time. Was it successful?
We didn’t pass reform. All we did pass was putting more money into what we already have. It’s successful in a sense that 1) we got a major bill passed, which is something for a new administration; 2) we created a system that’s going to force reform because of the financial realities; 3) a great many more people are going to have coverage. But this system is still not nearly as effective and efficient as the Canadian system.
Q. What’s the single most important lesson that Americans can take from the Canadian system?
It covers everybody with a relative lack of bureaucracy. I know Canadians think there is bureaucracy, but you haven’t seen anything until you work in a system with several hundred insurance companies that all do something different. American hospitals have a whole floor occupied by a billing office. You don’t have that in Canada.
Q. Conversely, what’s the most important lesson Canadians can take from the U.S. health-care system?
I’m afraid I’m not sure there is one. There is more cutting-edge innovative technology, but the cost of that is to pay 70 per cent more than Canadians do for health insurance. Canadians will have to decide if that’s a lesson they want to learn.
Q. Bottom line, which system is better for the patient?
I’ve spent a lot of time in both countries and there is no doubt that you’re better off getting sick in Canada.
Q. But don’t you have the best health care in the world? We hear that mantra constantly.
We have the best health care in the world for people who can afford it. But Canada has very, very good health care for everybody.
Toronto Debate (almost 2 hours):
“Be it resolved that I would rather get sick in the United States than Canada.”
Pro team: William Frist and David Gratzer
Con team: Howard Dean and Robert Bell
http://www.munkdebates.com/debates/Healthcare (Click on “Watch the Debate” for video)
As Howard Dean states, “We didn’t pass reform. All we did pass was putting more money into what we already have.” This is precisely why a debate on the Canadian versus the U.S. health care systems is more timely than ever.
If you don’t have two hours to watch the full debate, you may want to watch the opening statements, and then slide the time bar forward to catch the closing statements (though I watched the full debate live-streamed, and it was well worth my time).
The importance of this message is that this is a crucial debate that has not gone away in spite of the enactment of PPACA. We should all do our part to see that everyone in the United States becomes fully informed on the true facts.
Build foundation for health care on Medicare: Johnathon Ross, M.D.
By Johnathon Ross, M.D.
The Plain Dealer (Cleveland)
May 30, 2010
Mrs. Brown (not her real name) was recently in to check on her blood pressure. She knows I’ve worked decades for a national health plan that would benefit individuals and businesses alike.
“So what do you think of the reform bill, Doc?” she asked, hoping I’d be pleased.
I replied with a question of my own: “Would you add a third floor to a house that has a crumbling foundation?” Because that is what Congress just did.
The crumbling foundation is our private, for-profit, insurance-based system of financing health care. As nonprofit, community-service organizations, health insurers were once a boon to millions of workers and thousands of companies. Now, they are a very bad bargain, indeed.
Private insurers make money by denying claims. They cause us to waste enormous amounts of money on excess paperwork and bureaucracy — their own paperwork and the paperwork they inflict on hospitals, patients and doctors like me. An estimated 31 cents of every health care dollar goes toward administration in U.S. health care, at least half of it unnecessary.
The problem is getting worse. The number of administrative personnel in health care jumped more than 3,000 percent over the past three decades, while the number of doctors, nurses and other caregivers has grown by less than 200 percent.
In effect, health care has been overtaken by an army of bureaucrats whose “generals” — the CEOs — get astronomical salaries. Money-changers and paper-pushers thrive chasing the money to pay for care — not deliver it. In our complex, multipayer system, chasing money is expensive work.
Does the new law remedy this? No. “Insurance exchanges” will add yet another layer of private bureaucrats and IRS agents to determine eligibility for subsidies and enforce fines for those who fail to purchase insurance.
Private insurers in the new exchanges will continue to advertise and market their products, bill for premiums, determine eligibility for coverage, coordinate benefits, manage a multitude of yearly contracts with brokers, businesses, individuals, doctors, hospitals and other providers and, lastly, pay stockholders a high rate of return.
Each hospital and doctor will continue to track myriad contracts, discount arrangements, benefit packages, drug formularies, limited referral networks and insurance rules designed to reduce utilization of our medical resources and to increase insurance company profits.
The new law perpetuates this wasteful overhead and guarantees insurers more profits as we spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million uninsured Americans.
The exchanges are supposed to bring down prices by promoting “market competition” among various insurers. But Massachusetts and several other states have had plenty of experience with such exchanges, and the verdict is clear: They don’t control costs. In fact, Massachusetts now has the highest health care costs in the world.
As a rule, “market competition” doesn’t work well in health care. Health care is not an ordinary product that people want. Rather, it is a necessity that they must have. The most expensive care is most often not optional, predictable or negotiable.
Businesses are groaning under the burden of the rising costs of employee and retiree health care benefits. They, too, need to get out from under the heel of the private health insurance industry and the skyrocketing, volatile prices that come with it.
So what’s the alternative? It’s building on the solid foundation of our tax-financed, low-overhead Medicare system, and extending it to cover everyone without exception. The administrative savings from such a streamlined system would amount to $400 billion per year, enough to provide comprehensive coverage to all with no significant out-of-pocket expenses and with complete choice of doctor and hospital.
A single-payer system would also have the clout to negotiate drug prices and provider fees, and to allocate resources efficiently and wisely. It would possess powerful tools for improving quality and controlling costs.
Conventional wisdom suggests we have to “wait and see” how the administration’s new law plays out. But we can’t afford that: With about 50 million uninsured this year, some 50,000 people will die because they lack coverage, a recent study estimates. By 2019, those figures will only be halved, experts say.
It’s not too late to do the right thing. The sooner we adopt an expanded and improved Medicare-for-all, the better off our patients and our economy will be.
Johnathon Ross is past president of Physicians for a National Health Program (pnhp.org) and a leader of the Single Payer Action Network in Ohio (spanohio.org).
Also posted on the PNHP website:
Because of the complexity of the Patient Protection and Affordable Care Act (PPACA) and the intense attention that has been diverted to the details of the act, almost no consideration is being given to correcting the fundamental flaws in the health care financing structure of PPACA. The prevailing attitude is that the legislative task is finished, except for a few tweaks, and so this is the law that we are going to have to live with indefinitely.
Today’s qotd included Johnathon Ross’s piece in its entirety because it explains so well, in a single, easily read article, why we need to dismiss this idea that the legislative task has been completed, and why we must revise the financing system by getting rid of the private insurers and Medicaid, and replace the entire financing system with an expanded and improved Medicare for all.
The article can be downloaded to be used in your advocacy work by distributing it electronically or by printing it out to be distributed as handouts.
We must reopen the national dialogue on comprehensive reform, and this article can be used to initiate the requisite conversation. Failure to do so will result in more suffering, hardship, and even death. As a civilized society, we simply can no longer allow that.
Financial Incentives for Health Care Providers and Consumers
By Jill Bernstein, Deborah Chollet, and Stephanie Peterson
Mathematica Policy Research, Inc.
Health reform will emphasize financial incentives for providers and consumers to promote the use of effective health services and discourage the use of marginally effective or inappropriate services. This brief looks at evidence on the impacts of financial incentives and draws lessons for policymakers.
Consumer Incentives Affect Their Choices
Most private and public insurance plans use financial incentives to constrain consumer demand for care. This strategy is premised on the idea that consumers will make better decisions about seeking care and using cost-effective services when they bear responsibility for a portion of the cost. So-called “consumer-directed” health plans attempt to extend this model, coupling high cost sharing with consumer information about treatment alternatives.
Indeed, research shows that cost sharing — including deductibles, coinsurance, and copayments — does affect health care use and expenditures. However, cost sharing can have important negative effects on health, and high cost sharing may ultimately have little impact on total costs.
When people respond to greater cost sharing by reducing their use of health services, they may forgo services that are necessary and effective as well as those that are more discretionary or ineffective. Forgoing care in response to higher cost sharing may not have significant health consequences for people with good overall health status and average income. But people with health problems and those with lower income and education enrolled in high-deductible health plans may suffer worse outcomes when they forgo or delay care. Vulnerable populations are especially likely to experience negative health outcomes related to cost sharing.
In addition, financial incentives may not significantly change the overall costs of care. Consumers with serious health problems account for most health care costs. Even if strong incentives induce these consumers to use care judiciously, most of their care is nondiscretionary, and costs that exceed their cap on out-of-pocket spending may account for most of the total cost of their care.
A growing number of private and public payers (including Medicare) use financial incentives targeted to providers, consumers, or both, and linked to measures of health care quality and efficiency. These strategies have come to be known generally as value-based purchasing.
Value-based purchasing efforts that focus on providers typically use evidence-based measures of quality, effectiveness, and efficiency to classify or select providers, and to determine how much they are paid. These payment strategies, generally known as “pay for performance” (P4P), may also take into account measures of consumer experience or satisfaction. Most commercial P4P systems use hybrid approaches that combine fee-for-service payment with payment bonuses or withholds that reflect provider performance on specific measures of quality or patient satisfaction.
Value-based systems have encountered various problems related to consumer education and continuity of care that have affected their ability to meet program goals. For example:
* Consumers sometimes associate higher prices with higher quality, leading them to select inefficient, lower-quality health plans with higher premiums.
* Adverse outcomes — and ultimately greater cost — may result when conversions to new evidence-based treatment protocols disrupt care. Disruptions may be especially problematic for patients with serious, chronic illnesses and close ties to their care providers. Although careful targeting of incentives can protect vulnerable patients by identifying those who would most benefit from specialized care, it may also entail additional costs for technical and clinical expertise and for educating and communicating with patients.
SOME LESSONS LEARNED
Evidence on the impacts of financial incentives in private and public insurance plans is limited, but we do know that:
* In general, financial incentives work best when carefully targeted to a specific population, set of services, or health condition. However, providing high quality, effective care can be expensive, even when it is targeted.
* Incentives that improve care and reduce cost present challenges. For plan administrators, designing and using effective incentives can be technically demanding and administratively expensive. For providers, performance reporting can be time consuming. For consumers, choosing among plan options, providers, and treatments can be difficult.
* If not carefully designed, financial incentives can have unintended adverse consequences, including poorer health outcomes and higher long-term costs.
Considerable attention has been paid to controlling health care costs through financial incentives to constrain consumer demand for care (e.g., consumer-directed health care, or CDHC) or to encourage value-based purchasing (e.g., pay for performance, or P4P). This is more than just a theoretical construct since the Patient Protection and Affordable Care Act (PPACA) “focuses on developing financial incentives to improve quality of care and constrain costs.”
A great many readers have told me that they often skip the excepts from the resource, and go straight to my comment. Today’s surprise is that I do request that you read the excerpts above so that you understand more clearly why CDHC and P4P are yet other diversions that will not save money and yet would risk adverse outcomes.
(I’ll omit the comment that a single payer financing system would bring all of us true consumer choice of health care, absent financial barriers, while providing us value-based purchasing though the power of our own public monopsony. Er… I guess I didn’t omit that after 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.
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