Misguided fixation on premiums

Posted by on Thursday, Nov 12, 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.

Health savings? No one knows

By Carrie Budoff Brown
November 11, 2009

Barack Obama ran for president on a promise of saving the typical family $2,500 a year in lower health care premiums.

But that was then.

No one in the White House is making such a pledge now.

It’s one of the most basic, kitchen-table questions of the entire reform debate: Would the sweeping $900 billion overhaul actually lower spiraling insurance premiums for everyone?

Jonathan Gruber, the favorite economist of the White House, said the bill “really doesn’t bend the cost curve.”

Reminded that Obama demanded a bill that lowers health care spending, Gruber said: “That is what he would like to do. But he’s not doing it.”

If premiums are the benchmark by which reform is judged, “we are setting ourselves up to fail,” Gruber said.


From the very start, the two most important goals for reform allegedly were to cover everyone and to control health care costs. But the precondition that reform be based on an expansion of private health plans within our dysfunctional, fragmented financing system immediately eliminated universal coverage as a goal. It proved to be impossible to balance all of the variables in this dysfunctional system to ensure that everyone would be covered. So they gave up.

Efforts were then directed to creating policies that would slow the growth in health care costs, again with the precondition that the role of private insurers would be protected and expanded. This led to the profusion of magical thinking – pretending that numerous vague innovative concepts included in the bill would somehow slow the growth in health care costs. Since the Congressional Budget Office does not have a data base on magical solutions, they were unable to score any of these innovations as effective instruments to control costs. As Jonathan Gruber said, the bill “really doesn’t bend the cost curve.”

So they decided to forget about universal coverage and to forget about total costs, but they still had a problem unique to our financing system based on private health plans. In a high cost system like ours, how do you make premiums affordable?

More magical thinking. Pretend that there is a “basic” level of insurance that will take care of all of our basic health care needs. Gold, or platinum, or Cadillac tiered health plans should be made available for wealthier individuals who want more comprehensive plans and are willing to pay for them. But do those more comprehensive plan cover services that the rest of us really don’t need?

It is almost impossible to sort out health care products and services based on whether or not they are essential. For a person with a disabling osteoarthritis of the hip, is a hip replacement essential? Or should the surgery be reserved for those with platinum plans? A wheelchair for gold plans? A walker for the silver plans? And for the bronze plans, an instruction sheet on how to carve a cane out of a stick of wood?

Since they really couldn’t establish tiers based on the specific services provided, they based them on the actuarial value – the percentage of costs that the plan would pay for. Basic plans have been defined in the legislation as having an actuarial value of 65 or 70 percent. The patient is responsible for 30 or 35 percent of the costs. You can see how “basic” these lower tier plans are when you consider that the average employer-sponsored plan has an actuarial value of 80 percent and some are as high as 88 percent.

Designating this basic plan as the standard created two more problems. The premiums would still be unaffordable for the majority of us, and the out-of-pocket expenses would bankrupt those who developed major medical problems. The answer? Subsidize the premiums and the out-of-pocket expenses with two more administratively complex programs that attempt to match the subsidies to ever-changing income levels. Now do that within a $900 billion ten year budget that has to meet many other demands.

It doesn’t work. Low income individuals who would be mandated to purchase private plans (those not qualifying for Medicaid) do not have the discretionary income to pay even the very modest out-of-pocket expenses required. For moderate and moderately-high income individuals, the portions of the premium and out-of-pocket spending would create financial hardships, especially for those with health care needs.

Only the wealthy would fare well, and they’re the only ones who could afford the highest tier plans. The concept of tiered health plans allows the wealthiest of us to eliminate financial barriers to care, protecting the wealth of the wealthy, while leaving the majority of us with financial barriers that have been proven repeatedly to impair access to essential health care services. What a sick concept!

The precondition of building reform on an infrastructure of private health plans has resulted in a fixation of trying to make premiums and out-of-pocket expenses affordable when it is an impossibility under this model.

Even Jonathan “let’s-get-everyone-covered-and-then-figure-out-how-to-pay-for-it” Gruber says that if premiums are the benchmark by which reform is judged, “we are setting ourselves up to fail.”

It’s not too late to do it right. We can strip down the current legislation to the important beneficial features, including ending private insurer abuses, and pass it as a temporary emergency measure, codifying “temporary” and “emergency.”

We can include in the legislation language that the process must move forward immediately with reform that will ensure that health care is universal, accessible, comprehensive, portable, and publicly administered. That would set us up for success.

At The New Republic blog Jonathan Cohn goes out of his way to attack Marcia Angell’s clear and courageous article at the Huffington Post.

Mr. Cohn begins with a disclaimer:

I’m a longtime single-payer supporter myself. If Angell could get her way, I’d be thrilled. But Angell can’t get her way.

This old saw is by now condescending, tiresome, gratuitous. Mr. Cohn merely tells us what leading politicians have been telling single payer advocates for decades: real health reform is not politically feasible (so go away!) This is not the stance of a single-payer supporter. It also falls well short of a license for the lame straw man argument that follows.

Mr. Cohn:

To Angell–and to others on the left, as my colleague John Judis notes today–this is reason for ditching the whole effort. But what, really, would that accomplish? The immediate impact would be to undermine Obama and his allies in Congress, creating the (accurate) impression they are incapable of passing major legislation. The Democratic Party would lose seats at the midterms and then, quite possibly, suffer even bigger setbacks two years hence. That’s not exactly a recipe for progressive revival.

Perhaps Angell and those who agree with her that this would be a constructive failure–that eventually growing frustration with our health care system will help us elect even more progressives and pass more ambitious reforms. Well, maybe. But that’s an awfully big chance to take…

Dr. Angell is not writing about electing Democrats! She is writing about health reform.

Dr. Angell:

The danger is that as costs continue to rise and coverage becomes less comprehensive, people will conclude that we’ve tried health reform and it didn’t work. But the real problem will be that we didn’t really try it. I would rather see us do nothing now, and have a better chance of trying again later and then doing it right.

The nation asked the Democratic White House and the Democratic Congress for health care and so far we have gotten “health insurance reform” with a bonus – restricted access to abortion.

It is this fact that makes the Democratic Party “insurance reform,” – how does Mr. Cohn put it? – “not exactly a recipe for progressive revival.” Yet he blames Dr. Angell instead.

Our nation can do without “insurance reform” that will criminalize the uninsured, subsidize unaffordable insurance premiums with rivers of tax money, protect pharmaceutical company superprofits at patient expense, hugely expand Medicaid in the face of nationwide state budget crises and thus quickly prove fiscally unsustainable. (Incidentally the insurance industry projects its price increases will reach between 79% to 111% by 2019, under the proposed “insurance reform.”)

Dr. Angell keeps her eye on the prize – comprehensive health care for all. A single payer system is the minimum increment of change that can bring that about.

Mr. Cohn wants to change the subject to electing Democrats. Yet ironically, the amazing development of a nationwide grassroots effort for single payer has been the real “progressive revival” of 2009.

If those inside the bubble still feel they can dismiss us by holding up a straw man, it simply means we must try harder, and grow our effort for a single-payer national health program larger and louder. It is not only our duty to our patients, but to a nation that expects genuine health reform.

Andrew Coates is secretary of the Capital District (NY) chapter of PNHP. He practices medicine in Albany, NY.

Uninsured veterans

Posted by on Tuesday, Nov 10, 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.

Over 2,200 veterans died in 2008 due to lack of health insurance

Physicians for a National Health Program
Press Release
November 10, 2009

A research team at Harvard Medical School estimates 2,266 U.S. military veterans under the age of 65 died last year because they lacked health insurance and thus had reduced access to care. That figure is more than 14 times the number of deaths (155) suffered by U.S. troops in Afghanistan in 2008, and more than twice as many as have died (911 as of Oct. 31) since the war began in 2001.

The Harvard group analyzed data from the U.S. Census Bureau’s March 2009 Current Population Survey, which surveyed Americans about their insurance coverage and veteran status, and found that 1,461,615 veterans between the ages of 18 and 64 were uninsured in 2008. Veterans were only classified as uninsured if they neither had health insurance nor received ongoing care at Veterans Health Administration (VA) hospitals or clinics.

“Like other uninsured Americans, most uninsured vets are working people – too poor to afford private coverage but not poor enough to qualify for Medicaid or means-tested VA care,” said Dr. Steffie Woolhandler, a professor at Harvard Medical School. While many Americans believe that all veterans can get care from the VA, even combat veterans may not be able to obtain VA care, Woolhandler said.

Dr. David Himmelstein, the co-author of the analysis and associate professor of medicine at Harvard, commented, “On this Veterans Day we should not only honor the nearly 500 soldiers who have died this year in Iraq and Afghanistan, but also the more than 2,200 veterans who were killed by our broken health insurance system.”



A Word, Mr. President

By Bob Herbert
The New York Times
November 9, 2009

Reforming the chaotic and unfair health care system in the U.S. is an important issue. But in terms of pressing national priorities, the most important are the need to find solutions to a catastrophic employment environment that is devastating American families and to end the folly of an 8-year-old war that is both extremely debilitating and ultimately unwinnable.

If you were to take a walk around one of the many military medical centers, like Landstuhl in Germany or Walter Reed in Washington, your heart would break at the sight of the heroic young men and women who have lost limbs (frequently more than one) or who are blind or paralyzed or horribly burned. Hundreds of thousands have suffered psychological wounds. Many have contemplated or tried suicide, and far too many have succeeded.

“Mr. President,” I would say, “we’ll never be right as a nation as long as we allow this to continue.”


How can we continue to support a fragmented, dysfunctional financing system that allows some of our veterans (not to mention tens of thousands of others of us) to die merely because we have placed a higher priority on nurturing the private insurance industry than we have on improving access for everyone through a more effective health care financing system? Our veterans. How can we let them down like this?

On a personal note, Veterans Day has always been a difficult day for me. In August of 1964, when I was driving from California to Texas to report for duty as an Army medical officer, we heard on the radio that our close friend, Dick Sather, was the Navy pilot who was just shot down and killed in the Gulf of Tonkin incident. (The other pilot shot down, Everett Alvarez, was held captive for over eight years.)

I was already a pacifist, but strictly on an ethical and not a religious basis. I believe, like so many others, that war is not healthy for children and other living things. The very worst possible way to negotiate international disagreements is to engage in war. And yet the United States does it over and over again. The school yard excuse, “but they started it,” doesn’t even seem to apply anymore.

After medical officer basic training in San Antonio, my first assignment to season me before being sent overseas, was as a battalion surgeon in Fort Hood, Texas. Yes, that Fort Hood.

Now you understand why I seem to be off message – the combination of my Veterans Day grief, the tragic slaughter that just occurred at my former military base, and now this new report on the unnecessary deaths of so many veterans due to a broken health insurance system.

Veterans Day is a day to think about the impact on not just our veterans but all of us, of record unemployment, war, and the unfair health care system that Bob Herbert writes about. We can fix all of them.

So what are we doing? More government money for Wall Street, and less for jobs. More troops for the war in Afghanistan, instead of withdrawal. More money for private insurers, while health care becomes ever less affordable for patients.

Is this what our veterans were fighting for?

Enough already!

Posted by on Monday, Nov 9, 2009

“The House Public Plan: Yes, It’s Worth It” write Jacob S. Hacker and Diane Archer in The New Republic. Jacob Hacker is Stanley B. Resor Professor of Political Science at Yale University. Diane Archer is director of the Health Care Project at the Institute for America’s Future and founder and past president of the Medicare Rights Center.

A Response
to “The House Public Plan: Yes, It’s Worth It”
By Sarah K. Weinberg, MD

Jacob Hacker and Diane Archer ask us to believe that:

…health reform is much more likely to succeed with a public health insurance option, even one with negotiated rates, than if private insurers are left to run the show.

So a public plan that will be available to less than half the population and will attract maybe 2% as enrollees is going to have any effect at all on big insurers? I don’t think so, and I’ll bet the big insurers and their investors don’t think so either. (United Health Group and Wellpoint stock prices are stable this morning.)

In a remarkable paragraph, Hacker and Archer claim that private insurance premiums will be lower because sicker people will selectively enroll in the public plan:

Let us start with the obvious: No one knows for sure the exact role that the public option will play. CBO may be correct that the public plan will attract a less healthy pool of enrollees, and that risk-adjustment (paying plans with higher-cost patients more) will not fully compensate for this. And it is surely correct that the public plan will have lower administrative costs than private plans. (It should be emphasized that if the public plan has higher premiums primarily because it’s attracting less healthy enrollees, then it is still reducing average premiums and hence federal subsidies for premiums. That’s because average premiums would be even higher if the people enrolled in the public plan enrolled in private plans. That’s what the CBO’s more recent letter discussing “downward pressure” on private premiums implies.) But while the CBO estimates are rightly the authoritative source for Congress, they are by no means infallible. CBO has made clear that an unusually high level of uncertainty attaches to its analysis of the public plan.

Private insurance premiums will be lower because sicker people will selectively enroll in the public plan, forcing its premiums upward. Huh?!

ALL the premiums will go up – the only issue is how steeply. As for the public plan providing significant competition, what business is going to worry about a competitor with restricted access that only has about 2% of the market?

They also assume that providers will voluntarily sign up for a new public plan with a miniscule number of enrollees:

…the public plan would pay the same rates as the private sector. Nothing in the bill requires this.

Especially if that plan tries to pay the providers less than private insurers, there’s no reason to believe this assumption. Buried in this thought is the assumption that private insurers currently pay providers handsomely – something any doctor or hospital can tell you is totally false. American health care costs twice as much as health care anywhere in the world for several reasons, of which the largest is the enormous cost of all the administrative bureaucracy our system requires. Gross overpayment of doctors is not a reason, even though there are some who do exceptionally well from providing overvalued procedures. In fact, private insurers “save” by cutting payments to providers, but not by cutting administrative costs or profits.

This statement is supposed to support the idea that healthy non-elderly Americans will be willing to pay more for a public plan that offers “the same transparency and accountability the public Medicare plan offers”? Hacker and Archer argue they will:

The vast majority of older and disabled Americans enroll in the public Medicare plan – even though by choosing (excessively subsidized) private Medicare [Advantage] plans, many can get broader benefits for less than they pay for Medicare plus supplemental insurance [Medigap].

Generalizing from choices made by 65 year old Medicare eligibles to the notion that the public will flock to the public plan that costs more because they like “transparency and accountability” is… um… a stretch. As a Medicare enrollee, I can tell you that I never have thought of Medicare as transparent and accountable. I’m enrolled in the public Medicare plan because, as the spouse of a federal retiree, I’m required to if I want to keep the federal BC/BS plan as secondary (Medigap) insurance. I suspect that other factors are more important when 65 year olds decide on their Medicare choices. Wanting to stay with the doctor(s) and hospital they already know rather than shift to a plan with a different list of preferred providers would likely be number one on the list, especially for anyone with health issues. (Of course, this is exactly what the peddlers of Medicare Advantage plans want – to attract the 65 year olds who aren’t seeing doctors regularly. These plans often make their enrollees miserable once they do get sick, and many then switch out to public Medicare.)

These eminent health policy thinkers also continue to assume that the public plan will hold down medical costs better than the private plans, just because it is public:

Over the past twenty years, the public Medicare plan has had a substantially slower rate of growth than private insurance.

However, it’s not the public nature of the plan that holds cost increases down, it’s the fact that Medicare covers an entire (willingly) captive population and has great power to dictate payment terms.

But then they point out that:

The CBO report on the House bill states that private insurers are better at controlling utilization than a public plan would be.

The only functioning utilization controls in the U.S. (possibly excepting the VA and the military) are the private insurers’ dirty tricks: delaying or denying coverage for expensive care; rescinding the policies of those who get sick; raising cost-sharing with the sick to astronomical levels, etc.

Hacker and Archer write that:

…the public plan is really the only tool available for testing and implementing reforms in the market for the non-elderly.

2% of the population spread across the entire U.S. is not going to be a group that will be useful for this kind of experimentation. This will especially be true when only a limited number of providers choose to participate.

In conclusion, we are asked to believe that any public option at all will make all the difference:

But it’s still immensely valuable to give Americans an out – another choice – to let the insurers feel the heat of not being the only game in town.

First of all, the majority of Americans won’t have any such choice – they’ll get what their employers offer them, like it or not. Next, we should recognize that the big insurers already ignore the small insurers in each market who have 5% or less of the available business.

Finally, industry opposition to the public option is held up as evidence of the wisdom of the public option:

The fierce and continuing opposition of the insurance industry suggests that they think that a public option will prove a serious counterweight…

I think instead that the insurers’ opposition has been just fierce enough to get them a public option small enough to drown in a bathtub – success beyond their wildest dreams. Because when this public option fails, they (and the Republicans) will say: “See – single-payer health reform doesn’t work!”

Hacker and Archer (and other apologists for HR 3962) are letting their wishful thinking get the better of their common sense. Enough already!

Dr. Weinberg is a retired pediatrician, a member of Physicians for a National Health Program for 20 years, and the Newsletter Editor for Health Care for All – Washington for 9 years. She is also one of the authors of the Washington Health Security Trust, proposed legislation that would establish a single payer health financing system in the State of Washington.

eHealth is ready to connect America

Posted by on Monday, Nov 9, 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.

eHealth Views Passage of House Health Reform Bill as “Historic Step Toward Connecting All Americans to Coverage”

November 8, 2009

Health Insurance Exchanges Are Key

The following is (from) a statement from Gary Lauer, chairman and CEO of eHealth, Inc., regarding tonights passage of the U.S. House of Representatives’ health reform legislation:

“eHealth’s experience over the past decade in connecting nearly two million Americans to coverage through our national online marketplace proves that exchanges do work. By employing multiple paths to coverage, including exchanges, and online solutions like ours, we can optimize enrollment and provide the uninsured with the most choices and flexibility.

“The technologies that have been developed by private sector players, such as eHealth, are key to ensuring Americans find and receive the coverage this legislation would mandate.

“eHealth looks forward to being an active partner in implementing meaningful health reform legislation, and is poised and ready to connect the uninsured to coverage quickly.”


eHealth is “Ready to Connect America to Coverage:”




USE OF OTHER ENTITIES.–In carrying out this subsection, the Commissioner may work with other appropriate entities to facilitate the dissemination of information under this subsection and to provide assistance as described in paragraph (2).

From paragraph (2): (C) assist Exchange-eligible individuals in selecting Exchange-participating health benefits plans and obtaining benefits through such plans.


eHealth is ready to become the nation’s broker for private health insurance. Watching the two minute video at the “Ready to Connect” link above will demonstrate just how ambitious their plans are.

This is yet one more reason why the model of reform selected by Congress and the Obama administration is the most expensive of all. With all of the other wasteful administrative expenses, brokers’ fees are added on top, though often hidden in the premium as a commission rather than a fee.

Compare this to Medicare enrollment. The administrative costs for automatic enrollment in Medicare, at that only once in a lifetime, are negligible for the government and its taxpayers.

Imagine the simplicity and efficiency of automatic, lifetime Medicare enrollment at birth for everyone. But Congress won’t go there… not until the nation demands it.

Rep. Weiner withdraws single payer amendment

Posted by on Friday, Nov 6, 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.

Rep. Weiner Withdraws Single Payer Amendment from Current Health Care Debate

Representative Anthony Weiner
Press Release
November 6, 2009

Today, Representative Anthony Weiner (D – Brooklyn and Queens), a member of the House Energy and Commerce Health Subcommittee, released the following statement on his decision to withdraw his single payer amendment to H.R. 3962, the House health care reform bill:

“I have decided not to offer a single payer alternative to the health reform bill at this time. Given how fluid the negotiations are on the final push to get comprehensive health care reform that covers millions of Americans and contains costs through a public option, I became concerned that my amendment might undermine that important goal.”

“I am going to continue to press the case for health care reform in every venue I can. And I also will continue to press for a smarter, less-expensive, more-comprehensive alternative to the employer-based health insurance system we have today.”

“I’ve discussed the issue with Speaker Pelosi, Chairman Waxman, and agree with them that the health reform bill is so close it deserves every chance to gain a majority.”



Pelosi Statement on Congressman Anthony Weiner’s Single Payer Alternative

Speaker Nancy Pelosi
Press Release
November 6, 2009

Washington, D.C. — Speaker Nancy Pelosi issued the following statement today on Congressman Anthony Weiner’s single payer alternative:

“Within the next few days, the House will vote on the most comprehensive health care legislation in our history. Our bill will provide affordability to the middle class, security to our seniors, and responsibility to our children by not adding a dime to the deficit. While our bill contains unprecedented reforms, including an end to discrimination for pre-existing conditions and a prohibition on raising rates or dropping coverage if you become ill, our bill cannot include provisions some strongly advocated. The single payer alternative is one of those provisions that could not be included in H.R. 3962, but which has generated support within the Congress and throughout the country.

“Congressman Anthony Weiner has been a forceful and articulate advocate for the single payer approach and our legislation. His decision not to offer a single payer amendment during consideration of H.R. 3962 is a correct one, and helps advance the passage of important health reforms by this Congress. While single payer, like other popular proposals, is not included in the consensus bill we will vote on this week, Congressman Weiner has been a tireless and effective advocate for progress on health care, and his work has been a vital part of achieving health care reform.”



Chairman Waxman’s Statement on Rep. Weiner’s Single-Payer Amendment

Chairman Henry A. Waxman
Committee on Energy and Commerce
November 6, 2009

Today Chairman Henry A. Waxman released a statement in response to Rep. Anthony Weiner’s decision not to offer a single-payer amendment to the House Democratic health care legislation.

“Rep. Anthony Weiner has been one of the most tireless and effective advocates for health care reform. His decision not to offer his amendment on the floor was a difficult one for him, and for supporters of the measure. I believe Rep. Weiner’s choice will be enormously helpful in passing the health care reform package. His step is a correct and courageous one. I thank Rep. Weiner for it, and look forward to working with him closely. Rep. Weiner deserves a great deal of credit for helping to make quality, affordable health care more available to millions of Americans.”


Comment by Ida Hellander, M.D., Executive Director, Physicians for a National Health Program:

Next steps and interpretation –

1) The fact that single payer got so far along in the House is a testament to the strength of our single payer movement. The huge number of calls by single payer advocates in support of single payer and the Weiner amendment in recent days have been noted by several members of Congress.

2) It appears that nobody, particularly the President, expected our single payer option to be alive in the Congress for so long. As you know, they attempted to keep it “off the table” from the very beginning.

3) The President was directly involved in the decision to not hold a vote on the Weiner single payer amendment, and Weiner will be meeting with him later today. Stay tuned.

4) We need to increase pressure on the Congress and the White House for Medicare for All through lobbying, civil disobedience, media outreach, and grassroots organizing. Sen. Sanders will call for a vote on single payer in the Senate – this could come up anytime in the next month. Encourage your Senator to support the Sanders bill and also an amendment he will offer for a state single payer option. The California Nurses Association/NNOC has already started lobbying visits in the Senate in D.C.

5) We have been asked how to tell members to vote on the House bill. Our response is that the bill is “like aspirin for breast cancer.”

Harvard Professor William Hsiao on effective reform

Posted by on Thursday, Nov 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.

Health Care Abroad: Taiwan

An interview of William Hsiao, Ph.D., Professor of Economics at the Harvard School of Public Health
The New York Times
November 3, 2009

Q. What’s the most important lesson that Americans can learn from the Taiwanese example?

A. You can have universal coverage and good quality health care while still managing to control costs. But you have to have a single-payer system to do it.


William Hsiao, Ph.D.

There is no person more qualified to discuss health system design than William Hsiao (see the link above for his qualifications).

If you were to believe the hype that accompanied its release, you might think that it would be as important as Medicare and Social Security. The New York Times concluded that “This bill will take a long stride toward universal coverage while remaining fiscally responsible.” Nobel laureate economist Paul Krugman added: “The political environment is as favorable for reform as it’s likely to get. The legislation on the table isn’t perfect, but it’s as good as anyone could reasonably have expected.”

But this bill is not good enough to pass. It will not make a big enough difference in addressing the three main problems requiring reform–containing the spiraling costs of health care, providing universal access to affordable health care, and improving its quality. If we look at the provisions of this 1,990-page bill concerning just the first two of these three goals, we see that it will fail to deliver real reform.

After all of the political compromises along the way that have led to the introduction of the new bill (HR 3962), on the positive side we can say that it will introduce some limited reforms to the health insurance market, expand health insurance to some of the uninsured (primarily by expansion of Medicaid and by often-inadequate government subsidies to individuals and small employers for the purchase of private insurance); and help to address some other problems, such as the growing shortage of primary care providers.

But the negative side far outweighs the positive:

• Although supporters of the new House bill claim that it would expand coverage for as many as 30 million uninsured, we are actually likely to see an  increase in the number of uninsured in coming years for these kinds of  reasons—as costs keep going up, many Americans will be forced to drop  their present coverage because of inability to afford rapidly rising costs of  premiums, deductibles and co-payments; there is no guarantee that the  uninsured will be able to afford new private coverage (even with subsidies, which won’t kick in for another four years); and expansion of Medicaid will  not take place until 2013 (many states are already pushing back with  concerns that the their recession-strained budgets will not allow them to pay  their share in adding to their Medicaid programs, potentially leaving millions of the poorest Americans uninsured.

• There are no effective cost containment mechanisms built into the bill, either for the costs of health insurance or for health care itself. As it whines about weakening of the individual mandate that will likely limit some of its big increase in the insurance market, the health insurance industry is already warning that sharp premium increases will result. The most the bill will do is to require disclosure and review of premium increases, without any regulatory teeth. Although the bill would set up a Health Benefits Advisory Committee to recommend a minimal essential benefits package (with four tiers), insurance industry lobbyists will argue for the most minimal levels of coverage, and we can anticipate an exponential growth in underinsurance. Moreover, there are no price controls to be applied anywhere in the system, except perhaps in authorizing the government to negotiate drug prices with manufacturers. But that provision will almost certainly not clear the Senate, where we can expect even less concern for affordability and prices.

• Although the public option has been the target of intense controversy, it will play a negligible role in health care reform. The CBO has concluded that it would cover no more than 6 million Americans, just two percent of the population, in 2013, and will cost more than private programs, mostly due to adverse selection in attracting sicker individuals and its inability to set reimbursement rates for physicians and hospitals as is done by Medicare. Moreover, middle-income families may be required to spend 15 to 18 percent of their income on insurance premiums and co-payments.

• HR 3962 will not result in making health care more affordable, despite allocating some $605 billion over ten years for subsidies to low- and middle-income Americans to buy insurance on Exchanges. We can count on continued increases in the cost of health insurance as far as the eye can see, together with less actuarial value of coverage.

• Buried in the fine print of this monster bill are many provisions that will benefit corporate stakeholders in the medical industrial complex on the backs of patients and their families. These examples make the point:

• Although medical loss ratios (MLR) (the proportion of premium revenue actually spent on medical care) are specified at a minimum of 85 percent, this loophole has been added–“while making sure that such a change doesn’t further destabilize the current individual health insurance market.” By way of comparison, the Senate Commerce Committee has found that the average MLR for the largest insurers in the individual market is only 74 percent, with 26 percent of premium revenue going to marketing, administrative overhead and profits.

• Although the bill would create a much-needed Center for Comparative Effectiveness Research, it would have no say over reimbursement and coverage policies. As the bill says, it “contains protections to ensure that research findings are not construed to mandate coverage, reimbursement or other policies to any public or private payer.”

In sum, this $1.055 trillion plan over ten years will not fix the major problems of cost and affordable access to health care in our deteriorating system, will add new layers of bureaucracy and complexity to the present system, is not fiscally responsible, and is not sustainable.

What to do now? Rather than accept an unworkable bill that is politically  expedient, we would be better off to make a major course change. That vote could take place as early as tomorrow.

If that fails, shelving this bill would be the best option. Until a few days ago, I would have added that lawmakers should be pressed to retain the amendment proposed by Dennis Kucinich (D-Ohio) to allow states to experiment with single-payer plans, as a number of states would like to do (e.g. California, Colorado, Illinois, Maine, New Mexico, New York and Pennsylvania). Although that amendment had already been passed by a rare bipartisan vote of 27-19 in the House Education and Labor Committee, it has been stripped from the bill.

The best first option would be to call for a floor vote, as originally promised by the House Speaker Pelosi, for  the amendment proposed by Anthony Weiner (D-NY) to substitute HR 676, a single-payer proposal, for HR 3962. If that fails, shelving this bill would be the best option, but if that is not possible, lawmakers should be pressed to retain the amendment proposed by Dennis Kucinich (D-OH) to allow states to experiment with single-payer plans, as a number of states would like to do (eg. California, Colorado, Illinois, Maine, New Mexico, New York and Pennsylvania).

That amendment has already been passed by a rare bipartisan vote of 27-19 in the House Education and Labor Committee.  Whether a health care bill survives the end game in both chambers of Congress in this session is still up in the air. If a bill is finally enacted into law, however, it will be ineffective in remedying the big problems of cost and access to health care. We should be gearing up for an intense effort in 2010 to push for real health care reform–Medicare for All.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.” Buy John Geyman’s Books at: http://www.commoncouragepress.com

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CBO on premiums and cost sharing of the House bill

Posted by on Wednesday, Nov 4, 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.

Letter from CBO Director Douglas Elmendorf

Congressional Budget Office
November 2, 2009

This letter responds to questions about the subsidies that enrollees would receive for premiums and cost sharing and the amounts that they would have to pay, on average, if they purchased a relatively low cost plan in the new insurance exchanges to be established under H.R. 3962, the Affordable Health Care for America Act, as introduced in the House of Representatives on October 29, 2009.

The enclosed table focuses on enrollees who purchase a “reference” plan (the premiums for which equal the average of the three lowest-cost “basic” plans, as defined in the bill), because federal subsidies would be tied to that average. Such a plan would have an actuarial value of 70 percent, which represents the average share of costs for covered benefits that would be paid by the plan.

Although premiums under H.R. 3962 would vary by geographic area to reflect differences in average spending for health care and would also vary by age, the table shows the approximate national average for that lower-cost reference plan — about $5,300 for single policies and about $15,000 for family policies in 2016. Enrollees could purchase a more expensive plan or more extensive coverage for an additional, unsubsidized premium — and CBO anticipates that many enrollees would do that, so the average premiums actually paid in the exchanges would be higher (although average cost-sharing amounts could be lower than those shown in the table).

Estimate for “Reference Plan” in 2016 — Average of 3 Lowest-Cost Basic Plans:
Family Policy:
70% – Actuarial value
$15,000 – Average premium
$5,500 – Average cost sharing

One example – a family of four at a higher income level:

400-450% – Income relative to the federal poverty level
no cap – Premium cap as a share of income
$102,100 – Middle of income range
$15,000 – Enrollee premium in reference plan
0% – Premium subsidy (share of premium)
none – Average cost sharing subsidy
$5,500 – Average net cost sharing
$20,500 – Enrollee premium + average cost sharing
20% – Premium + cost sharing as a percent of income


Of the many flaws in the very expensive and highly inefficient model of health care reform that Congress has selected, one of the more important is the financial impact that it will have on middle- and upper-middle income individuals and families. Let’s look at the example of a family of four with a very good income: $102,100.

The premium ($15,000) and average cost sharing ($5,500) that that family would have to pay would leave them with a net income of $81,600. That is not bad, but it certainly falls short of the $100,000 plus income that no doubt the family believes they should have.

Also that family would likely want coverage beyond the average of the three lowest-cost basic plans. They would want coverage greater than an actuarial value of 70 percent, especially since employer-sponsored coverage now provides an average actuarial value of 80 percent. They would also want more protection should their out-of-pocket medical expenses exceed the $5,500 average net cost sharing. Even with caps on cost sharing, the family would still be responsible for non-benefit products and services and for often-unavoidable out-of-network health care. Take those costs out of the $81,600 balance and that one-hundred-thousand-dollar-income family is going to be very unhappy with this reform legislation.

Do you think that they know about this? Do you think that maybe we should tell them?

The Philly 13

Posted by on Wednesday, Nov 4, 2009

On October 30, thirteen brave people sat in front of the entrance of Independence Blue Cross (IBC), in order to demand that IBC change its practice of pretending to be a non profit, while spending millions lobbying against real health care reform. They were arrested for exercising their constitutional right to protest. A hundred more chanting protestors singing “We Shall Not Be Moved” circled in front of Independence Blue Cross, the largest insurer in the Delaware Valley. About half of those arrested were students active in the Student Healthcare Action Network. Among those arrested were Jeff M., an organizer with Healthcare NOW, Rhone F., an organizer with PDA, and Paula B. with Health Care for All Philadelphia. Their letter to Joe Frick, CEO of IBC said the following:

Dear Joseph Frick,

We recognize that Independence Blue Cross was founded with the social mission of providing affordable healthcare to citizens in the Philadelphia area. We know Independence Blue Cross is concerned about the 200,000 Philadelphians and 46 million Americans who cannot afford health insurance. We also know that you’re concerned about the rapidly rising costs of healthcare in this country.

We are concerned, however, with the fact that Independence Blue Cross continues to deny its members life-saving care and is currently funding efforts to kill meaningful healthcare reform in this country, which would bring more affordable healthcare to more people. You have done well at cloaking your efforts behind the slogan “get healthcare reform right,” but your scare tactics and accusations that even a public health care option will have “dangerous consequences” are not benefiting your policy-holders. You are using millions of dollars worth of our insurance premiums to spread that message, too.

The information is in, and it shows that the best option to insure all Americans and provide the best quality care is a single -payer universal healthcare plan. The time has come for Independence Blue Cross to stop blocking the meaningful reform that Americans need and to carry out its mission of serving the “public good”, not its own bottom line.

We are demanding, therefore, that you agree to the following:

1. Until the passage of either a nationwide or statewide single-payer healthcare system, Independence Blue Cross will agree to cover all doctor-ordered procedures and care.

2. IBC will immediately stop using our insurance premiums to fund efforts to quash meaningful reform, such as the fake grassroots (“astroturf”) organization GetHealthReformRight.org

3. You will join us at a press conference in one week to announce IBC’s support for both state and national efforts to create a single-payer health insurance system.


Student Healthcare Action Network
Healthcare NOW!
Mobilization for Healthcare for All

I, Joseph Frick, in order to fulfill Independence Blue Cross’ mission to provide affordable healthcare to residents of the Philadelphia area, agree to the aboe demands. I will join you at a press conference in front of Independence Blue Cross offices one week from today to confirm that we have met your demands and to announce Independence Blue Cross’ support for a single-payer healthcare system.


__________________ (Frick never came down to sign this)

Today thousands more called Speaker Pelosi’s office demanding that the Kucinich and Weiner amendments be put forward for a vote as previously promised. Their office was apparently instructed to transfer all such calls to an answering machine. We should be appalled at this effort to dismiss single payer advocates. Short of single payer, this 1,990 page effort to reform health care will be indecipherable for the American public and will quickly become unaffordable. We will be trying to build a house on a crumbling foundation. It will not work and we will be back here again in four years asking what went wrong.

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