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.
Name Of Game In Health Care: Cheaper, Better, Faster
By Jennifer Rossa
The Wall Street Journal
June 13, 2010
Now that health-care reform legislation has been signed into existence in the U.S., venture investors say they are focused even more intently than before on companies with products that aim to lower the cost of health-care.
Leslie Bottorff, a general partner at Onset Ventures, said she anticipates there will be opportunities to invest in health-care providers, infrastructure, and technology, as they all provide ways to take costs out of the system without affecting how doctors are paid. “You can’t scale doctors,” she said, speaking on a panel at the Dow Jones Limited Partner Summit in New York.
“Cheaper, better, faster is absolutely the name of the game” now, Bottorff said.
So the venture capitalists are lining up ready to invest in companies with products that “aim to lower the cost of health-care.” How many pharmaceutical firms do you suppose are ready to market innovative new inexpensive drugs that will replace their older more costly products? How many medical device companies are ready to market new devices that will cost less and make obsolete their existing products which are highly profitable? But doctors, well you can’t scale them.
The venture capitalists are there for one reason only – to make money, as much as possible. Do they really believe that the pharmaceutical companies and medical device manufacturers don’t have the same goal? Money, money, money. Yeah. Forget about that “cheaper” part.
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.
Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans
U.S. Department of Health & Human Services
Accessed June 23, 2010
During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.” He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise.
Compared to their polices in effect on March 23, 2010, grandfathered plans:
* Cannot Significantly Cut or Reduce Benefits.
* Cannot Raise Co-Insurance Charges.
* Cannot Significantly Raise Co-Payment Charges.
* Cannot Significantly Raise Deductibles.
* Cannot Significantly Lower Employer Contributions.
* Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
* Cannot Change Insurance Companies
“Keeping the insurance you have” – Don’t believe it!
Comment by Don McCanne, MD
Quote of the Day
July 11, 2008
Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not.
So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar copayments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents’ plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children’s Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can’t afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems.
The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama’s promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date.
Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other financially sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes.
In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans.
This HHS report predicts an end to the individual market and a sharp decline in the small employer market. They claim that the large employer market will not see much change, but other studies have shown that large employers are already switching to plans with larger deductibles and other cost sharing simply to keep premiums affordable, and many are switching the insurers that they are using, thereby losing their eligibility for the grandfathered status. Besides, for the reasons mentioned in the July, 2008 comment above, almost no one will end up staying indefinitely in the same employer sponsored plan anyway.
“Keeping the insurance you have” was only a slogan used to market the reform proposal. It wasn’t a serious long term strategy. Instead of wasting time in another political dogfight – this time over grandfathering – we should move forward with supporting policies that will work for everyone – like a single payer national health program.
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 Industry Inflates Rates While Falsely Blaming New Health Care Law
Health Care for America Now! (HCAN)
The health insurance industry argues that rising medical costs are to blame for runaway premiums, but it’s clear that they are constantly looking for excuses to raise rates and expand their cash flows.
Premium hikes have surpassed the growth of medical costs, wages and overall inflation. From 2000 to 2008, premiums for families enrolled in employer-sponsored health plans increased 97 percent, while rates for individuals in workplace health plans climbed 90 percent. During that same period, private insurers’ payments to health care providers rose only 72 percent, medical inflation increased 39 percent, wages grew 29 percent and overall inflation climbed 21 percent. Health insurers are basing increases on something other than medical inflation, wages or general inflation.
If you look beyond the inflammatory anti-private insurance rhetoric of this report (mostly appropriate, some perhaps not), you can find a few real numbers to help understand rising insurance costs. From 2000 to 2008, overall inflation increased 21 percent, but medical inflation increased 39 percent, while employer-sponsored insurance premiums increased 90 percent for individuals and 97 percent for families.
The fact that medical inflation grew faster than overall inflation supports the position of the private insurers that rising health care costs have necessitated higher premiums, but that isn’t the whole story.
Private insurers’ payments to health care providers increased at 72 percent, considerably higher than the rate of medical inflation. This supports the insurers’ position that failure of government reimbursement rates to keep up with medical inflation, especially in the Medicare and Medicaid programs, has resulted in a cost shift to the private insurers who are paying more to make up the differences. However, some economists have suggested that this merely represents a failure of the private insurance industry to hold down excessive price increases.
Even with medical inflation and public-to-private cost shifting, premiums have increased at a significantly higher rate. This likely represents both higher administrative costs and greater profits. If the insurance industry were efficient, the percent dedicated to administrative costs should actually decline since higher prices would reduce the percentage of premiums absorbed by each unit of administrative service.
Although the insurance industry has been evasive about the portion of premiums that are consumed by administrative services, the for-profit insurers have been required to report their profits and their medical loss ratios. From the 2009 data (included in this report) we know that their administrative costs are outrageously wasteful, and that their profits are at an all time high.
Today President Obama told representatives of the insurance industry to not raise their prices so high. Do you think that they will listen? It seems that he would be much more effective if he were to tell the public stewards of an improved Medicare for all to get the prices right.
The following is to clarify a legitimate concern of one of the qotd subscribers.
From the 6/22/10 message:
21% – general inflation
39% – medical inflation
72% – increase in private insurers’ payments to health care providers
90% & 97% – premium increases for individual and family health plans
General inflation and medical inflation refer to increased prices. Payments to providers and insurance premium increases refer to increased prices modified by increased volume and intensity of services.
Though the numbers should not be compared on a single scale, the principles are still the same as stated earlier. The rate of medical inflation (prices) has continued to increase in excess of the rate of general inflation. Insurance premiums have continued to increase in excess of the payments (prices x services) to providers.
Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance, Kaiser Survey Finds
Kaiser Family Foundation
June 21, 2010
People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser survey examining the experiences and views of people who buy health coverage in the non-group or individual market.
Most say they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether. After these so-called “buy downs” are taken into account, people who faced a premium increase ended up paying 13 percent more than before.
Many people report being in plans with high deductibles, including one in four (26 percent) with an annual deductible of $5,000 or more and 6 percent with a deductible of $10,000 or more.
Overall, the average deductible reported for single coverage is $2,498, almost four times the $634 deductible reported on average for employer-sponsored PPO coverage. Those with family coverage whose deductibles must be met on a per-person basis report an average deductible of $2,959, while those with a family deductible (the total spending required across the entire family before coverage kicks in) report an average of $5,149.
More than one in five (22 percent) say over the past year they or a family member covered by their plan did not get needed medical care because of the cost, and a similar share (20 percent) say they skipped filling a prescription due to cost.
Nearly four in ten policyholders (38 percent) report at least one problem getting their insurer to pay a bill.
“With people in the individual market being hit with average increases of 20%, the survey shows that the steep increases we have been reading about over the last several months are not just extreme cases,” Kaiser Family Foundation President and CEO Drew Altman said.
This survey is very important because it shows that outrageous insurance premium increases are not limited to the anecdotes that we have been hearing, but rather are a pervasive problem, inflicting the nation with an average 20 percent premium increase in the individual insurance market. Those who say that the Patient Protection and Affordable Care Act (PPACA) will fix this had better take a closer look.
With these increases, it is not surprising that many looked for less expensive plans, usually opting for higher deductibles. But look at the numbers. The average deductible for a family is now over $5000, and for some, $10,000 or more. In spite of all of the buy-downs to higher deductible plans, people still ended up this year paying an average of 13 percent higher premiums – paying more and getting less.
Will PPACA provide relief from these high deductibles that are impairing access to needed medical care? No. The plans will be required to have an actuarial value of only 60 percent, or 70 percent for the exchange plans eligible for premium credits. When the patients’ share averages 30 to 40 percent of the costs (plus the premium), it is inevitable that the plans will have high deductibles.
Will the cost sharing subsidies of the exchange plans adequately ameliorate the impact of the deductibles? No. Lower income individuals do not have adequate disposable income to meet their portion of the cost sharing, even with the subsidies. For those with incomes over 250 percent of the federal poverty level ($55,125 for a family of four), there are no cost sharing subsidies beyond the equivalent of a 70 percent actuarial value. The portion of the subsidized insurance premium that this family would still have to pay is $4438 (8.05 percent of income), so with a $5000 deductible, they would have to pay over 17 percent of their income before coverage begins (except for limited preventive services), and even then they would still have coinsurance payments plus costs for non-covered or most out-of-network services. By any definition, that is underinsurance, which will become the norm for the United States.
The problem is not the total cost of health care for our nation. We can afford it, though we are nearing our collective tolerance. The problem is the fragmented, dysfunctional financing system that results in tremendous inequities and runaway cost increases. A single payer national health program would fix this.
Sherif Emil, MD, CM
The University of California, Irvine
School of Medicine
June 5, 2010
It is a profound honor for me to be here today at UCI to partake in the commencement ceremonies of a group of individuals who are destined to become 104 of the best doctors in America. My presence at this podium today is the most significant event in my medical and surgical career spanning two decades. It is so significant because the invitation to join you today came from a very special group of medical students, students whom I admire immensely, students who are my pride and joy, students who give me true hope in the future of medicine in this great country of ours, hope that American medicine’s best days are still ahead, that its most lasting accomplishments are still to be realized, that one day the best health care in the world will be available to all our citizens without regard to financial means, personal circumstances, or status in society.
Although I left UCI in 2008 and moved to a distinctly less pleasant climate (Canada), UCI has never left me. My career in pediatric surgery began and matured at this university. I had wonderful mentors, and superb colleagues.
Finally, please, please stay involved in issues of health care policy. If you think we have passed health care reform, and can now rest easy, think again. We have not passed health care reform. We have only passed some health care expansion. It is too early to judge the effects of what just occurred, but it is not too early to be certain that much work still lies ahead. Make your voice heard in the national debate that started in your senior year, and will almost certainly rage on. It was interesting for me, as an American physician practicing in Canada, to see the recent negative depictions of the Canadian system in TV ads and lay media, depictions that bore absolutely no resemblance to the actual environment in which I practice daily. My reality is very different. I can see any patient and any patient can see me – total freedom of practice. My patients’ parents have peace of mind regarding their children’s health. If they change jobs or lose their job altogether in a bad economy, their children will still get the same care and see the same physicians. Micromanagement of daily practice has become a thing of the past for me. There are no contracts, authorizations, denials, appeals, reviews, forms to complete, IPA’s, HMO’s, or PPO’s. Our Division’s billing overhead is 1 %. My relationship with the hospital administration is defined by professional, not financial, standards. I have no allegiance to any corporate or government entity, nor does one ever get in between me and the patient. This environment, which some denigrate as the ever so scary system of “socialized medicine” allows for more patient autonomy and choice than was available to most of my patients in California. That is not at all to say that I practice in a medical utopia. There is no perfect health care system. The Canadian system has its own set of difficulties, challenges, and shortcomings, and Canadians are also looking to significantly reform their system. But as physicians, we have to enter the debate and we have to enter it objectively, salvaging it from the bias, misrepresentation, and demagoguery that has characterized it. Health care should not be a liberal or conservative issue, for disease, disability, and death do not recognize political affiliations. As a socially conservative Christian myself, my belief that health care is a fundamental human right, and my efforts on behalf of single payer universal health coverage stem from my faith, and not despite it. My faith calls for personal morality, but also for societal morality – how do we treat the sick amongst us, the weak amongst us, the least amongst us?
Sherif Emil, MD, CM
The students know. They brought Sherif Emil back from Canada to give them their commencement address. The future of health care in America is in good hands.
Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2009
By Robin A. Cohen, Ph.D., Michael E. Martinez, M.P.H., M.H.S.A., and Brian W. Ward, Ph.D.
Centers for Disease Control and Prevention (CDC)
National Center for Health Statistics
June 16, 2010
46.3 million (15.4%) were uninsured at the time of the interview
58.5 million (19.4%) had been uninsured for at least part of the year
32.8 million (10.9%) had been uninsured for more than a year
Estimates of enrollment in HDHPs, CDHPs, and FSAs:
Based on data from the 2009 NHIS, 22.4% of persons under age 65 years with private health insurance were enrolled in a HDHP (high deductible health plan), including 6.3% who were enrolled in a CDHP (consumer-directed health plan) and 16.1% who were enrolled in a HDHP without a health savings account (HSA). Enrollment in HDHPs increased from 17.5% in 2007 to 22.4% in 2009. There was a significant increase in enrollment in HDHPs without HSAs and in CDHPs.
Based on data for 2009, among persons under age 65 with private health insurance, 20.2% with employment-based coverage were enrolled in a HDHP, compared with 46.9% of those with a private plan that was directly purchased or obtained through means other than employment. The percentage of persons covered by employment-based private plans that are HDHPs increased from 15.6% in 2007 to 20.2% in 2009. The percentage of persons covered by directly purchased private health plans that are HDHPs increased from 39.2% in 2007 to 46.9% in 2009. For persons under age 65, approximately 8% of private health plans are directly purchased. HDHPs constitute a growing share of both employment-based and directly purchased health plans.
In 2009, among persons under age 65 with private health insurance, 20.4% were in a family that had a FSA for medical expenses. This is an increase from 2007, when 16.7% of persons under age 65 with private insurance were in a family with a FSA.
Although the net loss in insurance coverage for 2009 left another 3 million individuals without coverage, the media response is tempered by the anticipated expansions in health care coverage under the Patient Protection and Affordable Care Act (PPACA). What is being missed in the media reports is a new trend revealed in this survey that will result in an exponential increase in the rates of underinsurance.
A few facts:
* 20.2% of individuals with employer-sponsored plans have high deductible health plans (HDHP)
* 46.9% of individuals with private plans purchased outside of employment have HDHPs
* 72% of those with HDHPs do not have health savings accounts
* PPACA will require plans to have an actuarial value of only 60 percent
Much has been written about how high deductible health plans (HDHPs) result in underinsurance for the majority of Americans, so little will be said here other than to point out that those with medical needs do not receive all of the care that they should have when faced with the financial barrier of a high deductible before they can access the benefits of their health plan. Insurance should improve access to necessary care rather than impair it.
Although the right-wingers in the policy community tout health savings accounts (HSAs) as the solution for making deductibles affordable, there are several flaws. First, close to three-fourths of HDHPs don’t even have an HSA component. For those that do, excess expensive and burdensome administration is being wasted on managing the HSAs which are really no different from the patient paying the expenses out of personal savings, except for the very modest tax advantage of the HSA. Whether in an HSA or in a personal savings account, it is still the patient’s own money that is being spent. If the HSA or the personal savings account were empty, as might be expected for individuals with medical problems, then the high deductible remains as a barrier to care.
Another approach is to set up a flexible spending account (FSA) instead of an HSA. One-fifth of individuals are in families that already have FSAs through their employment. These are even less rational than HSAs since it is the employee’s own pre-tax money that is deposited into the FSA, yet any funds remaining at the end of the year are forfeited. How smart is that?
There is a coalescence of trends that makes it likely that HDHPs will become the standard for most of us with private coverage. To slow the increase in insurance premiums, employers are starting to convert to HDHPs, and one-fifth of them have already done so. Plans in the individual market are much less affordable except for HDHPs. Almost half of those purchasing plans in the individual market have now switched to HDHPs. Because of concerns about high insurance premiums, the drafters of PPACA decided on an actuarial value of only 60 percent for private insurance plans (the patient pays 40 percent of the costs of care). Large deductibles and high coinsurance are used to keep the actuarial value down. Adverse selection of plans will low deductibles will cause a premium spiral that will make those plans unaffordable, forcing even more individuals to choose HDHPs. With these trends it seems that the future will hold little option for most of us not eligible for government programs, other than to enroll in HDHPs.
Since PPACA provides subsidies for both the premiums and out-of-pocket spending, does it even matter if the plans have high deductibles? Since the alleged purpose of high deductibles is to decrease the use of health care by making patients sensitive to health care prices, then it makes no sense to add the administrative excesses and expenses of removing a benefit in the form of the deductible and adding it back in in the form of administered subsidies if the patient ends up bearing only a negligible portion of the costs, thereby jettisoning price sensitivity. As the means- tested subsidies diminish, the deductibles may have more significance, but not for those who are responsible for most of our health care costs – the 20 percent who use 80 percent of our health care.
Will the insurance exchanges obviate the need for HDHPs? When they crafted the PPACA model, it was clear that premiums for comprehensive plans were already too high. That is why they decided on reducing the actuarial values of the plans – 60 percent for the least coverage, though premium subsidies will apply to silver plans with a 70 percent actuarial value. Silver plans will still require high deductibles since they fall short of the typical employer-sponsored plan with an actuarial value of 80 percent or more.
Since the cost sharing would still be excessive for most individuals and families, PPACA provides for cost sharing credits that would have the effect of increasing the actuarial value on a sliding scale based on income – 70 percent for those at 250-400% of the federal poverty level (FPL) and up to 94 percent for those with incomes at 100-150% FPL.
There is concern that the combined premium plus the cost sharing for the exchange plans is still too high for most families, but these are the levels that Congress decided would be necessary because of their arbitrary decision to limit how much of the costs would pass through the federal budget.
But what is really ridiculous is that merely to avoid an efficient system with a single, publicly financed universal risk pool, they designed an administratively complex system of variable actuarial values, with variable premium subsidies, with variable cost sharing credits, which will drive the plans to introduce high deductibles as the national standard, when high deductibles have already been demonstrated to be a perverse policy for controlling costs.
Remember, by continuing on our current PPACA course, we are going to see an explosion in high deductible health plans, to the detriment of people who need health care. Of course, we could change course and enact an improved Medicare for all without any deductibles. We wouldn’t need price sensitivity if we had our own public health care monopsony.
League of Women Voters calls for ‘Medicare for all’
Physicians for a National Health Program
June 16, 2010
Noting the Obama administration’s new health law falls short of providing affordable care to all U.S. residents, the national convention of the League of Women Voters passed a resolution Monday calling on the group’s board to “advocate strongly” for “an improved Medicare for all.”
Although many other groups, including labor unions, religious denominations and medical associations, have gone on record in recent years in support of a single-payer health program, or an improved Medicare for all, the League’s action is believed to be the first national endorsement of its type since Congress passed the Patient Protection and Affordable Care Act in March.
The resolution was introduced at the Atlanta meeting by Karen Green Stone of Bloomington, Ind., who argued that the new law lacks effective cost controls and does nothing to eliminate wasteful paperwork and bureaucracy in the U.S. health system.
Green Stone commented after the vote, “The delegates at the meeting understood that it has never been more important to push for a single-payer plan, an improved Medicare for all. They loved our new slogan in Indiana: ‘Health care reform: We’re still for it … and we’re not done yet!'”
League of Women Voters
June 11-15, 2010
Motion #549-473, submitted by LWV of Bloomington-Monroe, IN.
Whereas the League of Women Voters of the United States believes quality health care at an affordable cost should be available to all U.S. residents; and
Whereas the current and proposed systems do not achieve the League goals of affordability and access to everyone; and
Whereas an improved Medicare for all, a publicly funded and privately delivered national health care plan, is consistent with this goal;
Therefore, be it resolved that we, the representatives of local and state Leagues assembled at the 2010 LWLVUS Convention, call upon the LWVUS Board to advocate strongly for bills that legislate for improved Medicare for all.
LWV Address by Health and Human Services Secretary Kathleen Sebelius
So I want to thank you for all your hard work on behalf of the Affordable Care Act. It’s a tremendous accomplishment.
But I’m also here to tell you that our work isn’t over. You understand this. The League of Women Voters was created right before the passage of the 19th amendment. Some people might have said it was a strange time to start a group focusing on women and democracy. After all, women were already poised to get the right to vote.
But you knew that passing the amendment was just the first step. There was still hard work to be done to fulfill its promise. That’s also true for the Affordable Act.
We’re on the right track. But we’ve still got a long way to go. And we’ll need your help to get there.
Once again, the League of Women Voters leads the way. Although they supported the Patient Protection and Affordable Care Act (PPACA), they realize that it falls far short of the League goals of affordability and access for everyone. Even HHS Secretary Kathleen Sebelius concedes that we still have a long way to go.
There are several beneficial measures in PPACA that we should continue to support. But the greatest deficiency in the act is that the PPACA financing model can never get us to an affordable system that includes everyone. The delegates at the LWV convention recognized this when they passed the resolution calling for the national LWV Board (LWVUS) to “advocate strongly for bills that legislate for improved Medicare for all,” since it would provide the financing infrastructure that we desperately need.
The individuals and organizations, who in the name of compromise abandoned support for a national health program, have achieved their lesser goal of passing something – anything – as long as the act provided some benefit. Now that it is clear that tweaks to PPACA will still leave us with only compromised “something – anything” policies, it’s time to remount the unified effort to enact an improved Medicare program that includes everyone. We need to give Kathleen Sebelius the tools that she needs to get us there, and that didn’t happen with PPACA.
The League of Women Voters has picked up the torch. Let’s join them. After all, as they say in Indiana, “Health care reform: We’re still for it … and we’re not done yet!”
By Margaret Flowers, M.D.
There is a lot of discussion about the Medicare buy-in. Since the federal legislation does not include a public option and the single-payer movement talks about expanding Medicare, people wonder if the bill introduced by Rep. Alan Grayson, D-Fla., is a step forward.
The answer, however, is no. Unfortunately, the Grayson proposal does not advance us towards single payer and serves as a distraction, much like the public option was, that takes energy away from working for single payer at a time when we need focus and a clear demand.
When single-payer advocates talk about “Improved Medicare for All,” we are not actually saying that we would simply expand the current Medicare to everybody. We are talking about creating a national health program that is similar to Medicare in that it is publicly funded and accountable, guaranteed, provides choice of provider and removes the insurance middlemen from making decisions about treatment.
The system would be universal; have proven cost controls such as global budgeting, simplified administration and negotiation for physician fees and the bulk purchasing of drugs and medical devices; and would create a framework for a health system so that we can address the many other areas that need to be addressed such as having enough providers, getting resources more evenly distributed, looking at how we deliver care and improve the health of our population. Simply allowing people to buy into Medicare will not place us on the path to creating this system.
The biggest obstacle to the success of a Medicare buy-in is that it keeps the private insurance companies, and so the fragmentation of our risk pools, in place. The only way that we as a nation can afford to pay for the health needs of everybody is by creating a single risk pool.
It is by doing this that we eliminate the waste of the hundreds of millions of dollars that are required to market and administer these hundreds of different plans. Not only are these dollars required by the insurers to process their claims, but they are spent by businesses, individuals, doctors, hospitals and health providers to submit and track claims to the many insurers. It is the expense of dealing with the many different insurers that is driving some medical practices, especially primary care, out of business. This would not change with a Medicare buy-in.
Most likely all that a Medicare buy-in would do is attract the sickest patients as usually happens in this situation in this country. The reason this happens is that the majority of people who are healthy are able to work and so get their insurance through their employer. Those who are not able to work or who do not have insurance offered at work must buy through the individual market. Health insurers don’t really want to insure those that have health needs because they are too expensive to treat, so they offer policies with high premiums to those who need care. This forces that part of the population to look elsewhere, which means they would probably be the ones buying Medicare.
This would relieve the private insurers of having to cover the sicker population (which they would like) and would place further financial strain on Medicare (caring for the sickest without the healthy contributing). And a simple Medicare buy-in would not create the improved Medicare that we need which would cover all medically necessary care including dental, mental, vision and prescriptions without co-pays.
It is possible to get a national improved Medicare-for-All health system, but the first and smallest increment of change that we must have in order to do this is to create a single public health fund. There is much more to do after that but this will be the step that will provide sufficient funds and a framework in which to take the next steps.
There will be many distractions and temptations to look for an easier way to get to single payer, but each of these takes us off the path to single payer. It is important that we stay together and focused on our goal. To paraphrase Gandhi, you cannot compromise on fundamentals, and single payer is the fundamental step that will end health care as a commodity and place us on the path of health care as a human right.
Dr. Flowers is congressional fellow for Physicians for a National Health Program.
Adapted from original post on Backbone Campaign.
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.
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!
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