Howard Waitzkin on commodification and the search for a universal health program

Posted by on Thursday, Oct 11, 2012

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

The Commodification of Health Care and the Search for a Universal Health Program in the United States

By Howard Waitzkin, M.D.
Robert Wood Johnson Foundation, Human Capital Blog, October 11, 2012

For better or worse, we treat health care in the United States as a commodity. We buy and sell it, and would-be patients who don’t have enough money to buy it must either rely on limited public assistance or go without care. In very real terms, it’s not just health care that we have turned into a commodity, it’s health itself, so it should come as no surprise that poor Americans die sooner than affluent ones, by an average of close to five years.

I observed this dynamic up close for the first time about 40 years ago, while working as a primary care practitioner in the clinic system of the United Farm Workers (UFW) Union in the 1970s (which, for a time, my mentors in the RWJF Clinical Scholars Program viewed as my required activity in clinical medicine). As I treated hard-working patients living in unhealthy circumstances, it was easy to conclude that one does not need to travel outside the United States to find the so-called “Third World.” As I observed with many of the patients I treated while working with the UFW, the living conditions of the poor contribute to ill health.

Shortly after the military coup in Chile that occurred on September 11, 1973, while researching an article on the health consequences of the military dictatorship that later appeared in the New England Journal of Medicine, I discovered the work that President Salvador Allende had accomplished in the field of social medicine. In 1939, three decades before he became Chile’s democratically elected President, Allende wrote “La Realidad Médico-Social Chilena” (The Chilean Medico-Social Reality), in which he presented an analysis of the relationships among social structure, disease and suffering.  The book conceptualized illness as a disturbance of the individual fostered by deprived social conditions. Breaking new ground in Latin America at the time, Allende­—himself a pathologist—described the “living conditions of the working classes” that generated illness, with emphasis on the social conditions of underdevelopment, international dependency, and the effects of foreign debt and the work process. Growing out of those conditions, in his description, were a number of specific health problems, including maternal and infant mortality, tuberculosis, sexually transmitted and other communicable diseases, emotional disturbances, and occupational illnesses.

Making the case that improved living conditions exerted a more profound impact on population health than medical advances, Allende described the responsiveness of tuberculosis to economic advances rather than treatment innovations, the role of housing density in the causation of infectious diseases, and the adverse effects of the pharmaceutical industry’s financial practices (for instance, Allende offered the earliest known account of the differences between generic and brand-name pricing of essential medications). In this context, Allende also put his finger on a dynamic that has come to trouble physicians, patients, and policy makers worldwide during recent years, writing colorfully that a “problem in relation to the pharmaceutical specialties is…the excessive and charlatan propaganda attributing qualities and curative powers which are far from their real ones.”

After his election to Chile’s presidency in 1970, Allende began to move health care toward a universal model, while at the same time initiating a variety of public health initiatives, such as establishing maternity clinics in rural areas, imposing new health and safety requirements on mining companies, improving sanitation and housing in low-income areas, and more. But Allende’s nationalization of several industries dominated by North American interests, despite the compensation provided to those corporations, earned him powerful enemies, and a U.S.-supported military coup drove him from power three years into his administration, ending his efforts to improve Chileans’ health.

In Central and South America, the part of the world where I’ve focused much of my research, the United States and various international financial institutions have worked to support health care systems structured along the for-profit model. The World Bank, for example, worked to foster health care systems that served the objectives of private capital accumulation in less developed nations, with the inevitable result that health and health care became a commodity. Commodification burdens poor people’s health in many ways, and the adverse impacts of corporatized health care have spread throughout the world.

One irony, however, is that some less developed countries have found ways to uncouple health from wealth. But it hasn’t come easily. In recent years, the commodification of health in Latin America has receded somewhat, particularly in the wake of the worldwide economic crisis and widespread protests that have followed. Regimes that previously embraced corporate interests have grown weak and largely have disappeared, replaced by elected governments that have refused to accept the historical patterns of economic empire that fostered exploitation and poverty around the world. National and local leaders have entered into novel coalitions that have given rise to a new era of social medicine in Latin America.

In the 1990s, for example, El Salvador saw sustained efforts to resist efforts by the World Bank and the ruling right-wing political party to privatize public hospitals. Strikes by health care workers at affected hospitals spread elsewhere, leading to a commitment from the government that it would abandon the privatization push. When the government subsequently began contracting out hospital services to private entities, more strikes followed. Eventually, the World Bank flinched, backing away from a privatization requirement in a loan it was extending to the country, and efforts to expand public-sector health care are again under way.

Popular efforts to accomplish similar objectives have taken root in a number of Latin American nations, and the idea of universal health care has even taken root right here in the United States. It was a key part of the agenda on which Barack Obama rode to victory in the 2008 Democratic election. However, the principle of universal access to health services through a strengthened public sector largely disappeared from the health care reform bill he eventually signed into law.

As many critics have pointed out, Obamacare, the Patient Protection and Affordable Care Act (PPACA), uses public-sector funds and mandatory patient-generated premiums to buy insurance coverage from the private, for-profit insurance industry. This approach ultimately will provide coverage for only about half of the uninsured, with costs that will continue to rise over time due to the administrative waste inherent in private insurance. In addition, Obamacare will provide yet another enormous public subsidy for the private insurance industry, despite its dismal historical record. Ironically PPACA closely resembles the “neoliberal” health reforms promoted previously by the World Bank in Latin America and other regions, for instance the widely criticized reform that began in Colombia during 1994.

This paradoxical situation becomes quite striking because Medicare offered a model for a successful system. Medicare provides universal access to publicly financed services with low levels of administrative waste and more effective cost control than seen under private insurance. Although Medicare retains various flaws, these flaws are far less critical than the continued commodification of health as preserved under Obamacare. The Obama administration could have proposed an expansion of Medicare for the entire population of the United States. Obama himself favored this type of “single payer” approach while he was a state legislator in Illinois but later changed his views when he began to accept large financial contributions from the private insurance industry.

Despite widespread support from professionals (see for instance Physicians for a National Health Program) and the general public (see for instance Health Care Now), “opinion leaders” like those who lead the RWJF have declined to advocate for the particular model of universal health care embodied in the Medicare for All approach. At the risk of appearing to bite the hand that feeds (which actually feeds only to a very minor extent), let me say that one of my major disappointments in the RWJF during its more than 40 years of trying to improve access to affordable health care is that its leaders consistently have declined to advocate for a coherent, unified model for a national health program.

The simple truth is that the United States remains the only economically advanced country without a viable national program that ensures access to needed care for all. As a result health care—and health—remain a commodity for sale. Until we in the United States decide to de-commodify our health care and health by implementing a universal, single, publicly financed, national health program such as Medicare for All, we will remain in our current state of ethical underdevelopment.

Howard Waitzkin, MD, PhD, is senior fellow at the Robert Wood Johnson Foundation (RWJF) Center for Health Policy at the University of New Mexico, as well as distinguished professor emeritus in the Department of Sociology, and clinical professor in the Department of Medicine. He is an alumnus of the RWJF Clinical Scholars Program. Waitzkin recently received the American Sociology Association Medical Sociology Section’s 2012 Eliot Freidson Outstanding Publication Award for his new book, “Medicine and Public Health at the End of Empire,” from which this blog post draws.

http://www.rwjf.org/en/blogs/human-capital-blog/2012/10/the_commodificat…

Howard Waitzkin’s article is too important to edit it for Quote of the Day. It is presented here in its entirety. No comment necessary.

Important! Medicare Advantage rip-off now quantified

Posted by on Wednesday, Oct 10, 2012

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.

Medicare Overpayments to Private Plans, 1985-2012: Shifting seniors to private plans has already cost Medicare $282.6 billion

By Ida Hellander, M.D., Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D.
International Journal of Health Services (Forthcoming), October 2012

Abstract

Previous research has documented Medicare overpayments to the private Medicare Advantage (MA) plans (also known as Medicare Part C or Medicare HMOs) that compete with traditional fee-for-service Medicare. This research has assessed individual categories of overpayment for a single year, or at most a few years. However, no previous study has calculated the total Medicare overpayments to private plans since the inception of the Medicare program.

There are five ways in which private insurers systematically garner excess Medicare Advantage payments from the Medicare program.

Prior to 2004, the selective enrollment of healthier seniors by private plans – what we call “old cherry-picking” – was the major source of excess payments. We conservatively estimate that this old cherry-picking has added $41 billion to Medicare’s costs since 1985. Medicare adopted a new risk-adjustment scheme in 2004 based on 70 medical diagnoses (“hierarchical condition categories”), but this scheme has not curbed, and may have increased, private plans’ ability to game Medicare’s payment system, albeit with a new strategy: now, plans seek to selectively enroll patients who have mild versions of the medical conditions that determine payment. This “new cherry-picking” has added $122.5 billion to Medicare’s costs since 2004.

Congress mandated increased payment to private plans in the 2003 Medicare Modernization Act, adding $84.4 billion to the cost of Medicare through 2012.

The Affordable Care Act (ACA) mandated a drop in these overpayments, but a new demonstration project on quality will offset one-third of the reductions called for by the ACA through 2014.

Another major way that private plans are overpaid is by enrolling persons who are eligible for Veterans Health Administration (VA) benefits. The VA has provided $34.8 billion in care to MA enrollees since 1985.

In total, we find that Medicare has overpaid private insurers by $282.6 billion, or 24.4 percent of all MA payments, since 1985. In 2012 alone, we find that MA plans are being overpaid by $34.1 billion, or 6.2 percent of total Medicare spending.

In 2012, 13.5 million Medicare beneficiaries are in private plans, 27 percent of total enrollment. Some proposals would push millions more beneficiaries into private plans (e.g. voucher-type Medicare reform).

Risk adjustment does not and cannot work in the setting of for-profit MA plans, which have a strong financial incentive, and the data and ingenuity, to game whatever payment system Medicare devises. It is time to end Medicare’s long experiment with privatization and look toward proven-effective methods for controlling costs and improving coverage.

PNHP press release (The full article can be accessed through a link provided in this press release):
http://www.pnhp.org/news/2012/october/private-insurers-have-cost-medicar…

Although we have known all along that the private Medicare Advantage plans have been ripping off the taxpayers, this study brings together the data that quantifies the extent to which the taxpayers have been cheated by the private insurance firms: $282.6 billion!

The full report provides the details. It should be downloaded and read in full, and then used in your activism. Use the link above to access the press release (which is also well worth reading), and then use the link in the press release to download the full report.

The reason that this is so important is that it reveals the dishonesty behind the efforts to privatize Medicare through “premium support” – code for vouchers. Telling us that private insurers could provide equivalent Medicare benefits at a lower cost was the first deception, now proven false by three decades of experience. Nevertheless, because of anti-government ideology, legislators moved forward with the Medicare Advantage plans, deliberately paying them extra in order to draw beneficiaries into their plans through extra funds for high-profile marketing while affording them the ability to offer attractive extra benefits.

Once enough beneficiaries are drawn into these private plans, legislators could then begin the gradual process of defunding the traditional Medicare program. The premium support vouchers would provide a means to that end. As access in the underfunded traditional program diminished due to a decline in willing providers, beneficiaries would be able to use their premium support to move into the “better” plans offered in the private sector.

The traditional program might survive as a vestigial Medicaid-like welfare program, but essentially all who could afford it would have moved into the private plans. The next step? Reduce the value of the premium support both through attrition and through more nudges and pushes that the politicians would claim are absolutely essential to help close the gaping deficit hole.

As many have figured out, a primary purpose of the tax cuts that the politicians are telling us are essential is to increase the deficit even more to force other cuts in spending – deficits that “cannot be made up by tax increases because those taxes would destroy the economy.” Closing the deficit with tax cuts is one of the biggest lies of this campaign. They want to increase the deficit to force upon us a government austerity program.

We desperately need single payer – an improved Medicare that covers everyone. A more urgent task for us to address immediately is to cut the overpayments in the Medicare Advantage plans before the politicians shove us into their fraudulent premium support scheme. Check Figure 1 in the full report that you are downloading.  When we had Medicare + Choice plans, the deception was exposed and you will see that the plans started dropping out. The rebound of the plans is directly attributable to the fraud exposed in this report – deliberate overpayment of the private Medicare Advantage plans.

People keep asking what they can do. This one’s easy. Start organizing protests against this outrageous scheme that has cheated us taxpayers out of so much. Begin now, or start planning for your own austerity program when premium support vouchers won’t buy you or your children the health care plan that you need. It’s your choice.

Who will remain uninsured?

Posted by on Tuesday, Oct 9, 2012

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.

After Millions of Californians Gain Health Coverage Under the Affordable Care Act, Who Will Remain Uninsured?

By Laurel Lucia, Ken Jacobs, Miranda Dietz, Dave Graham-Squire, Nadereh Pourat, and Dylan H. Roby
UC Berkeley Labor Center, September 2012

The implementation of the Affordable Care Act (ACA) is predicted to expand coverage to millions of Californians by 2019. This increase in coverage will primarily result from the expansion of Medi-Cal and the availability of subsidized coverage in the California Health Benefit Exchange (Exchange). However, three to four million Californians could remain uninsured even after the law is fully implemented.

Many Californians will remain uninsured

* 3.1 to 4 million Californians are predicted to remain uninsured in 2019.

* Almost three-quarters of the remaining uninsured in California will be U.S. citizens or lawfully present immigrants.

* Half of all remaining uninsured, or two million Californians, will be eligible for Medi-Cal or Exchange subsidies but remain unenrolled under the base scenario. Barriers to enrollment could include lack of awareness about the programs, challenges in the enrollment process, or inability to afford subsidized coverage.

* 72 percent of remaining uninsured Californians will be exempt from paying tax penalties under the minimum coverage requirements of the ACA due to income, lack of an affordable offer of coverage or immigration status. Approximately three percent of all Californians will owe a tax penalty due to not obtaining minimum coverage.

* Nearly 40 percent of the remaining uninsured will lack an offer of affordable coverage with premiums costing eight percent of household income or less. Some uninsured Californians will be ineligible for subsidized coverage due to income or immigration status, while others will be eligible for subsidized plans in the Exchange with premiums that exceed the affordability standard.

* Some of the remaining uninsured will lack coverage for short time periods due to life transitions.

Some demographic groups will be more likely to remain uninsured

* Two-thirds (66%) of Californians remaining uninsured will be Latino, compared to a projected 45 percent of the non-elderly population in 2020.

* Nearly three out of five California adults who remain uninsured will be Limited English Proficient.

* 57 percent of Californians who remain uninsured will have household incomes at or below 200 percent of the Federal Poverty Level.

http://laborcenter.berkeley.edu/healthcare/aca_uninsured.shtml

The projected numbers and demographics of the uninsured after full implementation of the Affordable Care Act in California are shameful. Although there would be regional differences in demographics, the national numbers would be roughly tenfold. We can do far better by enacting an improved Medicare for all.

Universal health care and the Iron Triangle myth of U.S. policy makers

Posted by on Monday, Oct 8, 2012

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.

Donald Light on the Iron Triangle Myth

By Donald Light

Response to the October 4, 2012 Quote of the Day on the meme of access, cost and quality (http://www.pnhp.org/news/2012/october/aaron-carroll-repeats-meme-of-acce…):

In my comparative studies of universal health care systems, I find their cost/quality profiles vary quite a bit between each other, and over time for the following reasons. The more such systems pay by fee, the more providers drive up costs in the name of “quality” from which they profit, such as Germany from after World War II up to the 1980s. The Canadian system has been suffering from this seeming trade-off for decades. Access stays universal but there seems to be “an iron trade-off” between cost and quality, until systems start moving towards bundled payments and then population-based capitation or salary within a national health service and an ethos of shared responsibility to improve quality within a fixed budget. (Notice the so-called “iron triangle” has faded from view.)

Thus it’s holding costs constant while maintaining universal access that is key to improving quality, not only by eliminating care that is detrimental but also unnecessary or avoidable care, by rethinking clinical strategies. Ironically, some of the models of shared access and budgets increasing quality are in the United States. Few, if any national systems, can match the steady improvements in quality and value of Kaiser Permanente, Intermountain, Marshfield, or the reformed VHA (Veterans Health Administration). For example, the English NHS has been learning from them for years.

The transformation of the VHA from a single-payer, fee-based, poor-quality set of hospital-centered services, to a single-payer system based on area population budgets centered on primary care, with coordinated, community-based specialty back-up and hospitals as a last resort offers inspiring lessons. Quality improved and costs sharply dropped, so that 30 percent more veterans could be treated within the same, fixed budget.

Reforms in Germany in the 1990s through today have also improved quality while lowering relative costs and expanding access from about 94 percent to 99 percent. Germany’s multi-insurer base has been made single payer-like by the government creating a single channel where all insurers’ premiums are risk-adjusted so all insurers operate on the same risk-adjusted budgetary basis. The Dutch reforms since 2006 operate in a similar way, with some distinct differences.

In sum, I would say the key is not single-payer per se but population-based budgeting together with universal access, and a shared ethos to improve quality within budgetary frames that give the lie to the so-called iron triangle.

The Iron Triangle is an American myth for lazy and unobservant policy leaders.

Donald W. Light, Ph.D.
Professor, UMDNJ-SOM
Visiting Researcher, Center for Migration & Development, Princeton University
Resident Fellow, Edmond J. Safra Center for Ethics, Harvard University
Senior Fellow, Center for Bioethics, University of Pennsylvania

 

As Professor Light shows us, with controlled budgets you can still improve quality in a system that ensures appropriate access for everyone. Although he states that the key is not single payer per se, it is clear that the Iron Triangle (interdependency of cost, quality and access) still applies to our fragmented, dysfunctional financing system in the United States – a system that has only been perpetuated with the Affordable Care Act. However, social insurance programs, including single payer and health service models, have shown that the inevitability of the Iron Triangle is a myth. An improved Medicare for all would provide us with “population-based budgeting together with universal access, and a shared ethos to improve quality within budgetary frames.”

Physicians’ Presidential Poll

Posted by on Friday, Oct 5, 2012

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.

Results of the 2012 Physicians’ Presidential Poll

By Jackson & Coker Research Associates
Jackson & Coker Industry Report, October 1, 2012

A new survey of physicians shows that if the Presidential election were held today, 55 percent would vote for Mitt Romney and 36 percent would support President Obama, according to a survey conducted by Jackson & Coker, a division of Jackson Healthcare, the third largest healthcare staffing company in the US.

When asked how they felt about the Affordable Care Act, 55 percent said “repeal and replace” the new law while 40 percent said “implement and improve” the ACA.

http://www.jacksoncoker.com/physician-career-resources/newsletters/month…

Rather than demonstrating where physicians are on their beliefs and understanding of health policy, this poll merely shows that the debate has been reduced to the politics of the Affordable Care Act (ACA). Of the 55 percent who would replace ACA, there is no breakdown on those who would replace it with Medicare for All (neither candidate)  and those who would replace it with policies that likely would shift more of the financial burden to patients (Romney). Also, of the 40 percent who would improve ACA there is no breakdown of those who would support the dubious strategy of modifying it incrementally as a means of eventually achieving single payer reform (neither candidate). We need surveys of physicians’ views on policy, not politics.

Aaron Carroll repeats meme of access, cost and quality

Posted by on Thursday, Oct 4, 2012

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.

JAMA Forum — The “Iron Triangle” of Health Care: Access, Cost, and Quality

By Aaron Carroll, MD, MS
news@JAMA, October 3, 2012

When I talk about health policy, I often refer to the iron triangle of health care. The 3 components of the triangle are access, cost, and quality. One of my professors in medical school used this concept to illustrate the inherent trade-offs in health care systems. His point was that at any time, you can improve 1 or perhaps even 2 of these things, but it had to come at the expense of the third.

I can make the health care system cheaper (improve cost), but that can happen only if I reduce access in some way or reduce quality. I can improve quality, but that will either result in increased costs or reduced access. And of course, I can increase access—as the Affordable Care Act (ACA) does—but that will either cost a lot of money (it does) or result in reduced quality.

Anyone who tells you that he or she can make the health care system more universal, improve quality, and also reduce costs is in denial or misleading you.

We can make the system cheaper. We can make it more expansive. We can make it higher in quality. But we can’t do all 3.

http://newsatjama.jama.com/2012/10/03/jama-forum-the-iron-triangle-of-he…

We have heard for decades the meme that health care access, cost and quality are interdependent. Any change in one or two of them must produce a reciprocal change in either one or both of the others. Any improvement must always be offset with one or two impairments. Yet the single payer model shows that this is merely a replication of a seriously deficient concept that omits consideration of many other important health policies.

Under a properly designed single payer model, access is improved by removing financial barriers to care for absolutely everyone. The comprehensive design features of single payer also significantly improve quality, simply stated, by ensuring that patients receive the care that they need while reducing or eliminating care that is detrimental. And costs are the forte of the single payer system. Single payer reduces waste, redirecting those funds to patient care, and puts into place economic mechanisms that slow the rate of increase in future health care costs. Spending can be contained while both quality and access are improved.

It is time to retire the meme that improving access, costs or quality can be done only by introducing impairments. Don’t let the policy community get away with that claim anymore. Aaron Carroll’s integrity is of such a high caliber that he certainly is not misleading us, but he clearly needs to end his denial.

Many Insurance Plans Heap Healthcare Costs on Consumers

Plans with lower premiums burden members with potentially crushing costs

By Steve Sternberg and Chris I. Young
U.S. News & World Report, October 3, 2012

A first-ever U.S News analysis of nearly 6,000 health insurance plans marketed to individuals and families reveals that many of the consumers who enroll in these plans may confront budget-wrecking out-of-pocket costs that deplete their savings.

Each of the plans in the U.S. News database was scored and assigned a rating of one to five stars; plans available to both individuals and families were rated separately for each. A plan’s score depended on completeness of coverage in as many as two dozen benefit categories and subcategories—hospitalization, outpatient surgery, name-brand prescription drugs, and emergency room visits are just a few examples—and how much of the cost consumers have to pay.

The plans U.S. News rated, which are those sold to individuals and families who have no access to employer or public coverage, currently cover some 14 million people. That number could very well double once the major provisions of health reform’s Affordable Care Act take effect in 2014, according to the bipartisan Congressional Budget Office, because the ACA mandates that everyone must have health insurance or pay a penalty.

U.S. News spent several months working with data obtained from the Centers for Medicare and Medicaid Services (CMS), a federal agency that summarizes plan coverage and pricing on a consumer page but does not rate or rank plans against each other. The analysis posed many challenges, including constant flux in the number of plans available in the federal database. That is because of incomplete reporting and because health insurers periodically create new plans and stop enrolling applicants in established ones.

Research into purchasing behavior shows that health insurance shoppers are strongly influenced by the size of the monthly premium. It is a regular outlay, like a mortgage or rent payment, so weighing its impact on one’s monthly budget makes sense—to a point. An individual or family that opts for an easily affordable premium can be blindsided in the event of traumatic injury or major illness. A plan that may seem like a good choice because it has a lower monthly premium may require consumers to pay much more out-of-pocket every time they need medical care.

Plans are often far from transparent about how much consumers must pay for medical services. The term “out-of-pocket maximum,” supposedly meaning the most a consumer will have to pay for medical services, is misleading; 90 percent of plans exclude some combination of deductible, copays (upfront fees paid for service), and coinsurance (the consumer’s share of the charges). Nearly 100 plans exclude all three. A plan member with average coverage who needs surgery could end up paying thousands more than their out-of-pocket cap.

If a hospital’s physicians aren’t members of a health plan’s network, the cost may climb even higher, an expense that often comes as a shock to plan members who assume their care is covered. The same is often true for hospital services, such as occupational therapy, that are not provided by physicians.

The higher you have to climb the deductible ladder before benefits are paid out, the more vulnerable your income and savings. Medical bills tend to come in waves. A routine doctor’s visit that starts with an annual physical and progresses to a tentative diagnosis can trigger a cascade of expenses, from lab tests to prescription drugs to inpatient or outpatient hospital procedures. Plans rarely cover more than a portion of those costs, which may add up to tens of thousands of dollars when severe illness strikes.

http://health.usnews.com/health-news/health-insurance/articles/2012/10/0…

No surprise. The title of this article says what we already knew: “Many Insurance Plans Heap Healthcare Costs on Consumers.” Further, individuals and families most often select plans based on how easily affordable the premium is, and those plans can easily exceed the supposed out-of-pocket maximum.

The Affordable Care Act includes some measures that will reduce some of the abuses of these plans, but it still leaves in place the fundamental infrastructure of private health plans. Shoppers in the state health insurance exchanges should understand that the plans they purchase will ensure neither financial security nor health security. We can do far better, beginning with establishing a single payer infrastructure.

U-Shaped Curve of Health Status and Coverage

Posted by on Tuesday, Oct 2, 2012

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 Status, Health Insurance, and Medical Services Utilization: 2010

By Brett O’Hara and Kyle Caswell
United States Census Bureau: Current Population Reports, October 2012

There is a U-shaped relationship between health status and having any type of health insurance coverage. Among all people who reported excellent health, 85.0 percent were insured. For those who reported good health, 80.2 percent had health insurance coverage. Finally, 85.1 percent of people who reported poor health also had health insurance coverage.

This U-shaped relationship for the overall insurance rate is partially attributable to trends in the type of health insurance coverage. For example, 15.7 percent of people with excellent health reported having only public insurance, compared with 44.7 percent of people with poor health. On the other hand, the percentage of people with excellent health who had private health insurance was 69.3 percent, compared with 40.4 percent of people in poor health.

http://www.census.gov/prod/2012pubs/p70-133.pdf

This seemingly mundane observation from this Census Bureau report provides great insight into the problems with health care financing in the United States.

It is astonishing that a country that spends so much on health care would have a U-shaped curve, or any curve for that matter, on the relationship between health status and whether or not one is insured.

Considering our financing system, the curve is easy to understand. People in excellent health also tend to have favorable socioeconomic circumstances that would result in higher enrollment in private insurance plans. Likewise, people in poor health tend to have less favorable socioeconomic circumstances that would result in higher enrollment in public insurance programs. People in good health would fall in between and thus would lie in the trough of the U-shaped curve, with lower rates of insurance than those well off and those benefiting from government programs.

If we had a decent health care financing system, wouldn’t those in good health be as well covered as those in excellent health and those with public programs? More importantly, shouldn’t either end of the U-shaped curve reach 100 percent coverage? And wouldn’t the trough be wiped out so everyone with good health were covered as well?

The Affordable Care Act might shift the entire curve up as more are covered, but the 30 million who will remain uninsured will perpetuate the bizarre U-shape of the curve. We need a flat line, at the top, with 100 percent coverage. That’s everyone, like we would have in an improved Medicare for all.

Small business owners under the Affordable Care Act

Posted by on Monday, Oct 1, 2012

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

How Small Business Owners Get Health Insurance

By Larry Levitt, Anthony Damico, and Gary Claxton
Kaiser Family Foundation, Health Insurance and Reform, September 28, 2012

As with any economic policy issue, there has been much discussion of how the Affordable Care Act (ACA) will affect small businesses. But, there’s been very little focus on how the health reform law will affect the owners of those businesses as people.

As our recently released Employer Health Benefits Survey shows, small businesses are much less likely than larger businesses to offer health benefits to their workers. Half of businesses with 3-9 workers and 73% of firms with 10-24 workers provide health insurance. That contrasts with 98% of firms with 200 or more workers that offer health coverage.

The workers in these firms that do not offer coverage must rely on employer-based insurance through a family member, buying insurance in the individual market (assuming they can afford the coverage and do not have a pre-existing health condition), or in many cases going uninsured.

But what about the owners of these small businesses? They’re pretty much in the same boat.

A few striking things emerge from this analysis:

• About one in four small business owners is uninsured, roughly the same as for non-elderly adults generally.

• Just 40% of small business owners get job-based insurance, either from their own job or through a family member. In contrast, almost six in ten non-elderly adults get their insurance through an employer.

• Small business owners rely heavily on the individual insurance market, with 30% of them buying “other private insurance” (the vast majority of which is coverage purchased in the individual market).

This suggests that the biggest effects the ACA will have on small business owners may not be changes in the rules for the small business insurance market, but rather the changes in the individual insurance market: guaranteed access to coverage and no premium surcharges for people with pre-existing health conditions, limits on how much premiums can vary by age, a requirement that all insurers cover a set of “essential” benefits, the creation of health insurance exchanges, the requirement to be insured, and tax credits to make premiums more affordable. In fact, an estimated 60% of small business owners now buying insurance in the individual market have incomes up to 400% of the poverty level and would be eligible for tax credits in exchanges or Medicaid, and 83% of owners who are now uninsured would be eligible for subsidized coverage (split about equally between tax credits and Medicaid).

It may be that we can gain more insight into the implications of policy issues like health reform for small business by focusing less on the businesses themselves and more on the people who own them.

http://healthreform.kff.org/en/notes-on-health-insurance-and-reform/2012/september/how-small-business-owners-get-health-insurance.aspx

Census tables on firm sizes, receipts and payrolls:
http://www.census.gov/econ/smallbus.html

In both policy and political debates, small business owners have been separated out for special attention as “job creators” who should not have to pay higher marginal income tax rates on the portion of their incomes over $1 million. This deceptive framing that falsely suggests that they are the primary drivers of our economy masks the fact that most small business owners have very modest incomes and are heavily dependent on the dysfunctional individual insurance market, and one-fourth of them aren’t even insured.

Over three-fourths of firms have no payroll, so these represent self-employed business owners, presumably with very modest incomes on average (see Census link above). Of firms with payrolls, over half have total receipts of less than $100,000 which is used for payrolls, all other business expenses, and the net income of the business owner. Most small business owners do not fall into the prototype “job creators” that the politicians keep talking about.

They have a problem with health insurance. This Kaiser reports shows that many of them will benefit from the improvements in the individual insurance market that are required by the Affordable Care Act. But, as we have shown many times in the past, these plans will still have unaffordable premiums and unaffordable out-of-pocket costs, even with the subsidies to be provided by the Act. Many of them will remain in the ranks of the uninsured, estimated by the CBO to be 30 million people. The Affordable Care Act will not meet the health care needs of far too many small business owners.

Our small business owners deserve what all of us deserve: an affordable health care system that takes care of everyone – an improved Medicare for all.

Wealth redistribution for health care

Posted by on Friday, Sep 28, 2012

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.

Redistribution of Wealth in America

By Uwe E. Reinhardt
The New York Times, September 28, 2012

A recent article in The Washington Post and an audio clip accompanying it on the Web featured an excerpt from a speech in 1998 by Barack Obama, then an Illinois state senator, at Loyola University Chicago.

In that speech he remarked, “I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.”

The article then quotes Mitt Romney: “I know there are some who believe that if you simply take from some and give to others then we’ll all be better off. It’s known as redistribution. It’s never been a characteristic of America.”

Really?

Aside from hard-core libertarians, who view the sanctity of justly begotten private property as the overarching social value and any form of coerced redistribution as unjust, how many Americans on the left and right of the political spectrum would disagree with Mr. Obama’s very general and cautiously phrased statement?

In fact, I wonder whether even Governor Romney actually disagrees with that general statement, aside from some dispute over “the certain level” at which redistribution takes place. After all, he has promised elderly voters to protect the highly redistributive Medicare program, which would remain highly redistributive, or become more so, under proposals by his running mate, Representative Paul D. Ryan, for restructuring Medicare.

The fact is that redistributive government policy — mainly through benefits-in-kind programs, agricultural policy and the like — has been very much a characteristic of American life, just as it has been in every economically developed nation, albeit at different levels.

At issue between the two political camps in this election season, then, is not redistribution per se, which is as American as apple pie. Rather, at issue is the “certain level” to which that redistribution is to be pushed. An honest and thoughtful debate on that would certainly be useful at this time. It would be useful at any time.

To be respectful to voters, such a debate should proceed at a level concrete enough to allow voters — or at least researchers and news organizations — to estimate fairly precisely how different families would fare under the different visions of that “certain level.”

It is the minimum voters ought to expect from political candidates.

http://economix.blogs.nytimes.com/2012/09/28/redistribution-of-wealth-in-america/

Comment originally published on the New York Times Economix blog.

Even though Mitt Romney derides redistribution, he too actually supports it. “Romneycare” was prompted by an opportunity to use a larger share of federal Medicaid funds if they could design a program that would comply with federal requirements. Although Medicaid is a program with redistribution to the poor, in this instance it was also a redistribution to Massachusetts from the taxpayers of all other states, since Massachusetts would have had to forgo the funds had they not acted.

Romney is now taking pride in that transfer, but at the same time he rejects “Obamacare,” even though it is a program which ensures a similar redistribution as he supported in Massachusetts, but with a greater degree of fairness in the redistribution between states.

We could dismiss this as the silliness typical of electoral politics, except that the politicians carry through with policy once they are in control. That has consequences. We have the most expensive health care system of all nations, yet also one of the most inequitable, partly because of our failure to adopt policies that would ensure the fairest redistribution through an efficient health care financing system.

The most efficient system that eventually would receive the support of the majority of U.S. citizens would be an improved Medicare program that served everyone. That would be the right way to redistribute our wealth to the benefit of our health, if only we citizens had the political wisdom to demand it.

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