New York HMO/POS death spiral

Posted by on Tuesday, Apr 28, 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.

Consumer Guide to HMOs

New York State Department of Insurance

Choices Available for Individual Coverage

Under New York State Insurance Law, New Yorkers purchasing health insurance on their own can choose either an HMO or an HMO/POS plan option at any time during the year. You cannot be denied coverage if you have health problems, but you may be subject to a waiting period of up to one year for certain pre-existing conditions.

HMOs deliver health care to members using provider networks, which are groups of doctors, hospitals and other health care providers that have agreed to serve members of a particular HMO. Health benefits are covered if the member uses providers that are in-network.

All New York HMOs also offer a point of service (POS) option that allows members to seek care from providers that are out-of-network. Services provided by out-of-network providers generally cost members more in out-of-pocket expenses.


Premium Rates for Standard Individual Health Plans

April 2009

New York County

Monthly family premium rates for Point of Service Plans (POS)

$4450 – Aetna Health. Inc.
$3776 – Atlantis Health Plan, Inc.
$4066 – Empire BlueCross BlueShield HMO
$6824 – GHI HMO Select, Inc.
$4187 – Health Insurance Plan of Greater New York, Inc.
$3816 – Health Net of New York, Inc.
$3500 – Managed Health, Inc.
$4208 – Oxford Health Plans (NY), Inc.

HMO family rates for these same insurers range from $2266 to $5686

So in New York County, for a premium of about $50,000 per year, you can have a choice of physicians and hospitals for your family, although you will have to pay more in out-of-pocket expenses if you select out-of-network providers. If you don’t mind losing choice by staying within the HMO for all of your care, you can have your family covered for under $40,000 per year.

What is going on here? Why are the premiums so high?

Well, first of all, New York has addressed the problem of underinsurance by requiring, through regulation, that insurers provide adequate benefits. Also, they must accept anyone, regardless of health status (though they can enforce a waiting period to prevent individuals from waiting until they need care to apply for coverage). Innovative insurance products that keep premiums competitive by shifting significant costs to the insured are prohibited in New York. Health care is very expensive in the United States, so premiums that reflect the true costs will be quite high.

Per capita spending for health care is already at $8,100 per year. For a family of four, that would be about $32,000, but these numbers in New York are even higher. What explains that? If you had an income of $80,000 per year, and you and your family are healthy, and you are told that your insurance premium will be $50,000, what would you do? You really don’t have much choice; you’d wing it. If you had ongoing medical expenses of maybe $250,000 per year, what would you do? You would try to stay in the plan and somehow pay that $50,000.

This is the classic “death spiral” of health insurance. A ever increasing number of individuals who are healthy would leave the plan, leaving within the risk pool the very high cost patients. Premiums skyrocket and become unaffordable for most.

The private insurance industry has an answer for this. They are asking Congress to require everyone, through an individual mandate, to purchase insurance so that the risk pools remain diluted with the large numbers of people who are healthy. That might take care of the death spiral, but it glosses over a very important point.

In most states, plans in the individual market are underinsurance products, and true reform must bring an end to their underinsurance innovations, otherwise people who need medical care will continue to face financial hardship. The New York experiment has demonstrated that well regulated individual plans (which Congress promises us) are too expensive. Congress understands this so they say that we should be able to chose our plans through a “connector” so that we don’t have to pay broker fees. Come on! It’s health care costs that are breaking us!

At today’s costs, private plans that are adequate to prevent financial hardship in the face of medical need must have unaffordable premiums, whether or not in a connector. We need to eliminate this obsolete system of premiums tied to a private package of health benefits. We desperately need an equitable, efficient, single payer national health program. Each person pays his or her fair share, and everyone gets health care.

And what is Congress preparing for us behind those closed doors? Look again at the premiums for New York County. At least you will have a choice of plans with perhaps $40,000 premiums, and for another $10,000 plus out-of-pocket cost sharing, you can have your choice of providers as well.

You say that premiums won’t be that high if we eliminate the death spiral? President Obama has already said that you can’t mandate people to buy an insurance plan they can’t pay for. That keeps the death spiral in play.

A funeral dirge for private health insurance?

Posted by on Tuesday, Apr 28, 2009

Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It
By John Geyman, M.D.
Common Courage Press, 2008
Softcover, 251 pp., $18.95
(Special price of $10 from PNHP Store)

Book review by A.R. Strobeck Jr.

Dr. John Geyman, a longtime physician and professor emeritus of family medicine at the University of Washington, has written several books about health care. In his latest work, “Do Not Resuscitate,” he provides us with a highly informative and critical analysis of the U.S. private health insurance industry. Given the current health reform debate, it could not have come at a better time.

Geyman opens with a startling premise: the current debate of how to pay for health insurance ignores “a profoundly important fact: … the health insurance industry is dying.” Private health insurance, the historical cornerstone of U.S. health care financing, is quite simply “not sustainable and has failed the public interest.”

As evidence, he cites 50 million uninsured Americans; 18,000 deaths annually from lack of insurance; and tens of millions of underinsured persons who would face severe economic hardship were they to get sick. Medical bills contribute to more than half of all personal bankruptcies in the U.S. today; about three-fourths of those had insurance at the onset of their illness.

Meanwhile the cost of insurance premiums goes up and up. If the rate of increase continues, he says, premiums will consume all of an average family’s income by 2025. Yes, you read that right: all of family income.

Geyman has a knack for presenting statistical data in plain, accessible language, a trait he may have learned as a rural doctor. But make no mistake: his data is up-to-date and relies on the latest medical literature. The book is also heavily footnoted and amply illustrated with charts and tables.

The widespread consensus that health care is broken and in urgent need of repair is reflected in daily headlines and in recent pronouncements from the Obama administration. But Geyman points to a growing conviction among health policy experts that just any kind of reform will not do, that “incremental ‘reforms’ will not resolve the inequities, access, cost and quality problems of our unaccountable market-based system.”

Before outlining the kind of reform he says is needed, he traces the historical roots and evolution of the U.S. health insurance industry from the early decades of the last century. The industry started largely through the efforts of not-for-profit groups who controlled costs by spreading the risk over large groups of people.

Since the end of World War II, however, private health insurance “has been transformed from the quasi-public partnership in its pioneering years to an enormous industry on a corporate mission of profit over service.” Whereas private health insurance “once had a mission to serve the public interest,” today “the industry places its own self-interest above the public interest” and avoids risk rather than spreading it.

Geyman explains how today’s private health insurance companies – dominated by giants like Wellpoint, United Health and Aetna – strive to maximize profit through devising new ways to cut the quantity, quality and access to care.

Private insurers understand well that a relatively small proportion of persons account for a large proportion of health care spending, so the companies find ways of excluding those who need care from coverage, e.g. by invoking pre-existing condition clauses, re-underwriting policies with higher premiums for sick enrollees, denying claims and cancelling policies outright.

Much of the private insurance workforce and administrative overhead is dedicated to denying care and avoiding the payment of medical costs. An army of claim deniers has sprung up over the past three decades: the number of administrative personnel in the private insurance industry has grown 25 times more rapidly than the number of U.S. physicians.

The bulking up of these and other administrative costs – including marketing expenses, payouts to shareholders and CEOs, and the huge paperwork burden on doctors, hospitals and patients – has resulted in the intolerable situation where more than one-third of every health care dollar in the U.S. goes to wasteful bureaucracy.

Geyman effectively debunks many of the myths private insurers tout – that people are uninsured because they prefer to be, or that the uninsured usually find care anyhow. And as for those on the right who cry “Socialism!” every time national health care is mentioned, he reminds us that Teddy Roosevelt was attacked as a socialist in 1912 for advocating a national health insurance program.

Finally, Geyman describes the type of national health insurance program that he would support – single payer – similar in most aspects to that found in Canada. He believes that the transition from a for-profit system run by corporate stakeholders to a not-for-profit system “will eliminate much of the profiteering that goes on today.”

The new system will spread risk among the entire U.S. population. Care will be publicly funded, but privately delivered. People will go to the doctor and hospital of their choice. By eliminating the fragmentation and waste of our multi-payer system, the single-payer system will yield administrative cost savings – estimated at $350 billion annually – sufficient to provide comprehensive and quality care to everyone and to eliminate all co-pays and deductibles.

Geyman’s book is compelling. It’s also a must-read for anyone concerned about the future of health care in the United States.

A.R. Strobeck Jr. worked for many years in health care administration. He resides in Chicago.

Marie Cocco on insurers' definition of reform

Posted by on Monday, Apr 27, 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 reform with no reform

By Marie Cocco
April 25, 2009

Maintaining what amounts to a monopoly on insurance for the working-age population has become a central goal of the insurance industry, which rightly fears that the government will provide more comprehensive coverage at a lower cost. This is, of course, the whole point of overhauling the insurance system. But never mind.

The industry worries that Americans will find out not only that government-supported health insurance isn’t a socialist catastrophe (see, for example, Medicare) but a fairer, lower cost and more efficient system than the expensive, inefficient – and failing – market-based system we have now.

Insurers have gone so far as to offer to stop charging people with existing medical conditions more for coverage, if only Congress and the Obama administration would continue to go along with a system more like the one we have now than the one that we actually need.

In essence, this is what the proponents of such a system want: a new and “reformed” health insurance system that works essentially like ours does today.

But the very reason we are again going down the politically treacherous path of attempting reform is that the system we have doesn’t work, not by any standard.

So far we have “reformed” the health insurance system by reinforcing precisely what’s wrong with it. To do this again would yield precisely the same result.

It wouldn’t be a reformed system. It would be just another way for the insurance industry to game the one we already have.

Everyone is in agreement that health care financing must be reformed. Most believe that the goal of reform should be to provide everyone with all necessary health care under a payment system that will prevent financial hardship for each one of us.

For the insurance industry, reform means expanding their successful business model to include more individuals in their plans while shifting the higher costs to the government (taxpayers). Most people do not want to be required to purchase health plans at premiums they cannot afford, and then be stuck with inadequate coverage designed to keep premiums from climbing even higher. Yet, as Marie Cocco makes clear, the insurance industry’s version of reform would reinforce precisely what is wrong with our health care financing.

So members of Congress continue to insist that a public insurance program that would achieve our goals is off the table, while they meet behind closed doors with representatives of the insurance industry, crafting reform that will cost much more but leave far too many of us without the protection we need.

Is complacency our problem?

complacency: “A feeling of contentment or self-satisfaction, especially when coupled with an unawareness of danger, trouble, or controversy.” (American Heritage Dictionary)

A Health Care Home Run

Posted by on Sunday, Apr 26, 2009

A Health Care Home Run
by Lisa Nilles, M.D.
April 26, 2009

It’s the bottom of the ninth inning in the 2009 Health Care World Series. Two outs. Team Single-Payer is down by three runs, and at bat. Their fans – the uninsured, the underinsured, the sick and the bankrupt – are cheering wildly. A window to victory is open.

The fans in the luxury box suites – supporters of Team Status Quo – act cool, but can’t celebrate just yet. It’s been a surprise to all, particularly to the baseball pundits, that Team Single-Payer, an under-funded team without corporate sponsorship, got this far. Surely they can’t win.

Batter up. As he takes a few practice swings, he thinks of his wife, who just lost her job and their health insurance. The pitch. The swing. A single.

The next batter wears a medal given to him by all the people excluded from health insurance because they have previously battled cancer. They are in his mind as he keeps his eye on the ball. He swings with all his might, all his anger, and all his skill. The ball soars into the sky, and then tumbles to the ground as the outfielders collide with each other. Runners on first and second.

The batter now up has just moved up from a long career in the minors. He never thought he would make it to this day, but long years of training, patience and perseverance pay off. He walks. Bases loaded.

The manager of Team Status Quo calls a time out, and consults with his players. They call on their ace, the one who has appeared in all their print, radio, and television ads. His mere appearance on the mound will intimidate Team Single-Payer.

The fans are on their feet. This is the moment they have been waiting for. The final standoff with the titans of Team Status Quo. The roar is deafening. The chant begins, “Home-run! Home run! Home-run!” They chant as if their jobs, homes, health, and lives depended on a win, for indeed they do.

The batter steps up. Bases loaded. The pitch is on the way . . .

Merton Bernstein and Nancy Pelosi on applying science to health care reform

Posted by on Friday, Apr 24, 2009

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

Propaganda And Prejudice Distort The Health Reform Debate

By Merton Bernstein, the Walter D. Coles Professor of Law Emeritus at Washington University
Health Affairs Blog
April 22, 2009

Science does not permit ideology to foreclose inquiry; it requires facing facts and following where they and logic lead. Hence many cheered when President Barack Obama announced that science is back, that predisposition will no longer be permitted to trump reality…

… the Obama, Baucus, Grassley, CBO, and other playlists exclude consideration of Medicare-for-all. With rising discomfort with the price tag of recovery programs, those desiring comprehensive health care cannot afford to disregard a program with such enormous savings. If Medicare-for-all gets “on the table” before the Senate Finance and House Ways and Means committees, the CBO must report its vast savings and its greater efficiency and effectiveness compared with more expensive alternatives. Only by censorship — only by treating Medicare-for-all as nonexistent — can lesser alternatives be discussed with a straight face.

And censorship is not compatible with science.


Pelosi Pushes For Truth Commission

By Jennifer Skalka
April 22, 2009

Nancy Pelosi, during a Christian Science Monitor event:

“As our members came back from their recess, a great deal of what they heard out there was public options, public options, public options, public options. In our caucus, over and over again, we hear single payer, single payer, single payer. Well, it’s not going to be a single payer. … We had an opportunity for that awhile back, and it was not realized. And that’s not what it’s going to be. So we had to take people from a place that they see universal, affordable, quality health care available best in single payer and say this can be achieved in other ways.”

Whether you call it Medicare-for-all, or national health insurance, or single payer, Merton Bernstein describes well the irrational, unscientific effort to keep off the table the concept of a truly universal, efficient, publicly administered and publicly financed national health program.

Nancy Pelosi’s comments reveal just how determined the Congressional leadership is in keeping single payer off the table. Presumably her comment that “we had an opportunity for that awhile back” refers to the Clinton effort at reform, even though that was a process that quite explicitly excluded single payer as a reform model. The closest the nation has come to embracing the single payer model is the enactment of Medicare. Even though the program requires updating, it has been more effective and more efficient than any other program. A new and improved Medicare is precisely the reform that the nation needs.

For an administration and a Congress that advocates for using science in policy decisions, it is astounding that they would reject health policy science and leave us in the Dark Ages in health care reform.

David Himmelstein's testimony

Posted by on Thursday, Apr 23, 2009

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

Ways to Reduce the Cost of Health Insurance for Employers, Employees and their Families

Health, Employment, Labor, and Pensions Subcommittee Hearing
United States House of Representatives
Committee on Education and Labor
April 23, 2009

Testimony of David U. Himmelstein, M.D.

Mr. Chairman, members of the Committee. My name is David Himmelstein. I am a primary care doctor in Cambridge, Massachusetts and Associate Professor of Medicine at Harvard. I also serve as National Spokesperson for Physicians for a National Health Program. Our 15,000 physician members support non-profit, single payer national health insurance because of overwhelming evidence that lesser reforms will fail.

Health reform must address the cost crisis for insured as well as uninsured Americans. My research group found that illness and medical bills caused about half of all personal bankruptcies in 2001, and even more than that in 2007. Strikingly, three quarters of the medically bankrupt were insured. But their coverage was too skimpy to protect them from financial collapse.

A single payer reform would make care affordable through vast savings on bureaucracy and profits. As my colleagues and I have shown in research published in the New England Journal of Medicine, administration consumes 31% of health spending in the U.S., nearly double what Canada spends. In other words, if we cut our bureaucratic costs to Canadian levels, we’d save nearly $400 billion annually — more than enough to cover the uninsured and to eliminate copayments and deductibles for all Americans. By simplifying its payment system Canada has cut insurance overhead to 1% of premiums — one twentieth of Aetna’s overhead – and eliminated mounds of expensive paperwork for doctors and hospitals. In fact, while cutting insurance overhead could save us $131 billion annually, our insurers waste much more than that because of the useless paperwork they inflict on doctors and hospitals.

A Canadian hospital gets paid like a fire department does in the U.S. It negotiates a global budget with the single insurance plan in its province, and gets one check each month that covers virtually all costs. They don’t have to bill for each bandaid and aspirin tablet. At my hospital, we know our budget on January 1, but we collect it piecemeal in fights with hundreds of insurers over thousands of bills each day. The result is that hundreds of people work for Mass General’s billing department, while Toronto General employs only a handful — mostly to send bills to Americans who wander across the border. Altogether, U.S. hospitals could save about $120 billion annually on bureaucracy under a single payer system.

And doctors in the U.S. waste about $95 billion each year fighting with insurance companies and filling out useless paperwork.

Unfortunately, these massive potential savings on bureaucracy can only be achieved through a single payer reform. A health reform plan that includes a public plan option might realize some savings on insurance overhead. However, as long as multiple private plans coexist with the public plan, hospitals and doctors would have to maintain their costly billing and internal cost tracking apparatus. Indeed, my colleagues and I estimate that even if half of all privately insured Americans switched to a public plan with overhead at Medicare’s level, the administrative savings would amount to only 9% of the savings under single payer.

While administrative savings from a reform that includes a Medicare-like public plan option are modest, at least they’re real. In contrast, other widely touted cost control measures are completely illusory. A raft of studies shows that prevention saves lives, but usually costs money. The recently-completed Medicare demonstration project found no cost savings from chronic disease management programs. And the claim that computers will save money is based on pure conjecture. Indeed, in a study of 3000 U.S. hospitals that my colleagues and I have recently completed, the most computerized hospitals had, if anything, slightly higher costs.

My home state of Massachusetts recent experience with health reform illustrates the dangers of believing overly optimistic cost control claims. Before its passage, the reform’s backers made many of the same claims for savings that we’re hearing today in Washington. Prevention, disease management, computers, and a health insurance exchange were supposed to make reform affordable. Instead, costs have skyrocketed, rising 23% between 2005 and 2007, and the insurance exchange adds 4% for its own administrative costs on top of the already high overhead charged by private insurers. As a result, one in five Massachusetts residents went without care last year because they couldn’t afford it. Hundreds of thousands remain uninsured, and the state has drained money from safety net hospitals and clinics to kept the reform afloat.

In sum, a single payer reform would make universal, comprehensive coverage affordable by diverting hundreds of billions of dollars from bureaucracy to patient care. Lesser reforms — even those that include a public plan option — cannot realize such savings. While reforms that maintain a major role for private insurers may be politically attractive, they are economically and medically nonsensical.


The definitive legislation on health care reform that will be supported by the Democratic leadership in Congress has not yet been written. This important testimony by PNHP’s David Himmelstein confirms that single payer reform is still in play, in spite of dismissive comments by many of those involved.

Instead of sitting back and observing the process, it is imperative that we intensify our efforts to deliver the single payer message. The physical and financial health of the people of our nation depend on it.

Reinhardt's Ways and Means testimony on insurance market reforms

Posted by on Wednesday, Apr 22, 2009

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

Health Reform in the 21st Century: Insurance Market Reforms

Statement of Uwe E. Reinhardt, Ph.D.
House Committee on Ways and Means
April 22, 2009

A much mouthed mantra in our debate on health policy is that “we all want the same thing in health care, but merely quibble over the means to get there.” Nothing could be further from the truth. That debate has been and continues to be a tenacious ideological fight over the social ethic that ought to govern American health care; but we camouflage it as a technical debate strictly over means.

My plea before this Committee and to the Congress is that any health reform proposal put before the American people be preceded with a preamble that clearly articulates the social goals our health system is supposed to pursue and the social ethic it is to observe. Policy makers in other nations routinely do so and accept the constraints that this preamble imposes on their design of health reform. It would be helpful to have a clearly articulated statement on the social ethics for American health care as well.

In a comparatively brief statement, Uwe Reinhardt explained to the members of the House Ways and Means Committee the principles and rationale of social insurance. His statement should be downloaded as a valuable resource for supporting some of the important policies for reform, and for refuting those policies that perpetuate inequities and injustices and may cause even further harm.

Single payer supporters, like me, will be disappointed that he does not dismiss a role for private insurers. But at the same time, we should recognize that he is not talking about America’s private health plans as we know them. Although we will continue to advocate for a pure, publicly administered and publicly financed single payer system, it does not mean that we should remain silent as wrong-headed policies are adopted in the crafting of reform. We should complain loudly and clearly when the principles of social insurance are violated, and then add on why the single payer model would be superior.

Download Professor Reinhardt’s statement now while you have access to the link.

Do Americans support an individual mandate?

Posted by on Tuesday, Apr 21, 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.

Will Americans Support the Individual Mandate?

by Tara Sussman, Robert J. Blendon, and Andrea Louise Campbell
Health Affairs
April 21, 2009

Survey questions

A random half of the sample was asked about a “stand-alone individual mandate.” The survey set the context as follows: “This proposal would require all Americans to have insurance. Most people would still get insurance through their work. People who don’t get insurance from work would have to buy it themselves, or pay a fine if they don’t. People with lower incomes would get help from the government paying the cost of health insurance.”

The other half of the sample was asked about a “shared-responsibility” plan. The context here was as follows: “This proposal would place requirements on individuals, employers, the government, and insurance companies so that everyone shares in the responsibility. Individuals who don’t already have insurance would be required to buy it or pay a fine, with financial help from the government for people with lower incomes. Employers would be required to cover their workers, or pay money into a pool that helps people buy insurance. Government health insurance programs would be expanded. Insurance plans would be required to take anyone who applies, even if they have a prior illness.”

How does support for shared responsibility compare to that for a stand-alone mandate?

A shared-responsibility plan was more popular than the stand-alone mandate in 2008. Fifty-nine percent of the public supported it, compared to the 48 percent who supported the stand-alone mandate.

Do Republicans and Democrats have different reasons for their opinions on mandate-based reform?

Respondents who supported the stand-alone individual mandate plan or the shared-responsibility plan were asked to select from a list their major reasons for support. The most popular reasons were “making sure everyone has health insurance is the right thing to do”; “people with health insurance will get preventive and more continuous care”; and “by requiring the uninsured to get insurance, people won’t face higher health care costs to cover the unpaid medical bills of those who don’t have insurance.” A substantial majority of both Democrats and Republicans offered each of these reasons, but more Democrats than Republicans agreed with the first, principle-based reasoning. Also, more Democrats than Republicans related their support to redistributing the costs of the sick: “to get everyone into the same insurance pool, so we can spread the costs of sick and healthy people over the whole population.”

Similarly, reform opponents were asked to select major reasons for their opposition. Republicans’ and Democrats’ responses reveal their fundamental disagreements on government’s role in health care. Among those who did not support either mandate plan, many more Republicans than Democrats said that the reform would lead to government-run health care or higher taxes, or both. The Democrats who opposed the plans were significantly more likely than the Republicans to say that these reform options were the wrong approach because a single government health plan was needed. Republicans and Democrats also disagreed on the issue of the individual mandate itself. A higher percentage of Republican opponents than Democratic opponents disagreed with the principle of government requiring people to buy insurance. More Democrats than Republicans opposed mandates because they thought that people might not be able to afford the insurance they were being required to purchase.

If this article gains traction, the conclusion that likely will be reported is that Americans support an individual mandate to purchase insurance as long as it incorporates “shared responsibility.”

This interpretation would certainly please insurance industry executives since they have said that they can agree to sell insurance to anyone regardless of preexisting conditions (guaranteed issue), but only if everyone is required to have insurance (individual mandate). The insurance industry would be willing to share the responsibility with individuals, employers and the government.

But what is shared responsibility? The responsibility of the individual is to pay his/her portion of the premium plus all out-of-pocket expenses, including cost sharing and costs of products and services not covered by the insurance plan. The responsibility of the employer is to pay a portion of the employee’s insurance premium, but economists agree that it is really the individual’s forgone wage increases that pays the premium. The government’s responsibility is to pay for part or all of the care provided to individuals who do not have the funds to pay for care, but it is really ultimately individuals who are paying the taxes that fund the government programs. And the responsibility of the private insurance industry? They don’t pay into the system; they take a large amount of funds out of the system – funds that again are ultimately paid by individuals.

So “shared responsibility” is not a sharing of responsibility; all of the responsibility falls on individuals. “Shared responsibility” is merely a rhetorical framing that advances the interests of some of the stakeholders, especially the private insurance industry.

Even if the respondents to the survey accepted the concept of shared responsibility, it would be a real stretch to conclude that a 48 percent support of a stand-alone mandate means that the public is opposed, whereas a 59 percent support of a mandate with shared responsibility is a solid public endorsement (11 percent difference). This is not a ringing endorsement of a concept that is more of a marketing slogan than a genuine policy proposal.

That said, there is an important take-home message from this survey. Those opposed seemed to understand the policy principles involved. Republicans were opposed because of higher taxes and greater government involvement. Democrats were opposed because a single government health program was needed instead of a mandate to purchase private plans that might not be affordable.

Pretending that the marketing ploy of shared responsibility will bring us bipartisan consensus on reform will only reinforce the process that we are about to see. The Republicans have already gained the greatest concession – single payer is off the table – and they will continue to use the process to gain further concessions that will destroy any semblance of health care equity, and then they will vote against the final bill anyway.

Jonathan Cohn interviews Taiwan's Dr. Michael Chen

Posted by on Monday, Apr 20, 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.

TNRtv: The Case for Single-Payer Health Care

By Jonathan Cohn

The Treatment (TNR’s health care blog)
The New Republic
April 17, 2009

At the 2009 World Health Care Congress, TNR senior editor Jonathan Cohn sat down with Dr. Michael Chen, Vice President and CFO of Taiwan’s National Health Insurance Bureau, to discuss the results of Taiwan’s switch to a universal health care system.

Jonathan Cohn (JC): You have what most people refer to as single payer health insurance – the government is the main insurer for everybody.

Dr. Michael Chen (MC): Yes.


JC: How did you decide on that model – the single payer? Why did you go in that direction?

MC: Well, we sent our people around the world to learn their programs, including the United States. Actually, the program is modeled after Medicare. And there are so many similarities – other than that our program covers all of the population, and Medicare covers only the elderly. It seems the way to go to have social insurance…

JC: Now, one issue that comes up in the United States when people talk about a single payer system, or even any kind of a system where the government is defining the benefits, there’s a big concern that there’s not enough choice. People in America… we want to know that you can choose the kind of insurance you want – how much coverage, what services. Is that an issue you dealt with in Taiwan? Was that a concern?

MC: Not at all, because in Taiwan the benefit package is rather comprehensive… We maintain a very long list for prescription drugs – more than twenty thousand items. And the benefit package includes inpatient, outpatient, and dental service which is usually not covered in this country.

JC: Now the flip side is that if you are offering such a generous package, that’s very expensive, is it not? I mean, how do you pay for it?

MC: Not the case.

JC: Not the case. What percentage of GDP?

MC: Six percent of GDP, so that’s very affordable. The premium on average that the family pays is about two percent of the household income because the premium is shared by your employer.

JC: … In this country we spend far more than that, and even looking at Europe – Switzerland, France – they spend a lot more than that also. Are there waiting times for services in Taiwan? Is there something that people are going without? I mean that’s a lot of services for such a little amount of money. I’m trying to figure out what it is that you’re not getting.

MC: No waiting lines.

JC: No waiting lines? I can see a doctor any day I want…

MC: If you are not too particular.. you can visit even a specialist in a matter of minutes…


JC: … If I were to be sitting here with a doctor in private practice in Taiwan – I know in this country doctors worry a lot that Medicare doesn’t pay enough money and that it’s very bureaucratic – what kind of complaints would I hear from them?

MC: Of course, doctors would complain in public, but appreciate it in private – because, you know, especially in this economic downturn, how can you find an industry with assured growth rate annually? Right now they enjoy somewhere between four percent to five percent increased rate, and this is a sure thing.

Our political leaders keep telling us that Americans don’t want single payer, but instead we want a uniquely American solution for all Americans.

So what did Taiwan do? They looked at health care systems throughout the world, and they chose a uniquely American system for Taiwan! – Medicare! – except that they expanded its benefits and included everyone. And it really works well.

So Congress is returning from recess with health care reform at the top of its agenda. They have already decided that single payer is off the table, but they are having difficulty in addressing three issues: 1) the role of government in regulating the private insurance industry and offering a public insurance option, 2) the near impossibility of covering everyone in the fragmented, multi-payer system that they have selected, and 3) the difficulty in finding funds to pay for this model of reform – the most expensive ever devised.

But they’ve taken off the table the one model that would work – the uniquely American program: Medicare for All. Fixing Medicare and providing it for everyone would: 1) define the most effective and efficient role that government could have in health care financing, 2) make coverage completely automatic for absolutely everyone, and 3) reduce inefficiencies and waste that would eliminate the need to search for other funds.

Oh wait… There is that uniquely American industry that helped pay for the elections of our members of Congress: the private insurance industry (no relation to the social insurance private plans of other nations).

What a difficult decision for Congress: taxpayer dollars to support a uniquely American private insurance industry that remains incapable of ensuring affordable health care for all, or efficient financing of a uniquely American Medicare for All that would provide for the health care needs of everyone.

Actually, for Congress that decision is not so difficult. Medicare for All is already off the table.

Hacker says that public option/private exchange would EXPAND private insurance market

Posted by on Wednesday, Apr 15, 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.

Extended discussion of Lewin Group

By Jacob Hacker
Institute for America’s Future
April 11, 2009

Put simply, Health Care for America is a pure, undiluted proposal for public plan choice. So it’s notable that under my proposal, according to the Lewin Group’s analysis of a couple years ago, the public plan ends up with much lower enrollment in the public plan than projected in the Lewin Group’s new analysis (90 million versus over 131 million). (For aficionados, the national insurance exchange in my proposal would have larger enrollment, but around 38 million people in the exchange would choose private plans instead of the public plan.)

In short, the Lewin Group’s hypothetical proposal has three features that guarantee the public plan will be big. Whatever “131 million enrollees in the public plan” represents, it does not represent an accurate picture of Obama’s campaign pronouncements, or Max Baucus’s “White Paper,” or my plan, or any other proposal under serious consideration today.

To get an estimate of how many people will end up in the public plan, therefore, we need to go back to the Lewin Group’s analyses of proposals more or less like what Obama proposed during the campaign–namely, play-or-pay plans with an exchange that features a competing public plan, and without extensive new rules on employment-based insurance. Those analyses (of my proposal or the Commonwealth Fund proposal) show that enrollment in the public plan is likely to be much, much smaller than the Lewin Group’s analysis estimates. Indeed, if you look at the Lewin Group’s analysis of my proposal (again, the maximalist public plan choice approach), more Americans have private insurance after reform than do before–either through their employer or through the new national insurance exchange.

Offering a public plan option within a market of private health plans has been one of the more controversial proposals during the current national dialogue on health care reform.

The opponents of the public option, especially the private insurance industry and the Republican members of Congress, insist that a government-sponsored plan would be an unfair competitor and drive the private insurance industry out of business. Theoretically, the government would do this by extracting unfair concessions from the health care providers, pricing the public option at a lower level than the private insurance sector could ever meet. (This ignores the more important evidence such as the demonstrated greater efficiencies of our public Medicare program when contrasted with the private Medicare Advantage plans.)

The supporters of a public option, especially the progressive community, contend that the public option would be a superior product made more affordable by reducing administrative inefficiencies. They contend that competition would motivate a massive shift to the public option, bringing us much closer to the single payer model that many in the progressive community prefer. (Much has been said about why this approach actually sacrifices most of the single payer advantages and would likely never lead to a single payer system.)

Professor Jacob Hacker of the University of California at Berkeley (and formerly at Yale) has been a leading proponent of reform based on a national insurance exchange of private plans with the addition of a public plan option. And what does he have to say about the impact that a public plan option would have on market share for the private health plans? He says that under his proposal, “more Americans have private insurance after reform than do before — either through their employer or through the new national insurance exchange.”

Get That? Even with a Medicare-like public plan option, the market for the private insurers will expand! That is the real tragedy of this debate over a public plan option. It has led us away from the debate we should be having instead: an affordable single payer national health program for everyone, versus expansion of our over-priced, inequitable, and inefficient system of financing health care through private plans and public programs

Forget about the public plan option! Let’s get rid of the private health plans, and go with single payer!

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