Blue Shield, Kaiser among state insurers fined

By Victoria Colliver
San Francisco Chronicle
November 30, 2010

State regulators Monday fined seven of California’s largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

“Our clear and consistent message is that California’s hospitals and physicians must be paid fairly and on time,” said Cindy Ehnes, director of the Department of Managed Health Care, which is charged with regulating the states’ health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the “tens of millions of dollars,” Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

Five of the insurers, excluding Anthem and Blue Shield, were also found to have improper provider appeals processes.

When doctors and hospital officials try to dispute a claim, they often have to deal with the same individual who originally denied the claim in the appeals process, Ehnes said.

Cracking down on the health plans for not properly paying providers helps consumers, said Anthony Wright, executive director of Health Access California.

“Consumers would rather that the time and resources of health providers go to patient care, rather than in fighting to get insurers to pay correctly,” he said.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/11/30/BUSR1GJ01V.DTL

What services do the private insurers provide for us? Processing claims? They won’t even do that right 20 percent of the time, according to this California audit. The total of $5 million in fines that they were assessed is so paltry that they have no incentive to discontinue their highly profitable policy of delaying and denying legitimate claims.

Let’s have the members of Congress fire the insurers and set up our own national health program – an improved Medicare that covers everyone. If they won’t do that then let’s fire them, replacing them with responsible elected stewards who will.

Reinhardt: Repeal Health Care, Make GOP Cut Costs

By John Greenwald
The Fiscal Times
November 28, 2010

In a freewheeling interview with The Fiscal Times, (Uwe Reinhardt) critiques the new health care reform law — including its lack of cost containment — and recent proposals from the president’s deficit-cutting panel. Never one to mince words, Reinhardt also discusses what he sees as the real culprit behind soaring health care costs, why he doubts a single payer health care system could work in the United States — and where he believes the country’s founding fathers went wrong.

The Fiscal Times (TFT): What would a high-performing national health care system look like?

Uwe Reinhardt (UR): I think the Germans, the Swiss, the Dutch have a perfectly fine approach. It’s not a single-payer system. While I’m a Canadian I am not for [single payer] in the U.S. because we do not have a political system that can handle it responsibly. Canada has a parliamentary system that insulates considerably the public program from lobbying.

TFT: So you favor universal coverage but not a single payer system?

UR: For other countries I do [favor single payer] but we can’t run it. You need a responsible system of governance. Whatever you can say about U.S. governance, you cannot call it responsible. You really couldn’t. I think the founding fathers gave us an impotent government that acts quite irresponsibly. I don’t think parliamentary systems are that bad.

http://www.thefiscaltimes.com/Issues/Health-Care/2010/11/28/GOP-Health-Reform-Repeal.aspx

Single payer advocates frequently are perplexed by Uwe Reinhardt’s positions on health care reform.

He seems to support health care justice. He frequently uses the example of the waitress who is trying her best to support herself and her child, but who is unable to afford health care. By extrapolation, a just society would not let her or her child go without the essential health care services that they might need.

Yet what about single payer? He is a supporter for single payer, but for other countries. In this interview he states that he does not support single payer for the United States. The reason he gives is that “the founding fathers gave us an impotent government that acts quite irresponsibly.”

Right now the British and the Canadians are facing an assault on their public health systems by their conservative governments. In the United States, we are facing an assault on our Medicare program by the conservatives and right-leaning moderates. Although we don’t know how much damage, if any, will be done to the systems, it is highly probable that all three of the systems will survive intact considering the strong public support in each nation.

Does our government act irresponsibly? Wars? Income transfer from the workers to the wealthy? Neglect of poverty and other social inequities? Of course our leaders have been irresponsible, and so have the leaders of all other nations, but only at times. Social Security? Medicare? Our national parks? Most government activities are quite responsible and certainly do not set us apart from other nations.

Although Reinhardt criticizes the new health care reform law for failing to contain costs, he states, “The private sector is the inflationary component of health care, not Medicare or Medicaid.” Can he seriously contend that these government programs are irresponsible and impotent when they continue to outperform the private plans on cost containment? Considering this, how can he support single payer for other nations, yet reject it for the United States?

Government impotence and irresponsibility are not reasons to reject single payer. They are merely an excuse as to why we haven’t enacted it yet. What we need is more responsible people power. Let’s get busy stirring it up.

Rema Nagarajan interviews Joseph Stiglitz

The Times of India
November 26, 2010

Why have you been pitching for a single payer system for health insurance rather than a system where several private companies compete?

The US model of private health insurers has been proven inefficient and expensive. Rather than provide better healthcare at lower costs, insurance companies innovate at finding better ways of discrimination. They are inefficient because they are trying to figure out how to insure people who don’t need the cover and keep out people who need it. With many companies, they also need to spend on marketing and advertising. The incentives are all wrong and the transaction costs are very high and you have to give them a high profit. In health, social and private incentives are totally disparate. Competition does not work in healthcare especially in the health insurance market. Several countries like the UK, France and Sweden have a single payer system, differing only in the organisation of healthcare delivery.

Several health insurance companies are setting up business here. Should India be worried?

India would be in a terrible mess, given the size of its population, if it went down the wrong route (of private companies for health insurance). They should learn from the mess that the US has got into. Once the companies start making profits, special interests in politics will come into play and it will be difficult to get them out.

http://timesofindia.indiatimes.com/home/opinion/edit-page/The-US-model-of-private-health-insurers-is-inefficient-expensive/articleshow/6989634.cms

Nobel laureate Joseph Stiglitz understands single payer. President Obama knows that he does. So why doesn’t…

(No, health care reform shouldn’t be reduced to a mere conundrum.)

The Fate’s Lieutenant

Last week the proposal by the co-chairs of the president’s bipartisan National Commission on Fiscal Responsibility and Reform reverberated on down the mass media echo chamber. They called for substantial cuts in Social Security and Medicare benefits, among other things that would undermine our basic standard of living.

The media saturation was intense. Even for casual news-watchers it was like being herded into a “captive audience meeting,” one of those smarmy PR jobs that company bosses hire out to consultants, who tell the workers through a microphone why they don’t need a union.

The proposals of the co-chairs are ambitious. They would re-make the United States of America as a place not only without unions, but largely without a middle class: leaving on one side low-wage workers (who foot the bill for their own benefits), and on the other side the super-rich, with precious few in the middle.

The editors at our local paper, the Albany Times Union went ahead and amplified the message, accepting it rather than holding it up to scrutiny. Starting with the premise that “the country needs to confront what it would take to stabilize the accumulation of the federal debt,” they uncritically embraced the co-chairs’ proposal, concluding that “Every one of its provisions deserves serious consideration.” They even supported the messenger, although in a backhanded way:

Hardly an unreasonable plan, even as it’s advanced by the likes of Mr. Simpson, who’s previously likened Social Security to a giant mammary gland and called its recipients “greedy geezers.”

Republican co-chair of the president’s commission, Alan Simpson is a conservative Republican fossil. His counterpart, Erskine Bowles, is a conservative Democratic Party dinosaur. What they share, besides being millionaires whose “public service” helped to enhance their immense personal fortunes, are failed ideas that ought to remain extinct. But here they are, the president’s appointees.

What to say? Well, if you want fossilized, vengeful and smarmy at center stage, then Alan Simpson is your man, Mr. President.

*

Back in June Mr. Simpson unhinged upon Alex Lawson of Social Security Works with an expletive-laced rant. Simpson was full of personal insults yet vacant of facts, rambling on.

When economist James K. Galbraith, professor of government at The University of Texas, gave his must-read testimony to the deficit commission, he cited that rant as evidence of Simpson’s incompetence. Galbraith questioned the legitimacy of the commission and demanded that the body advance no proposals.

Then in September Simpson stuck his foot into his mouth again with the line the Times Union editors mentioned, calling Social Security – “a milk cow with 310 million -” … udders. (You can figure out the profanity Simpson used.)

The National Organization for Women immediately responded, saying that Simpson’s quip amounted to a crass insult “to those who depend on Social Security – many of them older women, children and people with disabilities.” Soon afterward NOW President Terry O’Neill delivered over 1,500 baby bottle nipples, sent by NOW members from across the country, to Mr. Simpson.

I love Terry O’Neill. She is so courageous and unflappable. You can see her with Simpson on YouTube. As she hands her “gift” to Mr. Simpson, she smiles and says it is given “in the spirit of hoping that you’ll have the decency to resign.” She then presses Simpson for a pledge not to cut Social Security benefits. He acquits himself badly. As he tries to dodge and dismiss Ms. O’Neill, Simpson seems ever more cadaveric and sarcastic and ultimately furious.

Last week as the media echoed Bowles and Simpson’s proposals, particular delight focused on Alan Simpson’s rhetoric. The Times Union editors joined in. Here’s their lead:

Leave it to Alan Simpson, so blunt and irreverent, to set the tone for the debate that America has avoided for far too long.

A particularly illuminating Simpson quote was noted in the Wall Street Journal (and elsewhere):

“We have harpooned every whale in the ocean and some of the minnows,” said co-chairman Alan Simpson, a retired Wyoming Republican senator. “No one has ever done that before.”

Who does Alan Simpson think he is? Captain Ahab?

Like the captain of The Pequod, the ship in Herman Melville’s classic novel Moby Dick, the retired Wyoming senator lusts after a monomaniacal purpose – in this case, to send the middle class to the bottom, by raising the retirement age, slashing social spending, further privatizing Medicare, privatizing Social Security, taxing health insurance benefits and lowering the tax rate for corporations.

With unemployment at nearly 10% officially – and unofficially twice that – with health care costs sinking us all, with two-income households the norm and two, even three jobs for many workers a necessity, an alternative vision stands in plain sight yet scarcely makes the news. Nicholas Kristof proved this rule with an exceptional column last week titled “A Hedge Fund Republic?” He reminded us that the poorer 90 percent of people in the United States own only 29 percent of the wealth, while the wealthiest 1 percent own an even greater share, 34 percent of the total.

When the top 10 percent possess more than two-thirds of total holdings, it is time to increase taxes on the rich. We could easily afford to shorten the workweek with no cut in pay and also lower the retirement age – and each of these would put millions of people to work. We can also extend and improve Medicare to cover all necessary care for everyone, from birth, something that would save hundreds of billions of dollars annually. Bringing the troops home from Iraq and Afghanistan would not only save trillions of dollars, but human lives.

As for Social Security, only the first $106,800 of income is taxed for the Social Security fund. Nancy Altman and Eric Kingson point out that if this cap were scrapped, and all income was taxed at the present rate, benefits could be raised across the board and Social Security would be assured solvency for 75 years to come. As it is, there is no immediate crisis in Social Security funding. Well, then, let’s scrap the cap!

*

At the end of Moby Dick only the young sailor Ishmael survives, afloat on a coffin. But along the way the first mate, Starbuck, suggests to the revenge-crazed captain that he has got the great whale all wrong. Ironically, today “Starbucks” (named for Melville’s tragic character) has become a designer coffee-shop that symbolizes a middle-class lifestyle rich with lattes and car payments, i-Pods and consumer credit debts.

Although partisan differences loudly dominate when it comes to the TV, we have seen a bipartisan commitment to privatize profit and socialize risk, as President Bush and then President Obama both rushed to rescue Wall Street’s financiers and their insurers and bankers, instead of the debtors.

Now Alan Simpson, Mr. Obama’s appointee, wants “to harpoon every whale in the ocean” even if it means we all go down with the ship. For the co-captains of the deficit commission the credo is no longer E pluribus unum (“out of many, one”), but “I’ve got mine – you swim for it!”

Isn’t it simply absurd to hear retired millionaires like Simpson and Bowles, whose families grew wealthy at taxpayer expense, telling the people of the United States that they live too long to be allowed to retire at age 65? The very idea should be laughed off the stage, not championed and not echoed.

There is still hope, for in reality they have not harpooned any whales. All they’ve really done is issue a report and attend some press events. Yet as the media, including this newspaper, chooses to parrot Simpson’s maniacal ravings, we find ourselves like Starbuck and Ishmael, captive audience aboard The Pequod.

*
*

Horrible old man! Who’s over him, he cries; —aye, he would be a democrat to all above; look, how he lords it over all below! Oh! I plainly see my miserable office,— to obey, rebelling; and worse yet, to hate with touch of pity! For in his eyes I read some lurid woe would shrivel me up, had I it. Yet is there hope. Time and tide flow wide.

– Starbuck, in Moby Dick by Herman Melville (1851).

Americans pay too much for health care — in charts

By Ezra Klein
The Washington Post
November 23, 2010

There are a lot of complicated explanations for why American health-care costs so much, but there are also some simple ones. Chief among them is “we pay too much.” And I don’t mean in general. I mean specifically. Mountains of research show that for every piece of care you might name — a drug, a doctor visit, a diagnostic — you’ll pay far more in the United States than in other countries.

(He posts charts demonstrating higher health care prices in the U.S.)

The most positive spin you can give this data is that we’re paying to subsidize innovation for everyone, and though that’s not ideal, it’s better than that innovation not happening. The less positive spin is that we’re just getting ripped off.

For an analytical take — and a good look at the political economy of the problem — read Alec MacGillis’s October article on the subject.

The basic premise that our prices are higher than those of other nations is certainly correct. Alec MacGillis was precisely on target in the article that you cite.

But the claim that we “subsidize innovation for everyone” needs to be challenged.

Donald Light, in a Health Affairs article last year, wrote, “… a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity.”

Also the Nobel prizes for C-T scanning and MRIs were shared with British scientists. So we don’t even have an exclusive claim on our budget-busting technology. (In fact, the Beetles financed the British development of C-T scanners.)

And our outrageous pricing has proven that the private insurance industry has failed us miserably in its most important function – negotiating value in health care.

Our pharmaceutical and technological firms do excel in one regard. They know how to manipulate the political process to prevent an effective public role in setting best prices (legitimate costs and fair profits), even though all other nations have done so.

Maybe someday we’ll be smart enough to follow their lead, but, until then, we’ll keep paying dearly for the failures of our electorate to become adequately informed and then to take appropriate action in the polling booth.

Fixing Medicare and providing it for everyone would create a beneficent public monopsony (single purchaser) which would be capable of enforcing value in our health care purchases.

Even Milton Friedman’s mentor, F.A. Hayek, wrote, in The Road to Serfdom, “Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”

Klein article and responses:
http://voices.washingtonpost.com/ezra-klein/2010/11/americans_pay_too_much_for_hea.html

International Federation of Health Plans – Comparative Prices:
http://www.ifhp.com/documents/IFHPPricereportfinal.pdf

Alec MacGillis – The price problem that health-care reform failed to cure:
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102203394.html

Donald Light – Global Drug Discovery: Europe Is Ahead:
http://content.healthaffairs.org/cgi/content/abstract/28/5/w969

Health Care Use and Decision Making Among Lower-Income Families in High-Deductible Health Plans

By Jeffrey T. Kullgren, MD, MPH; Alison A. Galbraith, MD, MPH; Virginia L. Hinrichsen, MS, MPH; Irina Miroshnik, MS; Robert B. Penfold, PhD; Meredith B. Rosenthal, PhD; Bruce E. Landon, MD, MBA; Tracy A. Lieu, MD, MPH

Archives of Internal Medicine
November 22, 2010

From the Introduction:

In early 2009, 23% of all nonelderly adults with private insurance, and nearly 50% of adults who purchased coverage through the nongroup market, were enrolled in an HDHP (high-deductible health plan). Because of their relatively low premiums, HDHPs are also playing a prominent role in expanding insurance coverage. For example, most individuals who have purchased unsubsidized plans through the Commonwealth Connector, the new health insurance exchange in Massachusetts, have selected products like HDHPs that offer low premiums with high levels of cost-sharing.

As enrollment in HDHPs has grown, many analysts have voiced concerns about the impact these plans may have on low-income families. Decades of health services research have demonstrated that higher levels of cost-sharing reduce health care utilization, sometimes with greater adverse consequences for low-income patients.

From the Comment:

We found that lower-income families with at least $500 in annualized out-of-pocket expenditures in an HDHP were more likely than higher-income families to delay or forego health care services owing to cost (57% vs 42%).

Overall, we observed relatively high rates of delayed or foregone care in both income groups, with nearly half of all families having either delayed or foregone care in the last 6 months owing to the cost. These rates were substantially higher than the 20% of the US population reporting either unmet need or delayed care in the previous 12 months in the 2007 Heath Tracking Household Survey.

Beyond the implications for clinicians, our findings have important implications for federal health reform. Reform legislation that establishes an individual health insurance mandate could lead more families to enroll in plans with high levels of cost-sharing, as has been seen following the implementation of coverage mandates in Massachusetts.

http://archinte.ama-assn.org/cgi/content/abstract/170/21/1918

And…

Higher Deductibles, Lower Spending

By Reed Abelson
The New York Times
Prescriptions blog
November 22, 2010

As more families find themselves enrolled in health plans with high deductibles, they are increasingly likely to delay or forgo medical care because of the out-of-pocket cost, a new study shows (the study cited above).

Do you think people are better and more savvy consumers when they share in the cost of their medical care?

Three reader responses:

12. Anonymous BE, Belgium
November 23rd, 2010

NO. Medical care should be free at the point of service. The whole point of health insurance is that no one should be financially worse off because they have health problems. High deductible plans violate this maxim.

Furthermore, people are not in a position to judge what is necessary or not. People listen to what their doctor says, and they do it, unless their lack of insurance coverage makes it a financial problem. Patients are not evaluating the effectiveness of various treatments – that is a job for doctors and scientists, not patients. Patients are not consumers – they are people who are suffering who place themselves in the hands of the medical profession.

13. GoozNews, Washington, DC
November 23rd, 2010

RE: eliminating useful v. non-useful care via higher co-pays. It’s not an open question. The Rand Health Insurance Experiment, the only comprehensive study to date, showed that people were just as like to avoid necessary car as unnecessary care when forced to pay higher co-pays and deductibles. This is also common sense. When the quality of a good, in this case health services, has no relationship to price, and consumers lack accurate and timely information about what constitutes high quality, making rational decisions based on price is virtually impossible. It requires extensive research prior to the point of purchase — highly impractical when it comes to health care, which is usually purchased under the duress of immediate illness. Those who advocate “more skin in the game” as the cure for rising health care costs fail to acknowledge these all-too-human realities, or what an economist might call pervasive marketplace failures.

23. Don McCanne, San Juan Capistrano, CA
November 23rd, 2010

What really matters is our total national health expenditures. We are already spreading the risk by contributing to our public and private insurance pools through taxes and/or premiums. So we should decide whether the financial barriers to care that high-deductible health plans create are worth the projected savings in our total health care spending.

Only one-fifth of us use four-fifths of all health care. For this sector of our population, deductibles are rapidly exceeded and have virtually no impact on total national health care spending. (It is in this sector where most of the Dartmouth variations occur, but that is another topic.)

For the four-fifths of us who are relatively healthy, most of us would not decline clearly appropriate care even if it is below the deductible, providing that we had the ability to pay for it. Only the worried-well, perhaps with a common cold, might use the health care system more than necessary, but that doesn’t apply to most of us.

Although the trip to the doctor is almost always for legitimate reasons, perhaps ten percent of the time the marginal care offered might reasonably be declined, providing it is an informed decision. Studies show that about half of that care is still appropriate, so only five percent of care for healthier patients may be of no more value than receiving reassurance that no care is needed (which actually does have value in itself).

Since the four-fifths of us who are healthy consume only twenty percent of total health care, the five percent of our care that might deemed to be inappropriate constitutes only one percent of our national health expenditures (five percent of twenty percent). That one percent is the equivalent of only two or three months of health care inflation – not worthy of more than a footnote in our national health care budget.

We can control health care costs, but high-deductible health plans are not an effective mechanism. They certainly are not worth the price of denying beneficial care based on individual concerns over affordability.

Every other nation has controlled costs by establishing an effective model of social insurance. Unfortunately the model in the Patient Protection and Affordable care Act falls far short. What would work would be to improve the Medicare program and then include everyone. Several studies have shown that it would be the least expensive method of providing affordable care for absolutely everyone.

http://prescriptions.blogs.nytimes.com/2010/11/22/higher-deductibles-lower-spending/

This study of the impact of high-deductible health plans is unique in that it studied only families with over $500 in annual out-of-pocket medical expenses, thus they are families that do have some interaction with the health care system.

It is no surprise that 57 percent of these lower-income families with high-deductible health plans delayed or had foregone health care. What is less intuitive is that 42 percent of the higher-income families with high-deductible health plans also delayed or had foregone health care. Other studies indicate that about half of that care would have been beneficial, so we really should question the policy of using high-deductible health plans as a method of containing health care costs.

Another important concern is that individuals purchasing plans from the Massachusetts health insurance exchange are choosing high-deductible plans because of the lower premiums. The state exchanges to be established under the Patient Protection and Affordable Care Act will offer low-actuarial value plans as the standard. These plans are high-deductible plans that will likely attract most buyers. Bad policy.

When the evidence so clearly indicts high-deductible plans, why did Congress adopt them wholesale? Simply to accommodate the private insurers in preserving their markets by trying to keep their premiums affordable (which they’re not anyway).

It’s time to dump the private insurers and establish an improved Medicare for all, with first dollar coverage. We can control costs far better with the other single payer tools that would be at our disposal.

Preliminary Analysis of the Rivlin-Ryan Health Care Proposal

(Analysis transmitted by letter from Douglas Elmendorf, Director of the CBO, to Rep. Paul Ryan)
Congressional Budget Office
November 17, 2010

For purposes of this analysis, CBO assumed that all individuals projected to enroll in Medicare would use the proposed voucher. Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law, for two reasons. First, most of the savings for Medicare under the proposal stem from reducing the amounts that the federal government would pay for enrollees on a per capita basis, relative to the projections under current law. Second, future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.

Similarly, reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.

For both Medicare and Medicaid, the budgetary effects would become larger over time because federal payments would tend to grow more slowly under the proposal than projected costs per enrollee under current law. Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees’ spending for health care and the uncertainty surrounding that spending would increase.

http://www.cbo.gov/ftpdocs/119xx/doc11966/11-17-Rivlin-Ryan_Preliminary_Analysis.pdf

Congressman Paul Ryan and former Clinton budget director Alice Rivlin are both members of the Bowles/Simpson deficit commission. They have asked the Congressional Budget Office to analyze their proposal to reduce future federal health care expenditures by converting Medicare to a voucher program for purchasing private health plans, and by converting Medicaid into a block-grant program for the states.

If you read the analysis found at the link above, you would see that the deficits related to future spending in the Medicare and Medicaid programs would be reduced by this proposal. If your only goal is to cut the federal deficit, then the analysis would predict success, but at what cost?

Compared to the current Medicare program, the vouchers would purchase less coverage, or the premiums paid by the beneficiaries would be higher, or both. Merely shifting to private plans alone would result in higher premiums if the benefits were to remain the same as in the traditional Medicare program. Many Medicare beneficiaries are already burdened with excess medical debt, and the voucher proposal would increase the burden by both lowering the federal contribution and increasing the administrative waste characteristic of private plans.

Converting Medicaid into a block grant program uses the same principle as converting defined benefit programs into defined contribution programs. The federal government ends its exposure to the risk of ever-increasing costs by fixing its contribution to the states through a defined block grant. The state then bears the risk for increases in health care costs.

Of course, states are already heavily burdened by the costs of their Medicaid programs. Adding more to that burden further strains state budgets. The states are then put into a position of trying to balance reductions in health services with the greater deficit holes punched into the state budgets. Passing the problem from the federal taxpayer to the state taxpayer accomplishes nothing.

As the CBO analysis states, “Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees’ spending for health care and the uncertainty surrounding that spending would increase.”

What is our goal here? Appeasing anti-government budget hawks? Or removing financial barriers so that people can get the health care that they need?

The budget hawks say that we need to make hard choices. So what about the choice of a single payer monopsony – an improved Medicare for all? That would solve the budget deficit problem while enabling everyone to have the care that they need – not really very hard choices. Maybe it would be a hard choice for the hawks to accept a government program that would actually work, but let’s hold them to their demand. If they think an improved Medicare for all is a hard choice, then so be it.

Senators push bipartisan state healthcare waiver

Reuters
November 18, 2010

A Democrat and a Republican teamed up in the Senate on Thursday to offer legislation that would give states the flexibility to implement their own healthcare approaches when the federal overhaul goes into full effect in 2014.

The proposal by Democrat Ron Wyden and Republican Scott Brown moves up the date when states can apply for waivers from the federal law in order to implement their own approaches.

The law, which passed in March, currently allows states to apply for waivers in 2017.

Under the Wyden and Brown proposal, states could apply for an exemption from some requirements of the reform law — including the mandate that everyone purchase insurance and the employer penalty for not providing coverage — if they offer an alternative that is considered at least as effective and affordable.

http://www.reuters.com/article/idUSTRE6AH4NT20101118

And…

S. 3958 (the entire bill)

To allow an earlier start for State health care coverage innovation waivers under the Patient Protection and Affordable Care Act.
IN THE SENATE OF THE UNITED STATES
NOVEMBER 17, 2010

Mr. WYDEN (for himself and Mr. BROWN of Massachusetts) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL
To allow an earlier start for State health care coverage innovation waivers under the Patient Protection and Affordable Care Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the “Empowering States to Innovate Act”.

SEC. 2. EARLIER START FOR STATE HEALTH CARE COVERAGE INNOVATION WAIVERS.
Section 1332(a) of the Patient Protection and Affordable Care Act is amended—

(1) by striking ‘‘January 1, 2017’’ in paragraph (1) and inserting ‘‘January 1, 2014’’, and
(2) by inserting ‘‘beginning not later than 180 days after the date of the enactment of the Empowering States to Innovate Act’’ after ‘‘application’’ in paragraph (4)(B)(ii).

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s3958is.txt.pdf

And…

Patient Protection and Affordable Care Act (excerpts):

PART IV–State Flexibility to Establish Alternative Programs

Sec. 1332. Waiver for State innovation.

(a) Application.
(3) Pass through of funding.–With respect to a State waiver under paragraph (1), under which, due to the structure of the State plan, individuals and small employers in the State would not qualify for the premium tax credits, cost-sharing reductions, or small business credits under sections 36B of the Internal Revenue Code of 1986 or under part I of subtitle E for which they would otherwise be eligible, the Secretary shall provide for an alternative means by which the aggregate amount of such credits or reductions that would have been paid on behalf of participants in the Exchanges established under this title had the State not received such waiver, shall be paid to the State for purposes of implementing the State plan under the waiver.

(b) Granting of Waivers.
(1) In general.–The Secretary may grant a request for a waiver under subsection (a)(1) only if the Secretary determines that the State plan–
(A) will provide coverage that is at least as comprehensive as the coverage defined in section 1302(b) and offered through Exchanges established under this title as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by this Act and the provisions of this Act that would be waived;
(B) will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title would provide;
(C) will provide coverage to at least a comparable number of its residents as the provisions of this title would provide; and
(D) will not increase the Federal deficit.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_public_laws&docid=f:publ148.111

And…

Sen. Bernie Sanders: ‘Vermont stands a chance to be the first state in the nation to pass single-payer’

By Ezra Klein
The Washington Post
November 18, 2010

Ezra Klein:  So what happens if Scott Brown and Ron Wyden get their way and the waiver moves up to 2014? Will Vermont use it?

Bernie Sanders:  We believe Vermont stands a chance to be the first state in the nation to pass single-payer. The governor-elect campaigned on it, and we have support in the House and Senate. We’re not asking for one nickel more than we’d otherwise get. The other thing we think we have an opportunity to do is reach out to our conservative friends and say, hey, Vermont wants to go forward with a single-payer system, and Mississippi and Alabama don’t, but maybe they have other ideas. Now, we’re conscious of the need to make sure that the health-care reform bill’s standards aren’t diminished. So everyone needs to provide the same quality of health care as the bill provides and at the same, or lower, price. But if they can do that, then they should be able to go for it.

Ezra Klein:  And then the various models can compete with one another and, presumably, spread to other states if successful?

Bernie Sanders:  Absolutely. And that’s what we wanted from it. In my state, it’ll be single-payer. In California, I think there’s a chance it could be single-payer. In other states, it will be something else. This makes the states laboratories for the system, and then other states can copy them. Now, you need a minimum level for coverage and quality. You can’t go lower than health-care reform.

http://voices.washingtonpost.com/ezra-klein/2010/11/sen_bernie_sanders_vermont_sta.html

The initial reaction to S. 3958, The Empowering States to Innovate Act, sponsored by Sen. Ron Wyden (D-OR) and Sen. Scott Brown (R-MA), is that the bill will enable states to bypass the requirements of the Patient Protection and Affordable Care Act (PPACA) and set up their own state-based programs, even single payer should the states prefer. But what does the bill actually say?

PPACA already authorizes a program for state waivers, but not until 2017. The Wyden/Brown bill does only one thing. It moves the state waiver program forward to 2014, the same year that the individual mandate and insurance exchanges go into effect. It does not change the waiver in any other way.

For those states that wish to establish their own programs, advancing the eligibility date removes the very burdensome task of complying with the insurance exchanges, mandates and other requirements for an interval of only three years, and then facing the additional costs and burdens of transitioning to their own programs. If you agree with the policy that states should be able to set up their own programs, then this is a very wise move.

Massachusetts already has a program similar to PPACA. Sen. Brown would much rather modify what they have by complying with the waiver than to have to comply with all details of PPACA for the first three years. For Sen. Wyden, his preferred model of reform was rejected by Congress, but he would still like to experiment with his model, as much as possible, within the state of Oregon, while protecting what innovative programs they already have.

So just how much leeway does the PPACA state waiver allow? It does allow innovations as long as coverage is at least as comprehensive, cost sharing is at least as affordable, at least as many residents would be covered, and as long as the federal deficit would not be increased. It also passes through to the state the funds that would have been used for premium tax credits, cost-sharing reductions, and small business credits. Is that enough funding to establish a single payer system?

What about the funds for Medicare? Medicaid? CHIP? Taft-Hartley plans? What about ERISA requirements? What about the multitude of other funding requirements such as the VA system, academic institutions, safety-net institutions, community health centers, the Indian Health Service, the U.S. Public Health Service, and the many others?

There is no authorization in the Wyden/Brown bill, PPACA, nor any other existing law or regulation to fold many or all of these programs into one single payer system. Think of trying to run a partial single payer system (an oxymoron) while still having to deal with the massive Medicare and Medicaid programs. The point is, don’t let up on your advocacy, thinking that Wyden/Brown is our entry to single payer. We would still have a highly fragmented financing system.

Our best option remains enacting a national single payer bill such as HR 676, which will be re-introduced in the next session of Congress. In lieu of that, we should continue with our efforts to enact single payer systems on the state level. Just don’t be fooled into thinking that a bill such as Wyden/Brown is the ticket. The enabling federal legislation that would be required for state programs would be as complicated, if not more so, than a bill establishing a national single payer program – an improved Medicare for everyone.

Vermont is a test. Without enabling comprehensive federal legislation, I’m already apprehensive.

Consumers and Insurance: Experiences In Eleven Countries

By Chris Fleming
Health Affairs Blog
November 18, 2010

As the United States begins implementing health reform, how does the U.S. experience compare with that of other high-income countries? To answer that question, The Commonwealth Fund conducted its thirteenth annual health policy survey, this year focusing on access, cost, and care experiences. The survey findings were published today in a Health Affairs Web First article by Commonwealth Fund Senior Vice President Cathy Schoen and coauthors.

Overall, the survey identified significant differences between countries and found that US adults — even when insured — were the most likely to incur high medical expenses, spend more time on paperwork, and have more claims denied.

The countries surveyed were Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States.

Key findings include the following:

*  Twenty percent of US adults surveyed said they had had serious problems paying medical bills in the previous year. Responses to the same question from the other ten countries were in the single digits. US respondents were also significantly more likely than adults in other countries to have gone without care because of cost.

*  Thirty-five percent of US adults had out-of-pocket medical spending of $1,000 during the previous year, a far higher percentage than in any other country.

*  A lower proportion of adults in the United States (70 percent) than in all other countries except Sweden (67 percent) and Norway (70 percent) were confident that they would receive the most effective treatment when needed.

*  When asked about access to prompt medical care, 57 percent of US adults said they had seen a doctor or nurse the same or next day the last time they were sick and needed care. Switzerland had the most rapid access (93 percent). Adults in three other countries (Canada, Norway, and Sweden) reported longer waits than US adults.

*  Nearly one third of US adults (31 percent) reported either denial of payments by insurers or time-consuming interactions with insurers, a higher rate than in all other countries. Twenty-five percent of US respondents reported that their insurance company denied payment or did not pay as much as expected; 17 percent said they spent a lot of time on paperwork or disputes for medical bills or insurance — the highest rates in the survey.

*  The United States had the widest and most pervasive differences in access and affordability by income of the eleven countries. The United Kingdom had the least.

http://healthaffairs.org/blog/2010/11/18/consumers-and-insurance-experiences-in-eleven-countries/

And…

How Health Insurance Design Affects Access To Care And Costs, By Income, In Eleven Countries

By Cathy Schoen, Robin Osborn, David Squires, Michelle M. Doty, Roz Pierson and Sandra Applebaum
Health Affairs
November 18, 2010

US Insurance Reforms: Challenges Ahead

Concerns expressed by US respondents were concentrated in the working-age population that is the target of insurance reforms. In this age group, wide disparities by income for those insured throughout the year underscore the importance of the Affordable Care Act’s emphasis on benefits with income-related provisions. The law will expand eligibility for Medicaid to those earning 133 percent of the federal poverty level. It will also provide subsidies for premiums for people up to 400 percent of poverty and for cost sharing for people up to 250 percent of poverty.

However, by international standards, the United States will remain an outlier for cost sharing. The annual limits for the least expensive benefit option will range from $2,000 per person ($4,000 per family) for those with incomes just above 133 percent of poverty, to $6,000 per person above subsidy thresholds. Families can opt for lower cost exposure, but only if they can pay higher premiums.

As US reforms unfold, it will be important to monitor access and affordability. The Affordable Care Act will provide billions of dollars in subsidies for premiums and cost sharing to address affordability for individuals and families with low or modest incomes. Even so, it is still possible that some of the insured will remain at substantial financial risk for care they cannot afford when sick and bills they cannot pay.

Even after the enactment of health reform, the United States will also remain unique among countries in that it covers low-income people in a separate program. This poses the dual challenge of promoting equity across programs and ensuring continuity of insurance. In the other ten countries in our survey, providers were typically paid the same amount regardless of patients’ incomes, which is not currently the case in the United States. Nor is it likely to be the case after full implementation of health reform. Avoiding coverage gaps as patients’ circumstances change will require creative efforts to enable single portals of entry for people to enroll in publicly sponsored and private insurance, and smooth transitions as families gain or lose eligibility for insurance. To the extent that provider networks also differ for those low-income insurance programs, continuity of care as well as insurance will remain at risk after reforms take effect.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2010.0862v1

Compared to other high-income nations, the health care financing system in the United States does not perform well. We pay more; we have greater problems paying medical bills; we have excessive out-of-pocket spending; we have greater hassles with insurers; and we have the greatest disparities in access and affordability based on income levels.

We clearly needed reform, but will the Patient Protection and Affordable Care Act (PPACA) correct these deficiencies? It looks grim. The law has perpetuated the flawed system that we already have, one based on the U.S. version of dysfunctional private insurance plans plus a welfare program – Medicaid.

PPACA does include some important insurance regulations such as guaranteed issue and removal of annual and life-time spending caps, but it doesn’t do much to end the administrative hassles that are designed to protect the insurers from loss (i.e., protect them from having to pay medical bills). In fact, by making plans with low actuarial values the new standard, patients will face even greater out-of-pocket expenses and administrative hassles when they access health care. The government subsidies are not adequate to reduce the problems that patients already have with paying their medical bills.

Although other countries have special provisions for low-income individuals, Medicaid is unique in that beneficiaries are enrolled in an entirely different program that generally pays much lower rates than do private insurers. Thus the Medicaid networks of willing providers can be quite different from the networks for the private insurers, which in themselves also can vary greatly from plan to plan. Care can be very disruptive as individuals move in and out of the Medicaid program because of fluctuations in their eligibility, or move between various private plans based on such factors as employment, place of residence, or premium affordability. Such disruptions can aggravate the access problems noted in this study.

Another important observation in this study is the protection that is afforded by Medicare. Quoting from Schoen et al, “US adults under age sixty-five were significantly more likely to report insurance paperwork, disputes, or insurance surprises than were those sixty-five and older and covered by Medicare (35 percent compared to 16 percent). The high rates of insurance concerns among younger adults may stem from unstable coverage as well as complex benefit designs.”

What we needed was a program that includes everyone, funds care equitably, eliminates financial barriers to care, provides automatic life-long enrollment, provides choice of any health care professionals and facilities, and has public funding that would ensure adequate capacity in the system. A single payer, improved Medicare for all would have those goals.

Instead, we’ll be pouring even more money into the system we have, and still compare unfavorably to these other high-income nations, that is unless we are willing to do something about it. We need to tell our policy makers, “It’s the insurance, stupid!”

Schakowsky Alternative to Simpson-Bowles Deficit Reduction Plan

Congresswoman Jan Schakowsky
November 16, 2010

Today Rep. Jan Schakowsky (D-IL), a member of the bipartisan National Commission on Fiscal Responsibility and Reform, offered a comprehensive proposal to reduce the federal deficit without making middle class Americans foot the bill.  Schakowsky’s plan is an alternative to the Simpson-Bowles plan and would reduce the deficit by $427.75 billion in 2015, surpassing President Obama’s $250 billion target. Critically, the Schakowsky plan accomplishes deficit reduction without making cuts to essential federal expenditures that benefit the middle class.

http://schakowsky.house.gov/index.php?option=com_content&view=article&id=2777:schakowsky-alternative-to-simpson-bowles-deficit-reduction-plan&catid=21:2010-press-releases&Itemid=58

And…

Reviving the Economy, Cutting Spending and Debt, and Creating a Simple, Pro-Growth Tax System

By The Debt Reduction Task Force, Senator Pete Domenici and Dr. Alice Rivlin, Co-Chairs
Bipartisan Policy Center
November 2010

Strengthen Medicare for the Long Term: Transition to a Premium Support Option

Like today, Medicare enrollees will be in the traditional fee-for-service program unless they choose a private plan. However, if federal spending per enrollee for the benefits specified in legislation rises faster than GDP growth plus one percent, beneficiaries will have to pay an additional premium to cover the difference. They can avoid that additional premium, however, and potentially get higher quality health care, if they choose a private health plan offered on a new Medicare Exchange. The expectation is that increased competition among plans fostered by the Medicare Exchange, and increased beneficiary interest in these plans, will keep costs from rising rapidly and result in higher quality, more cost-effective health care.

This proposal will limit growth in federal support for Medicare per beneficiary to one percentage point per year higher than a five-year moving average of GDP growth. If Medicare spending per enrollee for the benefits specified in legislation rises at a faster rate, enrollees will have the option of paying an additional premium to cover the difference and remaining in the traditional Medicare program, or selecting a private insurance plan from the Medicare Exchange.

While the proposed premium support option resembles the current structure of Medicare Advantage, there are differences. Competition among plans will be enhanced by creating a federal Medicare Exchange, which will facilitate beneficiary choice and enrollment and increase the competitiveness of the market, leading to lower premiums.

This proposal will provide incentives for Medicare Exchange plans to develop products that will save beneficiaries money. Today, if a Medicare Advantage plan has very low costs, it cannot pay a rebate to enrollees; instead, it must increase benefits. Under this proposal, Medicare Exchange plans can offer beneficiaries relief from rising Medicare premiums. The Task Force plan might also increase political support – by Medicare beneficiaries, their children, and those approaching Medicare eligibility – for federal policies that promote cost containment in health care.

Asking beneficiaries to pay more for their Medicare coverage (or shift to a lower-cost plan) mirrors what has happened in private insurance over the past decade, with increases in patient cost-sharing to keep premium growth from exceeding income growth by too large a margin. Employers have generally opted to increase patient cost-sharing rather than increase the percentage of the premium that employees contribute. The former keeps employees enrolled in the plan and encourages more judicious use of health services.

http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf

The co-chairmen of President Obama’s deficit commission advanced a proposal that disappointed those of us who believe that the government has an important role in promoting a healthy and secure future for all of us. Erskine Bowles and Alan Simpson recommend reducing the deficit by cutting back on important social programs such as Medicare and Social Security, while failing to recommend tapping obvious potential revenue sources in our upside-down economy. Two members of their committee, Jan Schakowsky and Alice Rivlin, have now released alternative proposals.

Alice Rivlin is also co-chair, along with Pete Dominici, of The Debt Reduction Task Force from the Bipartisan Policy Center (BPC), an organization founded by Howard Baker, Tom Daschle, Bob Dole, and George Mitchell. Frankly, their report is also disappointing for basically the same reasons. It is very heavy on program reductions (though some are appropriate) and very light on seeking new revenues.

Discussed here is only one feature of the BPC recommendation: converting Medicare to a premium support program. This had been mentioned only cryptically in the Bowles/Simpson report, but more details are provided in the Rivlin/Domenici report (excepts above).

Premium support was a proposal advanced a dozen years ago by John Breaux, Bill Thomas, Bill Frist, and Bobby Jindal that barely failed to receive a super-majority vote in their Bipartisan Medicare Commission, and is now being trotted out again. It is a proposal to convert Medicare from a defined benefit to a defined contribution.

Premium support places a limit on the amount that the government contributes toward the Medicare beneficiaries’ premiums, exposing individuals to the increasing costs of health care. It then uses the leverage of higher individual premiums to encourage “voluntary” purchase of less expensive private plans in the marketplace.

Since private plans have much higher administrative costs, they can achieve lower premiums only by reducing benefits or increasing out-of-pocket costs for the beneficiaries, making coverage worse than under the traditional Medicare program. Instead of overpaying private plans as with the current Medicare Advantage program, the premium support underpays the private plans but allows them to obtain the balance from the Medicare beneficiaries. It is a plan to privatize Medicare that can have only disastrous consequences for Medicare beneficiaries.

In sharp contrast is the proposal of Jan Schakowsky. She would balance revenues and expenditures with the goal of reducing the deficit, as opposed to the unstated goals of Bowles/Simpson and Rivlin/Domenici to reduce government. Her recommended reductions in spending are carefully targeted to programs that many in America believe should be reduced anyway. Her proposed increased revenues not only would help wipe out the deficit, but they also would provide corrections to the current massive income transfer from middle-income workers to the very wealthy – one of the greatest social injustices in modern history.

Other than improving the way we would purchase pharmaceuticals, she has little to say about Medicare. Her position is that of protecting what we do have. We can go her one better on that. We can improve Medicare and then provide it for everyone. That frankly won’t reduce the deficit much, but it would provide us with much greater value for our health care taxes.

What more could we ask for out of our government than sustainable budgets that provide us with real value?

ACTION ALERT: The heavy hitters are out in force, and they intend to dismantle as much of government as they can, in the name of “fiscally responsible hard choices.” It is imperative that President Obama and members of the Senate receive our clear and unrelenting message that we must both protect and improve our public programs dedicated to social justice. The House alone cannot take those away from us if we have the President and the Senate on our side.