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Lessons of 401(k) plans for health care

Archives for 2008

Lessons of 401(k) plans for health care

Lessons From the Evolution of 401(k) Retirement Plans for Increased Consumerism in Health Care: An Application of Behavioral Research

By Jodi DiCenzo and Paul Fronstin
Employee Benefit Research Institute (EBRI)
August 2008

Retirement and health benefits following a similar evolution:

The private sector’s shift away from “traditional” company-financed pension plans toward individual 401(k) accounts illustrates how benefit decision-making and responsibility have shifted from the employer to the worker. The current trend in health care design toward “consumer-driven” health plans illustrates the same trend with health benefits.

Health plan design is encountering the same obstacles as 401(k)s did:

Efforts to make workers more involved and responsible for their health benefits have run into the same problems that 401(k) plans did: Workers tend to delay or be disengaged from both retirement and health care decisions, these issues require long-term planning, and workers see both retirement and health care decisions as complex and difficult.

Among the behavioral lessons learned from retirement plans:

* More choice is not always better: Behavioral research, particularly with 401(k) retirement plans, has shown that increased choice can have negative consequences: More is not always better and may even be worse in some cases. Many people remain disengaged from matters they do not have an immediate need to address, and by the time the need becomes immediate, it is often too late. Many, if not most, workers are probably not capable of making the most appropriate retirement planning or health care choices — it is simply too difficult.

* Education and information are not enough: Research has shown that education has resulted in little to no improvement in workers’ knowledge of retirement saving and investing. In addition, empirical evidence suggests that even when “educated” employees know, most of them fail to act on their knowledge. The heavy investment that many employers have made in retirement education and information programs often fails to produce the desired results.

* Financial incentives don’t always work: Financial incentives, such as an employer match in a 401(k) plan and tax breaks, also fall short of motivating optimal behaviors. Despite the tax-favored status of contributions and the existence of employer matching contributions, a significant portion of eligible workers still do not contribute to a 401(k) plan.

http://www.ebri.org/pdf/briefspdf/EBRI_IB_08-2008.pdf

Comment:

By Don McCanne, MD

The theme of this report is that lessons can be learned from the behavior of employees regarding their individual 401(k) retirement plans that can be applied to their participation in consumer-driven health plans, but the importance of these observations is far greater than merely providing suggestions to “nudge” employees into these programs. The behavioral observations are precisely those that would be anticipated in programs that are designed to shift the responsibility for retirement and health security from the employer to the individual.

Traditionally many employers provided generous health and retirement benefits to their employees. Participation was automatic and was welcomed by the employees as part of their employment compensation packages.

Once employers became concerned about the costs of these programs, they responded by shifting the responsibilities to the individual employees. First the traditional pension plans were shifted to individual 401(k) plans, and now health plans are being shifted to consumer-driven plans, especially health savings accounts or health reimbursement arrangements coupled with a high-deductible health plan. As the authors state, the decisions required tend to be complex and difficult, which tend to delay or disengage the employee from these decisions.

Compare this with Medicare and Social Security. These are retirement and health benefit programs in which enrollment is automatic, and with benefits that are so popular every politician has learned not to touch this third rail.

Employers should be relieved of their responsibility to develop and manage these programs, but placing that responsibility in the hands of each individual would be disastrous. With a median household income of $50,000 most simply cannot afford either adequate health benefit plans or retirement income security. A new study by Elizabeth Warren reveals that this is already at a crisis level – personal bankruptcy for retirees has skyrocketed.

The missing ingredient is social solidarity. Through social insurance programs we could all have both health security and retirement security that is completely automatic. We already have the money. But solidarity? That doesn’t take money; that takes will.

Census report already takes a hit

Thousands of California children are in danger of losing health insurance

By Jordan Rau
Los Angeles Times
August 24, 2008
California’s promising strides toward extending medical coverage to all its children, a longtime goal of Gov. Arnold Schwarzenegger and one advocates believed was in reach by decade’s end, has stalled — and thousands of kids are in danger of losing insurance.
…legislative budget negotiators this year have decided to increase premiums for the state’s Healthy Families program (SCHIP), which pays for medical care for more than 850,000 children of low-income workers who are above the federal poverty line. The state estimates that the parents of 19,000 children will end up dropping out of the program by July…
Lawmakers also have decided to require the parents of 3.4 million Californians who are below the federal poverty line to renew their Medi-Cal health coverage every six months. The Schwarzenegger administration expects that rule will pare Medi-Cal rolls by about 196,000 children over the next two years.
The changes to subsidized or free health programs come as private health initiatives that pay for the care of children are running out of money, causing them to limit the number they cover. These privately run initiatives exist in 30 counties, arranging medical care for children who are not legal residents or whose families earn slightly more than the threshold for public programs. Enrollment in the initiatives has dropped by 8,000 in the last two years, to 80,000, according to Wendy Lazarus, co-president of the Children’s Partnership, a nonprofit advocacy group.
http://www.latimes.com/news/local/la-me-kidshealth24-2008aug24,0,4590020,full.story

The good news in yesterday’s Census Bureau release was that increased enrollment in government health programs more than offset the decline in private insurance coverage, especially for children. Nationally, there were 512,000 fewer uninsured children in 2007 than there were in 2006, primarily because of increased Medicaid and SCHIP enrollment.
Only one year later, over 200,000 children in California alone are projected to lose their coverage.
Think about that.
If SCHIP and Medicaid expansion represent the successes of incrementalism, then how do you define failure?
Try this one. Failure is the perpetuation of policies that do not ensure that everyone is automatically included, for life, in a program that enables affordable access to all necessary health care.
Success would be easy – merely adopt a single payer national health program. So why are we so fixated on perpetuating failure?

Census report already takes a hit

Thousands of California children are in danger of losing health insurance

By Jordan Rau
Los Angeles Times
August 24, 2008

California’s promising strides toward extending medical coverage to all its children, a longtime goal of Gov. Arnold Schwarzenegger and one advocates believed was in reach by decade’s end, has stalled — and thousands of kids are in danger of losing insurance.

…legislative budget negotiators this year have decided to increase premiums for the state’s Healthy Families program (SCHIP), which pays for medical care for more than 850,000 children of low-income workers who are above the federal poverty line. The state estimates that the parents of 19,000 children will end up dropping out of the program by July…

Lawmakers also have decided to require the parents of 3.4 million Californians who are below the federal poverty line to renew their Medi-Cal health coverage every six months. The Schwarzenegger administration expects that rule will pare Medi-Cal rolls by about 196,000 children over the next two years.

The changes to subsidized or free health programs come as private health initiatives that pay for the care of children are running out of money, causing them to limit the number they cover. These privately run initiatives exist in 30 counties, arranging medical care for children who are not legal residents or whose families earn slightly more than the threshold for public programs. Enrollment in the initiatives has dropped by 8,000 in the last two years, to 80,000, according to Wendy Lazarus, co-president of the Children’s Partnership, a nonprofit advocacy group.

http://www.latimes.com/news/local/la-me-kidshealth24-2008aug24,0,4590020,full.story

Comment:

By Don McCanne, MD

The good news in yesterday’s Census Bureau release was that increased enrollment in government health programs more than offset the decline in private insurance coverage, especially for children. Nationally, there were 512,000 fewer uninsured children in 2007 than there were in 2006, primarily because of increased Medicaid and SCHIP enrollment.

Only one year later, over 200,000 children in California alone are projected to lose their coverage.

Think about that.

If SCHIP and Medicaid expansion represent the successes of incrementalism, then how do you define failure?

Try this one. Failure is the perpetuation of policies that do not ensure that everyone is automatically included, for life, in a program that enables affordable access to all necessary health care.

Success would be easy – merely adopt a single payer national health program. So why are we so fixated on perpetuating failure?

Health Care: It's time to rock

Seattle Post-IntelligencerEditorial Board
August 26, 2008

Truth be told, we already have a government-funded health care system; we just pretend we don’t. There’s this supposed mix of private and public insurance, but the fact is the U.S. government (you know, we, the taxpayers) spend nearly a quarter more for government health care programs than say, Canada (a country that is supposed to have government-controlled health care). And what do we get for our extravagant spending? A total mess.

The Census Bureau reported Tuesday that the number of people lacking health insurance dropped by more than 1 million in 2007 to nearly 46 million people.

This is a headline that looks great until you see that what’s declining is private insurance coverage and what’s increasing is the number of people eligible for government programs such as Medicaid.

It’s time to organize government health care into a single-payer system, one that covers all Americans. It’s the most cost-effective route forward. Last year’s health expenditures topped $2.3 trillion — or $7,600 per person — and those figures continue to grow faster than inflation.

Not only that, but U.S. industry is less competitive in a global economy when companies from other countries spend zero on employee health care.

David Himmelstein, a professor of medicine at Harvard University and a co-founder of Physicians for a National Health Program, said it’s time for politicians to be bold and “rock the private insurance boat.”

Rock away. Any chance delegates in Denver and St. Paul are ready?

How Long?

Remarks by Dr. Claudia Fegan at Reception at the DNC in Denver, Tuesday, August 26, 2008 for co-sponsors of HR 676

There are 45.7million uninsured people in the United States. There are probably some 50 million people who are underinsured, meaning even though they have health insurance they cannot afford the care they need. While it is true we saw a slight decrease in the number of uninsured last year, this was due to a massive expansion of public programs. Were it not for the fact that 2.7million more people were covered by public programs last year; Medicaid, SCHIP and Medicare we actually would have seen an increase in the number of uninsured. It is so clear that a public national health insurance program is no longer the best option to cover all Americans, it is the only option. The private insurance industry is never going to get us to universal coverage.

We live in the richest, most powerful country in the world. How long are we going to allow this to go on?

Two months ago I admitted a woman to the hospital. Both of this woman’s breasts were rock hard filled with cancer, the skin was discolored and dimpled, her armpits were filled with swollen lymph nodes. How could this happen? She had no health insurance, she was a hairdresser. She was sitting at home waiting to die; she didn’t think she had any other choice. Her daughter brought her in and asked us to help her. How long are we going to let this go on?

The insurance industry profiteers by retroactively denying coverage to people with illnesses. Insurance companies gladly take money from people when they are well, promising to take care of them should they need it. Then when they are sick, the industry systematically finds ways to deny them the care they need. How long are we going to let this go on?

In the United States today the pharmaceutical industry is more profitable than the gaming industry. The American public pays the highest prices in the world, while the same companies sell the same medications all over the world for prices 1/2, 1/3, or even 1/10 what they charge in the US. How long are we going to let this go on?

People are losing their jobs because they can’t get care and can’t work as a result. They are having strokes and heart attacks because they can’t afford their blood pressure medication. They are having limbs amputated or winding up on dialysis because they can’t afford the medication to control their diabetes.

People are dying because they can’t get the care they need. The insured and the uninsured are having care delayed or denied because we don’t have a health care system. Our county health system is so overwhelmed it takes months to get an appointment. There is no system in this country other than to deny care to those who need it. Access to care is a profit center controlled by the insurance industry. We pay them to limit access to care.

We spend more than $7000/person on health care a year in the US; yet we are ranked only 36th in the world by the World Health Organization for the quality of care we deliver. HOW LONG?

Our infant mortality rates are higher than other nations. Our maternal mortality rates are higher. Women die in childbirth in the United States at higher rates than other industrialized nations; 9 women for every 100,000 live births. In Germany the rate is 3, Sweden 4, and Canada 4.6. I’m not talking about a third world country; I’m talking about the most powerful nation in the world. The only country in the western hemisphere with a childhood immunization rate less than the United States is Haiti, and they are getting better with our help. HOW LONG?

We spend enough money on health care in this country. We just let too many people who aren’t involved in providing care take profit from it.

The United States no longer guarantees access to care for all veterans. 12% of non-elderly veterans in this country are uninsured. That means if you go out and lay your life on the line for this country, even for a war you don’t believe in, and you survive to come home, you are no longer guaranteed access to health care when you leave the service. So when your post traumatic stress disorder is diagnosed 2-3 months after you return, you’re not covered. HOW LONG?

This is about justice. Health care should be a right to which everyone is entitled. Remember we live in the wealthiest country in the world. We spend more on health care per person than any other country. It is time we got our money’s worth. It is time we got the health care we deserve, not the care the insurance industry is willing to let us have. It is time we made health care a right for all and not a privilege for those who can afford it. We will never get universal health care until we change the political climate in this country. That is our challenge. It is time for us to demand what we need. It is time to demand what we deserve. It is time to demand universal health care. We won’t get there by urging the insurance industry to play nice with others. We will get there by demanding a singlepayer national health insurance; Medicare for all.

The idea that singlepayer would take too long makes no sense, Medicare passed and was implemented in one year. The idea we have to do something else while we wait for single payer is like putting a band aid on the problem. As a physician I can tell you band aids are fine but they don’t solve the problem.

We will get there by supporting Congressman Conyers. We will get there by fighting for HR 676.

Physicians for a National Health Program, PNHP is an organization of 15,000 physicians and we are committed to fighting for this change. We are committed to helping Congressman John Conyers get HR 676 through Congress. Nearly 500,000 physicians support single payer. The California Nurses Association is committed. The cosponsors here tonight are committed and the next president of the United States; Barack Obama has told us YES WE CAN.

So together we can answer: Not much longer, not much longer will we let this go on because we are ready to fight to have a health care system that has EVERYBODY IN and NOBODY OUT! Say it with me: EVERYBODY IN NOBODY OUT! EVERYBODY IN NOBODY OUT!

Health Care: It’s time to rock

Seattle Post-IntelligencerEditorial Board
August 26, 2008

Truth be told, we already have a government-funded health care system; we just pretend we don’t. There’s this supposed mix of private and public insurance, but the fact is the U.S. government (you know, we, the taxpayers) spend nearly a quarter more for government health care programs than say, Canada (a country that is supposed to have government-controlled health care). And what do we get for our extravagant spending? A total mess.

The Census Bureau reported Tuesday that the number of people lacking health insurance dropped by more than 1 million in 2007 to nearly 46 million people.

This is a headline that looks great until you see that what’s declining is private insurance coverage and what’s increasing is the number of people eligible for government programs such as Medicaid.

It’s time to organize government health care into a single-payer system, one that covers all Americans. It’s the most cost-effective route forward. Last year’s health expenditures topped $2.3 trillion — or $7,600 per person — and those figures continue to grow faster than inflation.

Not only that, but U.S. industry is less competitive in a global economy when companies from other countries spend zero on employee health care.

David Himmelstein, a professor of medicine at Harvard University and a co-founder of Physicians for a National Health Program, said it’s time for politicians to be bold and “rock the private insurance boat.”

Rock away. Any chance delegates in Denver and St. Paul are ready?

Census Bureau on the uninsured

Income, Poverty, and Health Insurance Coverage in the United States: 2007

U.S. Census Bureau
August 2008
What Is Health Insurance Coverage?
For reporting purposes, the Census Bureau broadly classifies health insurance coverage as private coverage or government coverage. Private health insurance is a plan provided through an employer or a union or purchased by an individual from a private company. Government health insurance includes the federal programs Medicare, Medicaid, and military health care; the State Children’s Health Insurance Program (SCHIP); and individual state health plans. People were considered “insured” if they were covered by any type of health insurance for part or all of the previous calendar year. They were considered “uninsured” if they were not covered by any type of health insurance at any time in that year.
Highlights

  • Both the percentage and number of people without health insurance decreased in 2007. The percentage without health insurance was 15.3 percent in 2007, down from 15.8 percent in 2006, and the number of uninsured was 45.7 million, down from 47.0 million.
  • The number of people with health insurance increased to 253.4 million in 2007 (up from 249.8 million in 2006). The number of people covered by private health insurance (202.0 million) in 2007 was not statistically different from 2006, while the number of people covered by government health insurance increased to 83.0 million, up from 80.3 million in 2006.
  • The percentage of people covered by private health insurance was 67.5 percent, down from 67.9 percent in 2006. The percentage of people covered by employment-based health insurance decreased to 59.3 in 2007 from 59.7 percent in 2006. The number of people covered by employment-based health insurance, 177.4 million, was not statistically different from 2006.
  • The percentage of people covered by government health insurance programs increased to 27.8 percent in 2007, from 27.0 percent in 2006. The percentage and number of people covered by Medicaid increased to 13.2 percent and 39.6 million in 2007, up from 12.9 percent and 38.3 million in 2006.
  • In 2007, the percentage and number of children under 18 years old without health insurance were 11.0 percent and 8.1 million, lower than they were in 2006 — 11.7 percent and 8.7 million. Although the uninsured rate for children in poverty decreased to 17.6 percent in 2007, from 19.3 percent in 2006, children in poverty were more likely to be uninsured than all children.
  • The uninsured rate and number of uninsured for non-Hispanic Whites decreased in 2007 to 10.4 percent and 20.5 million (from 10.8 percent and 21.2 million in 2006). The uninsured rate for Blacks decreased to 19.5 percent in 2007 from 20.5 percent in 2006. The number of uninsured Blacks in 2007 was not statistically different from 2006, at 7.4 million.
  • The percentage and the number of uninsured Hispanics were 32.1 percent and 14.8 million in 2007, lower than 34.1 percent and 15.3 million in 2006.

http://www.census.gov/hhes/www/hlthins/hlthin07/hlth07asc.html

And…

Number of Uninsured Drops…

By The Associated Press
The Washington Post
August 26, 2008
The Census Bureau reports that the number of people lacking health insurance dropped by more than 1 million in 2007, the first annual decline since the Bush administration took office.
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/26/AR2008082600863.html?hpid=moreheadlines

The Associated Press story just released on the decline of 1.3 million in the numbers of uninsured will surely be welcome news. It was especially good news for those who gained coverage in 2007. Should we be celebrating? Let’s look at some of the statistics.

  • The percentage of people covered by employment-based health insurance declined by 0.4 percent, continuing a downward trend. The foundation of employment-bsed coverage continues to deteriorate.
  • The percentage of people covered by government health insurance programs increased 0.8 percent, more than offsetting the decline in employer-sponsored coverage. The net improvement in the numbers is due to an expansion of government programs.
  • The percentage of people covered by Medicaid increased 0.3 percent. That amounts to an increase of 1.3 million individuals, which just happens to be the same number as the decline in the uninsured. The chronic underfunding of this program has sacrificed access because of the lack of willing providers. Expanding a program that has perpetuated impaired access does not seem to be a wise policy choice.
  • People who were uninsured for only part of the year were counted in this study as being insured. Yet studies have confirmed that having only intermittent coverage impairs access and outcomes.
  • This study remains silent on the explosion in the rate of underinsurance, a phenomenon that is difficult to measure anyway. Counting the numbers of people who have insurance coverage provides a very incomplete picture if that coverage does not protect individuals from financial hardship in the face of medical need.
  • A slight improvement in the percentages for Blacks and Hispanics is of little consolation when compared to the enormity of these disparities.

Celebration time? Don’t think so.

Census Bureau on the uninsured

Income, Poverty, and Health Insurance Coverage in the United States: 2007

U.S. Census Bureau
August 2008

What Is Health Insurance Coverage?

For reporting purposes, the Census Bureau broadly classifies health insurance coverage as private coverage or government coverage. Private health insurance is a plan provided through an employer or a union or purchased by an individual from a private company. Government health insurance includes the federal programs Medicare, Medicaid, and military health care; the State Children’s Health Insurance Program (SCHIP); and individual state health plans. People were considered “insured” if they were covered by any type of health insurance for part or all of the previous calendar year. They were considered “uninsured” if they were not covered by any type of health insurance at any time in that year.

Highlights

* Both the percentage and number of people without health insurance decreased in 2007. The percentage without health insurance was 15.3 percent in 2007, down from 15.8 percent in 2006, and the number of uninsured was 45.7 million, down from 47.0 million.

* The number of people with health insurance increased to 253.4 million in 2007 (up from 249.8 million in 2006). The number of people covered by private health insurance (202.0 million) in 2007 was not statistically different from 2006, while the number of people covered by government health insurance increased to 83.0 million, up from 80.3 million in 2006.

* The percentage of people covered by private health insurance was 67.5 percent, down from 67.9 percent in 2006. The percentage of people covered by employment-based health insurance decreased to 59.3 in 2007 from 59.7 percent in 2006. The number of people covered by employment-based health insurance, 177.4 million, was not statistically different from 2006.

* The percentage of people covered by government health insurance programs increased to 27.8 percent in 2007, from 27.0 percent in 2006. The percentage and number of people covered by Medicaid increased to 13.2 percent and 39.6 million in 2007, up from 12.9 percent and 38.3 million in 2006.

* In 2007, the percentage and number of children under 18 years old without health insurance were 11.0 percent and 8.1 million, lower than they were in 2006 — 11.7 percent and 8.7 million. Although the uninsured rate for children in poverty decreased to 17.6 percent in 2007, from 19.3 percent in 2006, children in poverty were more likely to be uninsured than all children.

* The uninsured rate and number of uninsured for non-Hispanic Whites decreased in 2007 to 10.4 percent and 20.5 million (from 10.8 percent and 21.2 million in 2006). The uninsured rate for Blacks decreased to 19.5 percent in 2007 from 20.5 percent in 2006. The number of uninsured Blacks in 2007 was not statistically different from 2006, at 7.4 million.

* The percentage and the number of uninsured Hispanics were 32.1 percent and 14.8 million in 2007, lower than 34.1 percent and 15.3 million in 2006.

http://www.census.gov/hhes/www/hlthins/hlthin07/hlth07asc.html

And…

Number of Uninsured Drops…

By The Associated Press
The Washington Post
August 26, 2008

The Census Bureau reports that the number of people lacking health insurance dropped by more than 1 million in 2007, the first annual decline since the Bush administration took office.

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/26/AR2008082600863.html?hpid=moreheadlines

Comment:

By Don McCanne, MD

The Associated Press story just released on the decline of 1.3 million in the numbers of uninsured will surely be welcome news. It was especially good news for those who gained coverage in 2007. Should we be celebrating? Let’s look at some of the statistics.

* The percentage of people covered by employment-based health insurance declined by 0.4 percent, continuing a downward trend. The foundation of employment-bsed coverage continues to deteriorate.

* The percentage of people covered by government health insurance programs increased 0.8 percent, more than offsetting the decline in employer-sponsored coverage. The net improvement in the numbers is due to an expansion of government programs.

* The percentage of people covered by Medicaid increased 0.3 percent. That amounts to an increase of 1.3 million individuals, which just happens to be the same number as the decline in the uninsured. The chronic underfunding of this program has sacrificed access because of the lack of willing providers. Expanding a program that has perpetuated impaired access does not seem to be a wise policy choice.

* People who were uninsured for only part of the year were counted in this study as being insured. Yet studies have confirmed that having only intermittent coverage impairs access and outcomes.

* This study remains silent on the explosion in the rate of underinsurance, a phenomenon that is difficult to measure anyway. Counting the numbers of people who have insurance coverage provides a very incomplete picture if that coverage does not protect individuals from financial hardship in the face of medical need.

* A slight improvement in the percentages for Blacks and Hispanics is of little consolation when compared to the enormity of these disparities.

Celebration time? Don’t think so.

Doctor's Orders: Health Coverage for Everyone

By Daina Saib
YES! Magazine
Fall 2008: Purple America

An agenda that puts people first: Health Care

You wouldn’t know it from the candidates’ debates or reports on the major television networks, but a majority of Americans favor a government-run health insurance system similar to Canada’s.

Those lining up to support single-payer health care include medical professionals, business people, and many Republicans. Dr. Rocky White has been all of those things.

White is a former Republican, from a conservative, evangelical background, who got interested in health care reform nine years ago when his own medical practice slipped into the red. His research into the health care system led him to conclude that the problem wasn’t just in his practice– the health care system itself is broken, and a single-payer program is the most efficient way to fix it.

Under the single-payer system, doctors’ offices and hospitals remain private for-profit or non-profit institutions. But the federal government covers the bills for patient services, with funds coming from taxes. The patient gets the health care they need. Paperwork and billing are kept to a minimum. Employers no longer have the difficult task of choosing, administering, and paying for health insurance for employees. Everyone is covered.

The current setup is as complicated as single-payer is simple. Today, the discerning consumer must wade through a complex system of pre-existing condition exemptions, co-pays, and deductibles–if they have coverage at all. Arguments over billing among doctors’ offices, insurance companies, patients, and their lawyers eat up millions of dollars. An estimated $25 out of each $100 spent goes to paperwork, profits, and executive pay and bonuses. And disagreement over medical coverage is one of the most common sources of labor disputes for employers who have seen insurance premiums double since 2000.

With these inflated costs, it’s little wonder that in 2006, the last year for which government figures are available, 47 million Americans had no insurance at all, including 8.7 million children, or that 68 percent of bankruptcies in the U.S. come as a direct result of medical expenses among people who do have insurance.

When White learned about Physicians for a National Health Program and their plan for a single-payer health care system, he saw it was similar to his own idea and he joined their effort.

Other medical professionals have had a similar reaction. The American College of Physicians–the largest organization of medical specialists in the country–endorses single-payer health care as does the California Nurses Association, the largest organization of registered nurses.

And so do 55 percent of Americans, according to a CBS News poll conducted in September. In another poll, 64 percent said they would be willing to pay higher taxes for a national health care insurance program.

In Congress, HR 676, the “Medicare for All” bill introduced by Representative John Conyers, Jr. of Michigan, currently has 90 co-sponsors–more than any other health care reform proposal–and the endorsement of the U.S. Conference of Mayors.

Republicans for Single-Payer

Support for single-payer health care is not just strong among progressives. George Swan, for instance, is a health care administrator, self-described “Purple Republican,” and a founder of Republicans for Single Payer.

“It’s about being American and doing what’s right,” Swan says. “What’s right is not paying a 30 percent premium to the insurance system and receiving sub-standard health care.”

Business owners are also supporting single-payer health care. For 25 years, Jack Lohman owned a company that provided cardiac monitoring services to hospitals. Today, he’s a co-founder of the Business Coalition for Single Payer. A “lifelong Republican,” Lohman argues that conservatives should support single-payer because it’s pro-business.

“For the same 16 percent of GDP that we are spending on health care in the U.S.,” he says, “we could provide first-class health care to 100 percent of the people.” And single-payer would “get health care off the backs of corporations so they can be more competitive with products made overseas.”

John Arensmeyer spent 12 years running an e-commerce company with 35 employees. Then he founded the Small Business Majority to advocate for the interests of small businesses, particularly on health care issues. Sharp rises in health care costs for small businesses are hurting their ability to survive, Arensmeyer says. “It’s antithetical to what we’re all about as a country, which is to allow people the freedom to go out and start new enterprises.”

Small business has often been portrayed as opposing health care reform, but SBM’s research shows that small businesses are interested in being part of the solution–even if it means paying higher taxes.

Walter Maher, former vice-president of public policy at the DaimlerChrysler Corporation, sees the problems in similar ways, although he looks at health care costs through the lens of large corporate employers.

General Motors, he says, is paying people to leave their jobs so they can hire replacements at 50 cents on the dollar with reduced health benefits. “It’s sad,” he says. “You have a giant albatross around your neck because you choose to provide a good standard of living for your employees.”

Money in Politics

If the current system is so unpopular among medical professional, patients, and business owners, what’s keeping it in place? Most advocates for single-payer agree that money in politics is the greatest obstacle to change. During the 2006 election cycle, the health care industry spent $99.7 million on campaign contributions. Lobbying on health care issues topped $446 million in 2007.

For Jack Lohman, that’s the crux of the problem. “Both McCain’s and Obama’s plans for health care are lousy,” he says. “Although both claim they’re not taking lobbyist money, somehow this money is getting through. They are each supporting health care that keeps the insurance industry involved.”

And all that money can buy a lot of misinformation and scaremongering. Rocky White says he finds that people get interested in the single-payer approach if they understand what’s actually being proposed: “When people realize that all that it is,” he says, “is a publicly owned insurance company, all of a sudden business people start to lose that fear that ‘Oh my God, we’re going to become the Soviet Union.’ Even Republicans say, ‘This really makes a lot of sense.'”

While White would like to see reform happen on a national level, he believes it’s more realistic to work at the state level for now. And for him, that means Colorado. White sits on the board of Health Care for All Colorado, a nonprofit, volunteer-run group with 250 members that includes Democrats, Republicans, physicians, business people, college professors, and economists. And he is running for a Democratic seat in the state legislature to add “the voice of medicine” to the debate.

“Any time a state has studied it, they find that single-payer is the most cost-effective and covers everyone,” White says. His proposal for a single-payer system in Colorado is being studied by a blue ribbon commission created by the Colorado Legislature.

In May, the 6,000 delegates to the Colorado Democratic Party Convention endorsed a pro-single-payer resolution that will be forwarded to the national convention in Denver in August.

If one state can make a single-payer plan work, White believes, it could start a cascading effect similar to what took place in Canada during the 1940s and ‘50s.

“People are discouraged, they’re angry, they’re upset,” White says. “But politics is the process that drives policy, and if we don’t get involved in the political process we’ll never make a difference.”

Daina Saib wrote this article as part of Purple America, the Fall 2008 issue of YES! Magazine. Daina is a former YES! editorial assistant.

Slight drop in uninsured masks deepening problem, doctors say

For Immediate Release
Aug. 26, 2008

Contact:
Don McCanne, M.D., don@mccanne.org

Data released this morning by the Census Bureau showing a slight drop in the number of Americans who lacked health insurance in 2007 masks an acute and worsening problem of access to care, a national doctors’ group said today. The figures also do not reflect the harmful consequences of this year’s economic downturn, the group said.

Census officials reported that the number of uninsured dropped from 47 million in 2006 to 45.7 million in 2007, or by half a percentage point (from 15.8 percent to 15.3 percent)

“While any drop in the number of uninsured is welcome news, a closer look at the Census Bureau data for 2007 provides little cause for celebration,” said Dr. Don McCanne, senior policy fellow at Physicians for a National Health Program.

McCanne said the number of people covered by employer-sponsored plans stayed about the same or slightly declined (0.4 percent), continuing a long-term trend of eroding coverage from this traditional source. While 64 percent of the population was covered by employment-based plans in 1999, only 59.3 percent was covered in this way in 2007.

Upon closer examination of the data, McCanne said, it is clear that last year’s gain in the number of insured people was entirely attributable to an expansion of government programs like Medicare and Medicaid. The number of people covered by government health insurance programs increased by 2.7 million. Were it not for this increase, he said, the uninsured numbers would have surpassed the 2006 figure.

“The new figure – 45.7 million uninsured – is still unacceptably high,” he said. “It’s the second-highest figure since the 1960s, when Medicare and Medicaid were enacted into law. We still have at least 8.1 million children who are uninsured, a scandalous figure.”

McCanne said the Census Bureau report is silent on another problem, which he called “the explosion in the rate of underinsurance.” People are typically defined as underinsured if they spend 10 percent or more of their income (or 5 percent if they are low-income) on out-of-pocket medical expenses or if they had deductibles equal to 5 percent or more of their income.

While the number of underinsured is difficult to measure, he said, last June the Commonwealth Fund estimated that 25 million people were in this category in 2007, up 60 percent from 2003. Some health policy experts estimate the number of underinsured to be 50 million.

“Not having health insurance, or having poor quality insurance that doesn’t protect you from financial hardship in the face of medical need, is a source of mounting stress, anguish and poor medical outcomes for people across our country,” McCanne said.

He said African Americans are almost twice as likely to be uninsured as whites, and that Hispanics are three times more likely to be uninsured. While minorities, like whites, posted slight improvements in coverage in 2007, “such gains are of little consolation when compared to the enormity of these disparities,” he said.

Several studies have shown that economic recessions, with their attendant job losses, correlate with an increase in the number of uninsured. For example, a January report by John Schmitt and Dean Baker at the Center for Economic and Policy Research suggests that in a mild-to-moderate recession health insurance coverage is likely to fall 1.4 percentage points, leaving an additional 4.2 million individuals without insurance. A more severe recession would have worse consequences.

Many economists believe a recession began in the U.S. at the end of 2007. As a result, McCanne said, it is likely that the Census Bureau figures present a misleading picture of the current situation. “The continuing high profile of the health care issue in the elections is another index of public anxiety about access to care,” he said.

The growing financial difficulties of the much-touted incremental reforms in Massachusetts, he said, shows that its short-term gains in reducing the number of uninsured are in jeopardy.

McCanne said fundamental health care reform is possible. “What is really needed is a system that removes the financial burden from patients and more effectively pools our funds into a public program that is able to address costs more effectively by introducing greater efficiency and value into our health care system.

“Such a system would guarantee comprehensive health care to everyone by replacing the private insurance industry with a tax-supported government agency or agencies that would pay all medical bills, similar to the way Medicare operates today, but even better than Medicare,” he said. “People would have the freedom to choose their own doctors and hospitals.

“That’s a single-payer system. Such a system is embodied in H.R. 676, the U.S. National Health Insurance Act, introduced by Rep. John Conyers (D-Mich.). It currently has over 90 co-sponsors in Congress, more than any other health reform proposal.”

A table showing the number of uninsured by state for the years 2004-2007 is available here. Physicians for a National Health Program has physician-spokespersons in every state who are available for comment.

###

Physicians for a National Health Program, a membership organization of over 15,000 physicians, supports a single-payer national health insurance program. To contact a physician-spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Doctor’s Orders: Health Coverage for Everyone

By Daina Saib
YES! Magazine
Fall 2008: Purple America

An agenda that puts people first: Health Care

You wouldn’t know it from the candidates’ debates or reports on the major television networks, but a majority of Americans favor a government-run health insurance system similar to Canada’s.

Those lining up to support single-payer health care include medical professionals, business people, and many Republicans. Dr. Rocky White has been all of those things.

White is a former Republican, from a conservative, evangelical background, who got interested in health care reform nine years ago when his own medical practice slipped into the red. His research into the health care system led him to conclude that the problem wasn’t just in his practice– the health care system itself is broken, and a single-payer program is the most efficient way to fix it.

Under the single-payer system, doctors’ offices and hospitals remain private for-profit or non-profit institutions. But the federal government covers the bills for patient services, with funds coming from taxes. The patient gets the health care they need. Paperwork and billing are kept to a minimum. Employers no longer have the difficult task of choosing, administering, and paying for health insurance for employees. Everyone is covered.

The current setup is as complicated as single-payer is simple. Today, the discerning consumer must wade through a complex system of pre-existing condition exemptions, co-pays, and deductibles–if they have coverage at all. Arguments over billing among doctors’ offices, insurance companies, patients, and their lawyers eat up millions of dollars. An estimated $25 out of each $100 spent goes to paperwork, profits, and executive pay and bonuses. And disagreement over medical coverage is one of the most common sources of labor disputes for employers who have seen insurance premiums double since 2000.

With these inflated costs, it’s little wonder that in 2006, the last year for which government figures are available, 47 million Americans had no insurance at all, including 8.7 million children, or that 68 percent of bankruptcies in the U.S. come as a direct result of medical expenses among people who do have insurance.

When White learned about Physicians for a National Health Program and their plan for a single-payer health care system, he saw it was similar to his own idea and he joined their effort.

Other medical professionals have had a similar reaction. The American College of Physicians–the largest organization of medical specialists in the country–endorses single-payer health care as does the California Nurses Association, the largest organization of registered nurses.

And so do 55 percent of Americans, according to a CBS News poll conducted in September. In another poll, 64 percent said they would be willing to pay higher taxes for a national health care insurance program.

In Congress, HR 676, the “Medicare for All” bill introduced by Representative John Conyers, Jr. of Michigan, currently has 90 co-sponsors–more than any other health care reform proposal–and the endorsement of the U.S. Conference of Mayors.

Republicans for Single-Payer

Support for single-payer health care is not just strong among progressives. George Swan, for instance, is a health care administrator, self-described “Purple Republican,” and a founder of Republicans for Single Payer.

“It’s about being American and doing what’s right,” Swan says. “What’s right is not paying a 30 percent premium to the insurance system and receiving sub-standard health care.”

Business owners are also supporting single-payer health care. For 25 years, Jack Lohman owned a company that provided cardiac monitoring services to hospitals. Today, he’s a co-founder of the Business Coalition for Single Payer. A “lifelong Republican,” Lohman argues that conservatives should support single-payer because it’s pro-business.

“For the same 16 percent of GDP that we are spending on health care in the U.S.,” he says, “we could provide first-class health care to 100 percent of the people.” And single-payer would “get health care off the backs of corporations so they can be more competitive with products made overseas.”

John Arensmeyer spent 12 years running an e-commerce company with 35 employees. Then he founded the Small Business Majority to advocate for the interests of small businesses, particularly on health care issues. Sharp rises in health care costs for small businesses are hurting their ability to survive, Arensmeyer says. “It’s antithetical to what we’re all about as a country, which is to allow people the freedom to go out and start new enterprises.”

Small business has often been portrayed as opposing health care reform, but SBM’s research shows that small businesses are interested in being part of the solution–even if it means paying higher taxes.

Walter Maher, former vice-president of public policy at the DaimlerChrysler Corporation, sees the problems in similar ways, although he looks at health care costs through the lens of large corporate employers.

General Motors, he says, is paying people to leave their jobs so they can hire replacements at 50 cents on the dollar with reduced health benefits. “It’s sad,” he says. “You have a giant albatross around your neck because you choose to provide a good standard of living for your employees.”

Money in Politics

If the current system is so unpopular among medical professional, patients, and business owners, what’s keeping it in place? Most advocates for single-payer agree that money in politics is the greatest obstacle to change. During the 2006 election cycle, the health care industry spent $99.7 million on campaign contributions. Lobbying on health care issues topped $446 million in 2007.

For Jack Lohman, that’s the crux of the problem. “Both McCain’s and Obama’s plans for health care are lousy,” he says. “Although both claim they’re not taking lobbyist money, somehow this money is getting through. They are each supporting health care that keeps the insurance industry involved.”

And all that money can buy a lot of misinformation and scaremongering. Rocky White says he finds that people get interested in the single-payer approach if they understand what’s actually being proposed: “When people realize that all that it is,” he says, “is a publicly owned insurance company, all of a sudden business people start to lose that fear that ‘Oh my God, we’re going to become the Soviet Union.’ Even Republicans say, ‘This really makes a lot of sense.'”

While White would like to see reform happen on a national level, he believes it’s more realistic to work at the state level for now. And for him, that means Colorado. White sits on the board of Health Care for All Colorado, a nonprofit, volunteer-run group with 250 members that includes Democrats, Republicans, physicians, business people, college professors, and economists. And he is running for a Democratic seat in the state legislature to add “the voice of medicine” to the debate.

“Any time a state has studied it, they find that single-payer is the most cost-effective and covers everyone,” White says. His proposal for a single-payer system in Colorado is being studied by a blue ribbon commission created by the Colorado Legislature.

In May, the 6,000 delegates to the Colorado Democratic Party Convention endorsed a pro-single-payer resolution that will be forwarded to the national convention in Denver in August.

If one state can make a single-payer plan work, White believes, it could start a cascading effect similar to what took place in Canada during the 1940s and ‘50s.

“People are discouraged, they’re angry, they’re upset,” White says. “But politics is the process that drives policy, and if we don’t get involved in the political process we’ll never make a difference.”

Daina Saib wrote this article as part of Purple America, the Fall 2008 issue of YES! Magazine. Daina is a former YES! editorial assistant.

Cost of covering the uninsured

Covering The Uninsured In 2008: Current Costs, Sources Of Payment, And Incremental Costs

by Jack Hadley, John Holahan, Teresa Coughlin, and Dawn Miller
Health Affairs
August 25, 2008
People uninsured for any part of 2008 spend about $30 billion out of pocket and receive approximately $56 billion in uncompensated care while uninsured. Government programs finance about 75 percent of uncompensated care. If all uninsured people were fully covered, their medical spending would increase by $122.6 billion. The increase represents 5 percent of current national health spending and 0.8 percent of gross domestic product. However, it is neither the cost of a specific plan nor necessarily the same as the government’s costs, which could be higher, depending on plans’ financing structures and the extent of crowd-out.
Incremental resource cost versus transfer or crowd-out costs.
Most important for the policy debate, however, it is essential to differentiate the incremental resource cost of insurance expansion from transfer or crowd-out costs, and from the more thorny issue of the financing of insurance expansion. Incremental resource cost is a key number for assessing the cost-effectiveness of expanding insurance coverage–that is, comparing the value of improved health associated with expanded coverage to its resource cost.
However, the additional cost of care used by the uninsured is not the same as the cost to the government of a coverage expansion, since out-of-pocket spending and income-related premium payments by the newly insured are likely to pay some of these extra costs. Further, the cost attributed to any broad health care financing reform could be much higher, depending on the extent to which people drop their prior coverage in favor of coverage under the new plan or retain their current coverage but receive new public subsidies to help pay their premiums.
These costs are not new national resources being devoted to health care but, rather, represent a transfer of spending from one type of coverage to another: although government spends more, many individuals, families, and businesses spend less. The savings to businesses and families in private insurance premiums and out-of-pocket spending can be large and are often overlooked in health reform cost calculations that focus on increased government spending. How the cost of the subsidies is distributed among different classes of people and geographic areas is at least as major a political issue as the amount of the subsidies.
http://content.healthaffairs.org/cgi/content/full/hlthaff.27.5.w399/DC1

Previous studies by Jack Hadley and his colleagues have shown that the increase in medical spending that would result from expanding insurance coverage to the uninsured would have been about $55 billion in 2001. For 2008, because of rapid increases in health care costs, continuing growth in the number of uninsured people, and changes in the characteristics of the uninsured population, that estimate has increased to about $122.6 billion. Even at this level, the cost of expanding coverage to everyone would be “remarkably small — about the same as the growth of real health care spending over eighteen months” (Aaron, Health Affairs blog, 8/25).
It is not the lack of funds that has impeded reform. As a nation we could easily afford to cover everyone. So what is the problem?
We already have proven that reform cannot be accomplished by incremental expansions of our current programs, even with introductions of new targeted programs (e.g., SCHIP). The effectiveness and equity of health care financing have continued to deteriorate under the incremental approach to reform. No reform proposal is capable of leaving those with coverage alone while collecting $122 billion and spending it exclusively on those who are currently uninsured.
Only through comprehensive reform could we provide all necessary health care for everyone at a cost comparable to today’s spending. Not just any reform would do. In fact, the policies that we would need to adopt would limit the reform options to some form of social insurance such as a single payer national health program.
Transforming a financing system for a $2 trillion industry inevitably results in winners and losers. Our policies to date have made winners of the entrenched vested interests that have so much to gain (money), while making losers of the patients that the industry should be serving (losing affordable health care access).
It’s time to make patients the winners. That means that a well financed and well managed health care delivery system would also fall into the winners’ category. There will be losers, but, gee, aren’t they already losers anyway?