PNHP

Underinsurance is bad for your heart

Underinsurance is bad for your heart

Financial Barriers to Health Care and Outcomes After Acute Myocardial Infarction

Ali R. Rahimi, MD, MPH; John A. Spertus, MD, MPH; Kimberly J. Reid, MS; Susannah M. Bernheim, MD, MHS; Harlan M. Krumholz, MD, SM
JAMA
March 14, 2007

Objective: To measure the baseline prevalence of self-reported financial barriers to health care services or medication (as defined by avoidance due to cost) among individuals following AMI (acute myocardial infarction) and their association with subsequent health care outcomes.

Results: The prevalence of self-reported financial barriers to health care services or medication was 18.1% and 12.9%, respectively. Among individuals who reported financial barriers to health care services or medication, 68.9% and 68.5%, respectively, were insured. At 1-year follow-up, individuals with financial barriers to health care services were more likely to have lower SAQ (Seattle Angina Questionnaire) quality-of-life score (77.9 vs 86.2), and increased rates of all-cause rehospitalization (49.3% vs 38.1%) and cardiac rehospitalization (25.7% vs 17.7%). At 1-year follow-up, individuals with financial barriers to medication were more likely to have angina (34.9% vs 17.9%), lower SAQ quality-of-life score (74.0 vs 86.1), and increased rates of all-cause rehospitalization (57.0% vs 37.8%) and cardiac rehospitalization (33.7% vs 17.3%).

Conclusion: Financial barriers to health care services and medications are associated with worse recovery after AMI, manifested as more angina, poorer quality of life, and higher risk of rehospitalization.

http://jama.ama-assn.org/cgi/content/abstract/297/10/1063

Comment:

By Don McCanne

Many in the policy community insist that we must build on our existing system of private health plans and public programs. They do not perceive the elimination of private plans and substitution of a single public program to be a politically viable option.

The problem with these multi-payer models is that the private insurance industry has been unable to offer products with affordable premiums that are effective in eliminating financial barriers to beneficial health care services. Since the reform proposals require affordable premiums, the insurance industry has responded with products that deliberately erect greater financial barriers for the purpose of reducing health care utilization.

Do these barriers make a difference? Emphatically, yes. As an example, this study confirms that victims of heart attacks have worse outcomes when they have financial barriers to followup care and medications.

The policy community should be particularly concerned about the fact that two-thirds of the individuals with financial barriers and impaired outcomes were insured! At a time when efforts should be made to remove financial barriers that impair outcomes, the policy community is supporting measures that will increase those barriers.

Private plans that would remove financial barriers to beneficial services cannot serve as the vehicle for coverage for average-income individuals. The reason is that the health care that they must fund through a guaranteed-issue program and the administrative excesses that they require are so great that the premiums they must charge could never be affordable. Since the private plans are no longer able to function as equitable insurance risk pools, why would we want to design reform that merely perpetuates their administrative excesses?

There is another very important policy lesson from this study. Of those reporting financial barriers to health services and medications, 47.6 percent had Medicare coverage and 42.4 percent were on Medicaid. We can only speculate that Medicare patients had inadequate access to affordable drugs and that Medicaid patients had inadequate access because of a lack of willing providers. Regardless, it is important that reform efforts be directed toward taking down these financial barriers that prevent patients from getting the care they need.

For the “but we can’t afford it” crowd, there are many other mechanisms in the single payer model that would reduce waste to a level that would allow us to provide comprehensive care for everyone without spending more than we already do.

'Single-Payer' Idea Stays Afloat

Legislative Committee Clears Two Differing Approaches To Health Care Reform

By DIANE LEVICK
Hartford Courant Staff Writer
March 14 2007

A bill to create a single health insurer in Connecticut – an anathema to the industry – won half-hearted approval Tuesday from a legislative panel, which also passed a reform bill the industry favors.

The Insurance and Real Estate Committee, in a 12-7 vote, approved a bill aimed at creating a “single-payer” system to ensure coverage for all Connecticut residents not on Medicare.

Several Democrats on the committee, including committee Co-chairman Brian J. O’Connor, said they were voting for the Connecticut Saves Health Care bill simply to keep reform debate going despite misgivings about potential job loss in the insurance industry.

State Rep. Christopher R. Stone, D-East Hartford, who voted yes Tuesday, said he wouldn’t support the bill on the House floor.

The bill’s proponents, though, scored the vote a victory because it showed a major shift in the climate for universal health care and keeps the single-payer idea afloat.

The Connecticut Saves Health Care program would replace the current system of employer-based and individually purchased policies, taking away much of the role of private health insurers. However, they wouldn’t be prevented from selling supplemental coverage.

The insurance committee is known for preserving the role of insurance companies in health care, but “what they’ve said today with their vote is the system is broken and we need to change it,” said Phil Sherwood, legislative director of the Connecticut Citizen Action Group. “I think that rang loud and clear.”

Legislators of both parties, however, voiced worries about insurance industry jobs in Connecticut, should there be a switch to a single-payer system.

State Sen. Louis C. Deluca, R-Woodbury, the committee’s ranking member, said Iowa has become as big or bigger a mecca for insurers than Connecticut because of legislators’ actions here over the years.

“We continually give them reasons not to be here,” he said. “I believe this would be another one.”

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, warned that “If Connecticut wants to maintain its pre-eminence as an insurance state, I would think that passage of single-payer would be about the worst possible message you could send to the industry.

“It’s a lot of families that are supported by the insurance industry, a lot of mouths are fed, a lot of children put through college, and the idea that people are willing to just chuck that is extremely disturbing.”

But state Rep. John C. Geragosian, D-New Britain, praised the single-payer concept, saying, “Insurance companies don’t add any value in this [current] system” and that “it’s time to take some bold action” to solve the health care crisis.

Stover blanched at that, saying after the meeting that “essentially every innovation in health insurance, from chronic disease management to consumer-driven health plans, etc., all come from the minds here in Hartford, in Connecticut.”

Tuesday’s vote was a “victorious first step toward comprehensive change,” said Juan A. Figueroa, president of the Universal Health Care Foundation of Connecticut, which had pushed the single-payer bill.

The vote, he said, “acknowledges that incremental steps are not the way to fix our state’s broken health care system.”

The vote for a single-payer system also drew praise from Council 4 of the American Federation of State, County and Municipal Employees, the largest AFL-CIO union in the state, and from Citizens for Economic Opportunity, a labor-community coalition.

But a single-payer system is “potentially unsustainable” from a funding standpoint, said Eric George, associate counsel at the Connecticut Business and Industry Association, which has “grave concerns” about the idea.

The state already under-funds Medicaid payments to hospitals, driving hospitals to make up a part of the shortfall through reimbursements from private insurers, George said. In a single-payer system, health care providers wouldn’t have private insurers to fall back on, he said.

The insurance committee removed funding provisions from the bill because there was no consensus, measures that would have levied a 50 percent surcharge on the state income tax and an 8 percent payroll tax on employers of a certain size. The bill now goes to the Senate.

The committee also passed a revised version of the Healthy Steps bill, which Stover said “provides the most rational framework for ongoing discussion” and relies on a market-based system.

The bill, which now heads to the House, would create a new Health Care Reform Commission to develop a more affordable health plan for small employers of 50 or fewer employees.

The state would contract with a private nonprofit organization that would serve as an insurance purchasing pool for previously uninsured individuals and small employers to buy coverage.

The Connecticut Connector program would offer three kinds of health plans, including a high-deductible plan linked with a health savings account.

Legislators removed from the bill a proposed 3 percent tax on revenue of health care providers in Connecticut that would have helped to fund some of the provisions. Doctors protested the tax at a committee hearing last week.

The bill would provide tax credits at varying levels to small employers that provide health insurance that meets or exceeds the standards set for the affordable plan to be developed.

The measure also calls for expansion of the state’s Husky insurance program, and increased reimbursement to doctors, dentists and hospitals from insurers serving Medicaid members.

Contact Diane Levick at dlevick@courant.com.

Copyright 2007, Hartford Courant

‘Single-Payer’ Idea Stays Afloat

Legislative Committee Clears Two Differing Approaches To Health Care Reform

By DIANE LEVICK
Hartford Courant Staff Writer
March 14 2007

A bill to create a single health insurer in Connecticut – an anathema to the industry – won half-hearted approval Tuesday from a legislative panel, which also passed a reform bill the industry favors.

The Insurance and Real Estate Committee, in a 12-7 vote, approved a bill aimed at creating a “single-payer” system to ensure coverage for all Connecticut residents not on Medicare.

Several Democrats on the committee, including committee Co-chairman Brian J. O’Connor, said they were voting for the Connecticut Saves Health Care bill simply to keep reform debate going despite misgivings about potential job loss in the insurance industry.

State Rep. Christopher R. Stone, D-East Hartford, who voted yes Tuesday, said he wouldn’t support the bill on the House floor.

The bill’s proponents, though, scored the vote a victory because it showed a major shift in the climate for universal health care and keeps the single-payer idea afloat.

The Connecticut Saves Health Care program would replace the current system of employer-based and individually purchased policies, taking away much of the role of private health insurers. However, they wouldn’t be prevented from selling supplemental coverage.

The insurance committee is known for preserving the role of insurance companies in health care, but “what they’ve said today with their vote is the system is broken and we need to change it,” said Phil Sherwood, legislative director of the Connecticut Citizen Action Group. “I think that rang loud and clear.”

Legislators of both parties, however, voiced worries about insurance industry jobs in Connecticut, should there be a switch to a single-payer system.

State Sen. Louis C. Deluca, R-Woodbury, the committee’s ranking member, said Iowa has become as big or bigger a mecca for insurers than Connecticut because of legislators’ actions here over the years.

“We continually give them reasons not to be here,” he said. “I believe this would be another one.”

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, warned that “If Connecticut wants to maintain its pre-eminence as an insurance state, I would think that passage of single-payer would be about the worst possible message you could send to the industry.

“It’s a lot of families that are supported by the insurance industry, a lot of mouths are fed, a lot of children put through college, and the idea that people are willing to just chuck that is extremely disturbing.”

But state Rep. John C. Geragosian, D-New Britain, praised the single-payer concept, saying, “Insurance companies don’t add any value in this [current] system” and that “it’s time to take some bold action” to solve the health care crisis.

Stover blanched at that, saying after the meeting that “essentially every innovation in health insurance, from chronic disease management to consumer-driven health plans, etc., all come from the minds here in Hartford, in Connecticut.”

Tuesday’s vote was a “victorious first step toward comprehensive change,” said Juan A. Figueroa, president of the Universal Health Care Foundation of Connecticut, which had pushed the single-payer bill.

The vote, he said, “acknowledges that incremental steps are not the way to fix our state’s broken health care system.”

The vote for a single-payer system also drew praise from Council 4 of the American Federation of State, County and Municipal Employees, the largest AFL-CIO union in the state, and from Citizens for Economic Opportunity, a labor-community coalition.

But a single-payer system is “potentially unsustainable” from a funding standpoint, said Eric George, associate counsel at the Connecticut Business and Industry Association, which has “grave concerns” about the idea.

The state already under-funds Medicaid payments to hospitals, driving hospitals to make up a part of the shortfall through reimbursements from private insurers, George said. In a single-payer system, health care providers wouldn’t have private insurers to fall back on, he said.

The insurance committee removed funding provisions from the bill because there was no consensus, measures that would have levied a 50 percent surcharge on the state income tax and an 8 percent payroll tax on employers of a certain size. The bill now goes to the Senate.

The committee also passed a revised version of the Healthy Steps bill, which Stover said “provides the most rational framework for ongoing discussion” and relies on a market-based system.

The bill, which now heads to the House, would create a new Health Care Reform Commission to develop a more affordable health plan for small employers of 50 or fewer employees.

The state would contract with a private nonprofit organization that would serve as an insurance purchasing pool for previously uninsured individuals and small employers to buy coverage.

The Connecticut Connector program would offer three kinds of health plans, including a high-deductible plan linked with a health savings account.

Legislators removed from the bill a proposed 3 percent tax on revenue of health care providers in Connecticut that would have helped to fund some of the provisions. Doctors protested the tax at a committee hearing last week.

The bill would provide tax credits at varying levels to small employers that provide health insurance that meets or exceeds the standards set for the affordable plan to be developed.

The measure also calls for expansion of the state’s Husky insurance program, and increased reimbursement to doctors, dentists and hospitals from insurers serving Medicaid members.

Contact Diane Levick at dlevick@courant.com.

Copyright 2007, Hartford Courant

High deductibles are bad for children's health

High-Deductible Health Plans and the New Risks of Consumer-Driven Health Insurance Products

Committee on Child Health Financing

Pediatrics (Official Journal of the American Academy of Pediatrics)
March 2007
Policy Statement

Abstract

Consumer-driven health care is the most noteworthy development in health insurance since the widespread adoption of health maintenance organizations and preferred provider organizations in the 1980s. The most common consumer-driven health plan is the high-deductible health plan, which is essentially a catastrophic health insurance plan, often linked with tax-advantaged spending accounts, with very high deductibles, fewer benefits, and higher cost-sharing than conventional health maintenance organization or preferred provider organization plans. The financial risks are significant under high-deductible health plans, especially for low- to moderate-income families and for families whose children have special health care needs. Of concern for pediatricians are the potential quality risks that are predictable in high-deductible health plans, in which families are likely to delay or avoid seeking care, especially preventive care (if it is not exempted from the deductible), when they are faced with paying for care before the deductible is met. This policy statement provides background information on the most common consumer-driven health plan model, discusses the implications for pediatricians and families, and offers recommendations pertaining to health plan product design, education, practice administration, and research.

http://pediatrics.aappublications.org/cgi/content/full/119/3/622

Comment:

By Don McCanne, MD

The American Academy of Pediatrics is to be commended for stressing the importance of protecting preventive services from the negative impact of high-deductible health plans.

Unfortunately, many of their specific recommendations are self-serving for pediatricians (full up-front payment of billed charges, debit cards, payment for telephone consultations, etc.). Conspicuously absent were specific recommendations to prevent the negative impact of high-deductibles on acute and chronic care. It is not as if they didn’t understand this in that a specific recommendation under practice management was to “prepare for greater administration/collection burdens and bad debts.”

High-deductible health plans are bad for children’s health. The Academy should be condemning these plans and supporting comprehensive solutions that would enhance the health of the nation’s children. A national health insurance program would not only cover preventive services, but it would also remove financial barriers to beneficial acute and chronic health care services.

It’s time for physicians to quit whining about how badly they’re being treated by our dysfunctional system, and start advocating for change that will meet the needs of their patients. A practice environment that works well for patients is one that works well for physicians as well.

Time to Fix Healthcare

The Nation
[from the March 26, 2007 issue]

Editorial

The need to expand access to affordable healthcare is rapidly emerging as the top domestic policy issue in the 2008 presidential race. And no wonder: With the number of uninsured now up to nearly 47 million, and more than one-third of that total consisting of households with family incomes of $40,000 or more, lack of health insurance has become a concern not just of the poor but also of the middle class. Moreover, soaring medical costs–increasing in large part because at least one of every five healthcare dollars goes to administrative costs and insurance company profits–are a worry even to those who have some form of insurance. More than half of personal bankruptcies today are caused by illness or medical debts.

There’s no mystery about the fix Americans want: Nearly two-thirds of those surveyed in a recent New York Times/CBS poll say the government should guarantee health coverage for all Americans. Half said they’d willingly pay as much as $500 a year more in taxes to pay for universal coverage. To do that, this country needs to establish a single-payer system–one inspired by Canada and other developed countries but distinctly American in approach. There’s already legislation, with seventy-eight co-sponsors–the United States National Health Insurance Act (HR 676)–that would accomplish this by expanding and improving the existing Medicare system. The popularity of such an approach, endorsed March 6 by the AFL-CIO executive council, is illustrated by the ease with which California legislators passed a single-payer plan last year–only to have Governor Schwarzenegger veto it. In late February, the plan was introduced again, as part of a reform-from-below push that is seeing states tackle the healthcare crisis.

Ultimately, however, America needs a national fix.

Americans have lost hope that the Bush Administration will do anything to address the national healthcare crisis. Only 24 percent of those in the New York Times/CBS poll said they were satisfied with Bush’s handling of the issue. And that number will surely shrink with recent revelations about the deplorable conditions at the Army’s Walter Reed Hospital–another reminder of this Administration’s incompetence. But so far most of the major presidential candidates have failed to take advantage of Bush’s low standing to advance bold proposals.

Among the candidates, Congressman Dennis Kucinich has a long record of embracing single-payer proposals. Unfortunately, he is a lonely leader. The front-running Democratic contenders remain vague and cautious. Senator Barack Obama says, “I am absolutely determined that by the end of the first term of the next President, we should have universal healthcare in this country.” Senator Hillary Clinton says she would enact “health insurance for every child and universal healthcare for every American”–with specifics “yet to come.” Former Senator John Edwards moves beyond rhetoric to a plan: He would require everyone to have insurance and require employers either to provide coverage or pay into a fund to provide it. But although he reaches out to labor on other issues, Edwards is unwilling to embrace HR 676, which has earned support from nine international unions, seventeen state federations and sixty-three central labor councils.

Voters have to demand more if they want more. Obama at least recognizes the frustration of Americans for whom meaningful healthcare reform has been a dream deferred at least since the collapse of the Clinton Administration’s bureaucratic proposals of the mid-1990s. The Clinton plan rejected single-payer and embraced a complicated hybrid that relied too heavily on the same insurance companies that had failed to make healthcare affordable and accessible. “We can’t afford another disappointing charade in 2008, 2009 and 2010,” says Obama. He’s right. But he and his fellow front-runners should recognize that as long as they avoid talking about single-payer and continue to tinker around the edges of the current system, they are players in the charade.

High deductibles are bad for children’s health

High-Deductible Health Plans and the New Risks of Consumer-Driven Health Insurance Products

Committee on Child Health Financing

Pediatrics (Official Journal of the American Academy of Pediatrics)
March 2007
Policy Statement

Abstract

Consumer-driven health care is the most noteworthy development in health insurance since the widespread adoption of health maintenance organizations and preferred provider organizations in the 1980s. The most common consumer-driven health plan is the high-deductible health plan, which is essentially a catastrophic health insurance plan, often linked with tax-advantaged spending accounts, with very high deductibles, fewer benefits, and higher cost-sharing than conventional health maintenance organization or preferred provider organization plans. The financial risks are significant under high-deductible health plans, especially for low- to moderate-income families and for families whose children have special health care needs. Of concern for pediatricians are the potential quality risks that are predictable in high-deductible health plans, in which families are likely to delay or avoid seeking care, especially preventive care (if it is not exempted from the deductible), when they are faced with paying for care before the deductible is met. This policy statement provides background information on the most common consumer-driven health plan model, discusses the implications for pediatricians and families, and offers recommendations pertaining to health plan product design, education, practice administration, and research.

http://pediatrics.aappublications.org/cgi/content/full/119/3/622

Comment:

By Don McCanne, MD

The American Academy of Pediatrics is to be commended for stressing the importance of protecting preventive services from the negative impact of high-deductible health plans.

Unfortunately, many of their specific recommendations are self-serving for pediatricians (full up-front payment of billed charges, debit cards, payment for telephone consultations, etc.). Conspicuously absent were specific recommendations to prevent the negative impact of high-deductibles on acute and chronic care. It is not as if they didn’t understand this in that a specific recommendation under practice management was to “prepare for greater administration/collection burdens and bad debts.”

High-deductible health plans are bad for children’s health. The Academy should be condemning these plans and supporting comprehensive solutions that would enhance the health of the nation’s children. A national health insurance program would not only cover preventive services, but it would also remove financial barriers to beneficial acute and chronic health care services.

It’s time for physicians to quit whining about how badly they’re being treated by our dysfunctional system, and start advocating for change that will meet the needs of their patients. A practice environment that works well for patients is one that works well for physicians as well.

Swiss voters reject single payer

Health reform flops at the ballot box

NZZ Online
March 11, 2007

An overwhelming majority of voters have thrown out a proposal for a single health insurance company in Switzerland, with premiums based on income and wealth.

Final results showed 71 per cent of voters rejected the reform. Turnout was close to 46 per cent, slightly above average.

There are currently 87 private insurers providing mandatory basic health care coverage for Swiss residents under a 1996 law. But health premiums have soared over the past decade.

More than 100,000 people are no longer covered because they haven’t paid their premiums.

Switzerland has the most expensive health system in Europe, according to an international comparison. It spent 11.6 per cent on health in 2005, ahead of Germany and France but behind the United States.

http://www.nzz.ch/2007/03/11/eng/article7609812.html

And…

Costs dominate health insurance debate

swissinfo
March 6, 2007

Supporters and opponents of a single health insurance company – to come to a nationwide vote next Sunday – are at odds over the financial impact of the proposal.

The initiative, backed by the political centre-left but opposed by the government and business world, wants parliament to determine the funding model. But costs have become a sore point.

In 2003 voters rejected a plan for health insurance to be funded by a rise in VAT with premiums set according to income and wealth. This would have replaced the current system of obligatory private health insurance as offered by 87 firms.

Mindful of this, the authors of this latest initiative were careful to leave the financing issue to parliament. The only requirement is that premiums are set according to a person’s “economic capacity”.

“The vote is about deciding on a radical change to the basic insurance, not about voting for a precise financial model,” Hans-JƃĀ¼rg Fehr, president of the centre-left Social Democratic Party, has said.

But this has led to some uncertainty about the sums involved — a situation that santésuisse, the umbrella organisation of Swiss health insurers, has been quick to exploit.

It has drawn up its own financing model, which shows that the middle class is most likely to lose out under the single insurance plan.

Earlier this year, santésuisse put its model online on the Comparis website, a comparison service which, among other things, allows the public to compare health insurance prices.

Santésuisse based its model on several hypotheses. The first was that there would be no premium rise for those on an income of more than SFr120,000 ($96,000) — to avoid health insurance acting as a form of tax on the rich. The lower limit for paying premiums was set at SFr20,000.

According to santésuisse, the new system would be mostly funded by people with incomes in between these two sums — basically the middle classes.

Secondly, it projected that costs assumed by basic health insurance would rise by ten per cent because savings options, such as excesses (i.e., deductibles), would no longer be available under a single insurance.

An excess is what an insured person decides to pay for health services before the insurance reimburses. The higher the excess, the lower the monthly premium — and the less paid out by insurers.

Santésuisse’s move caused temperatures to run high among the initiative’s supporters on the left. Whereas the Green Party wanted to keep income-based premiums, the Social Democrats drew up a model that increased the number of people eligible for premium reductions (60 per cent compared with the current 30 per cent).

Financing would come from a three per cent rise on premiums for those with incomes above SFr100,000, with no top limit. This would bring in an estimated SFr1.2 billion a year, said the party. Excesses would still be valid.

An additional SFr500 million would come from the lower administration costs arising from a single health insurance, it added.

After some resistance, the supporters of the initiative finally put their figures on Comparis as well. The public can now consult both models, but with rather different results.

According to santésuisse, a family of four from Lausanne with a taxable income of SFr90,000 would pay SFr100-SFr200 more per month. But the initiative’s model claims the same family would save around SFr300.

The differences become even larger for incomes of SFr100,000-SFr120,000.

http://www.swissinfo.org/eng/front/detail/Costs_dominate_health_insurance_debate.html?siteSect=105&sid=7525010&cKey=1173182383000

And…

Swiss spurn health insurance plan

BBC News
March 12, 2007

A row over costs in the last few days before the vote caused confusion. Supporters of the plan claimed an average family of four would save about 300 Swiss francs ($250) a month under the new scheme.

Using the same figures, Switzerland’s health insurers said the family would actually pay up to 200 francs ($150) more.

One reason (explaining the election results) may be the power of the insurance sector, and of the big pharmaceutical companies in Switzerland – both are important to the Swiss economy and both have strong lobby groups, our correspondent reports.

http://news.bbc.co.uk/2/hi/europe/6436995.stm

Comment:

By Don McCanne, MD

In evaluating health care reform proposals, one of the first questions individuals ask is, “What is it going to cost me?”

The Swiss organization representing Switzerland’s private health insurers, santésuisse, was ready with an answer. Although the measure would require that premiums would be set according to a person’s economic capacity (means tested premiums), santésuisse made the assumption that lower-income individuals would have smaller premiums or no premiums, whereas the wealthy would not have an increase in premiums. The impact of that would be to shift most of the cost of reduced premiums to the middle-income citizens.

Some would contend that this analysis was dishonest since the intent of the measure was to have means testing apply throughout the income scale. Others would contend that this analysis was appropriate because it would be unfair to require the wealthy to pay more than the full premium. Although it was a measure calling for progressive funding of health care, santésuisse found that modeling it as a welfare program provided results that supported their political agenda.

After considerable delay, the proponents of the initiative finally provided an analysis compliant with the intent of this measure, but it was too little, too late. The polls demonstrated increasing opposition, and by the time of the election, most of those who had been undecided voted against it.

As in the United States, the insurance and pharmaceutical lobbies played a major role in fending off this reform effort. But it would be a mistake to accept the results as simply a buy off of an election by vested interests with too much money and too much power.

The voters did hear the message of the proponents. The voters did understand that everyone would be covered. Middle-income individuals did hear that they would pay less if they were willing to increase taxes on the rich.

But the clearest message of all was that a government-run program would replace their private insurance plan. 71 percent of the voters didn’t like that message.

Many reading this will dispute that conclusion and contend that the polls in the United States prove that we do want to replace private plans with a single payer program of national health insurance. If that is true, then why haven’t we already enacted Medicare for All? Have the insurers and pharmaceutical firms really bought us off?

If you want to change the dynamics in the United States, then you are going to have to show the healthy workforce that their employer-sponsored coverage is bad for their finances and bad for their health. It’s true, but that’s going to be a hard sell. But that’s what you have to do.

Jonathan Gruber on the RAND HIE

What is Insurance?

by Jonathan Gruber

wbur.org (Boston’s NPR)
Commonhealth (a blog)
March 9, 2007

The debate over health care reform implementation in Massachusetts has become focused on the critical issue of defining the level of “minimum creditable coverage”, the minimum level of insurance generosity that will satisfy the individual mandate. This is not a decision that can be avoided; without such a definition, the mandate has no teeth.

But this decision has become needlessly controversial because the debate has moved away from the fundamental goal of insurance: to insure individuals against unexpected medical risk.

This definition of insurance has nothing to do with the typical American conception of health insurance. Most Americans think of health insurance as medical prepayment: you pay an up-front premium and in return all of your medical expenses are covered (what experts refer to as “first dollar coverage”). But such a system has an inherent flaw: any time something is free, it will be overused. This should not be a controversial statement to anyone who has ever gone to an all-you-can-eat buffet. Having paid at the door, you always end up eating more than if you were paying for each item your ordered.

But isn’t medical care different from food? Don’t individuals only use medical care when they really need it? The answer to this question is clearly no. There is substantial evidence of overuse of medical care by the insured. The classic piece of evidence for this proposition is the famous RAND Health Insurance Experiment (HIE) in the 1970s. In this experiment, individuals were randomly assigned to insurance plans that were more or less generous, ranging from first dollar coverage to policies where indivduials paid 95% of the cost of their medical utilization. Once individuals had spent $1000 (about $4000 in today’s dollars), however, they were fully insured — so no one was going uninsured in these plans.

The lessons of the HIE are clear, yet have been conveniently misinterpreted by parties on both sides of the debate. I review these lessons in a paper prepared for the Kaiser Family Foundation, available at http://www.kff.org/insurance/7566.cfm. First, medical care is price sensitive: those who paid nothing for their care used about one-third more than those who paid almost the full cost at the point of service. Second, on average, the extra medical care consumed by those who received care for free had no beneficial impact on health: individuals in the first dollar coverage plan were no more healthy, on average, than those in the full cost plan. Third, there is some evidence (although it is not very precise) that there were some health benefits for low-income, chronically ill populations; most of this benefit was found in screening for chronic illness and maintaining treatments for that illness. The 25 years of research since the results of the HIE were reported have done nothing to overturn these central conclusions, although no study has so carefully studied the health impacts of insurance generosity.

At the same time, there is a large literature in health services research which shows that having insurance, relative to having none, is important for health outcomes. The resolution between these seemingly conflicting results is that it matters whether individuals have some insurance, but, given insurance coverage, for the typical person it does not really matter how generous that insurance is. Once again, coming back to the buffet analogy, it is clearly harmful to not allow individuals to eat — but less critical that you allow them to eat as much as they want.

These results have two clear implications for health policy. First, it is vital that we provide health insurance coverage to the uninsured as a means of improving their health. Second, that insurance need not be as generous as first dollar coverage. There is no clear benefit to covering all medical costs, and a clear cost in terms of encouraging excessive use of medical care. Insured individuals should therefore bear some of the costs of their medical care utilization, but with a limit when costs rise to a sizeable share of income. In addition, insurance should provide reduced cost sharing for prevention and maintenance of chronic illness.

This suggests that the structure of the minimum creditable coverage plans that are being discussed makes a lot of sense. All of the plans being considered provide some up front medical care that individuals can use to get preventative care and be evaluated for more serious medical disease. If individual are found to be chronically ill, they can then buy up to more generous plans that are more appropriate to their health status.

Ideally, insurance plans would be more flexibly designed to accommodate the lessons of the HIE, for example offering different levels of out-of-pocket costs by income level or by illness level. There is some exciting work being done now on designing such “value-based insurance plans”, whereby co-payments are targeted to the needs of the particular individual being insured. But such plans are still in their infancy, so that today the choice remains between offering first-dollar coverage or a plan where individuals pay more of their costs up front. The evidence is clear that the latter design provides real insurance, in the true sense of the word.

Jonathan Gruber, Professor of Economics at MIT and member of the Connector Board

http://blogs.wbur.org/commonhealth/?p=23#comments

Comment:

By Don McCanne, MD

Dr. Gruber states that the RAND Health Insurance Experiment (RAND HIE) has been “conveniently misinterpreted by parties on both sides of the debate.” He then takes one side, stating that the lessons are that “medical care is price sensitive,” that “on average, the extra medical care consumed by those who received care for free had no beneficial impact on health, but that “there were some health benefits for low-income, chronically ill populations.” It would be incorrect to characterize this as a misinterpretation, because these statements are, “on average,” true.

But there is another side as to the importance of the findings of the RAND HIE, which also should not be characterized as a misinterpretation.

It is crucial to understand the nature of the population studied. The subjects were a gainfully employed workforce and their families, who were observed for a few years. Thus this was a study of relatively healthy workers and their healthy families during healthy years of their lives. Being employed, they had discretionary income sources that could be used for health care cost sharing.

The intrinsic validity of this study can be applied to similar healthy populations with reliable incomes, but it does not have extrinsic validity in a system of “universal coverage.” A system that would cover everyone must take into consideration the entire market basket of health problems, from conception to death. Even if sectors are segregated based on age (Medicare), income (Medicaid), employment (employer-sponsored coverage), or whatever, the remaining uninsured have a multitude of problems which result in their being uninsured in the first place. The RAND HIE conclusions would apply “on average” only to the employer-sponsored group, but not to these others, and certainly not to the uninsured.

There is also considerable question as to the overall impact on total health care spending. Although the 80 percent of us who are healthy would reduce utilization, we consume only 20 percent of health care. A modest reduction of only one-fifth of our health care bill would not have a major impact. The 20 percent of individuals who use 80 percent of health care, the group that was not studied in the RAND HIE, have little opportunity to selectively decline health care that seems necessary because of their health care problems.

Besides, is the RAND HIE “on average” conclusion satisfactory? Individuals in the RAND HIE with hypertension had a 10 percent higher death rate when cost sharing was required. The families of those who died receive little consolation in the fact that these deaths did not change the statistics of the overall beneficial outcomes of this healthy population.

Is health care about the majority of us who are healthy, or is it about prevention and management of disorders that can lead to disability or death?

Since we are not static beings, how can we possibly determine which of us will remain healthy and be well served by a private insurance plan which has an affordable premium because it doesn’t cover expenses that we won’t be facing anyway? But the real question is the reciprocal. Which of us will develop major medical problems that will require affordable access to health care made possible only by selecting a more comprehensive plan, but with premiums that we can’t afford?

So what is the real lesson of the RAND HIE? Cheap insurance works for healthy people. Period.

Since the RAND HIE was completed in the 1970s, there has been a plethora of studies in the health policy arena. The studies on cost sharing have clearly indicated that erecting financial barriers to care maim and kill people with health care needs.

The fundamental flaw with using private health plans to expand coverage to everyone is that private plans work only for healthy subsets such as employer-sponsored group plans. If those with health care needs are to be included with reasonable levels of coverage, the premiums become unaffordable.

Healthy individuals are now segregated into low risk pools (e.g., employer-sponsored) which, regardless, have become so expensive that they are now barely affordable. If we are to have universal coverage, these healthy individuals must also contribute to the pools covering the high-cost, high-risk individuals, even though that isn’t affordable either. Rather than compounding the nightmare of administrative inefficiencies, it would be much simpler to combine everyone into a single risk pool that is equitably funded and therefore affordable for everyone.

Single payer would do it. But in his efforts to make the antiquated private plans work, Dr. Gruber states, “… we can’t insist everyone who has no insurance get the policy that optimizes their health.” Further, “Let’s get them into the system and get them real insurance, and then maybe they’ll be interested in buying something better.” (The Boston Globe, March 5)

Why don’t we start out with something better? Real insurance. Single payer.

Additional Comment:

By Leonard Rodberg, PhD, Chair, Department of Urban Studies, Queens College/CUNY, responds to the comments on the RAND HIE made by Jonathan Gruber, Professor of Economics, MIT:

Prof. Gruber, like many other American economists, should remove his chauvinist blinders and take a look at the rest of the world where there has been a real world “experiment” going on for years, one that is far more extensive than the very limited Rand HIE. Countries around the world offer what we would call “first dollar coverage”, that is, little or no financial barrier to seeing a doctor. The results: (i) no overuse of medical services and (ii) lower spending than the US. The conclusion might be that eliminating cost-sharing would actually save us money!

For Dr. Gruber’s original statement and our responses:
http://blogs.wbur.org/commonhealth/?p=23#comments

The Health Care Monster Returns: Even Republicans acknowledge its ravages, but what's the best way to slay the beast?

by David Moberg
In These Times
03/7/07

Like the creature from the Black Lagoon, the health insurance monster has returned, creeping back onto the public stage. After President Clinton’s jury-rigged pen to contain the monster collapsed in 1994, it never really went away. Political leaders tried to ignore the beast or deal piecemeal with its ravages, but it pushed more unsuspecting civilians into the uninsured pit, devoured more family budgets, squeezed even giant corporations’ ability to compete globally, and raised fear and insecurity among the populace.

Now its depredations have become too loathsome to ignore for even cautious politicians and business executives — who still are inclined to see the monster as one of their own. After a rebuff in the fall elections, when voters ranked health care as one of their top concerns, President Bush offered a plan that almost certainly would not deliver his promise of “quality, affordable health care for all Americans.”

Recently, chief executives like Lee Scott of Wal-Mart — under attack for its skimpy health insurance coverage of employees — and Steve Burd of Safeway — which endured a long strike by southern California grocery workers to cut their health insurance — joined progressive leaders like Service Employees Industrial Union (SEIU) President Andy Stern, head of the nation’s largest health workers union, to call for major changes in the health care system. Under fire from both other labor unions and many citizen health care groups for joining with strange bedfellows on behalf of very broad principles, Stern argues that “the most essential change is to get everyone in a system where they have health care,” then work to improve it.

Although the war in Iraq is likely to dominate the already energetic Democratic presidential primary race, health care is emerging as the leading domestic issue in both parties. Shortly after announcing his candidacy, John Edwards laid out a comprehensive health care plan. Barack Obama said that the nation should provide universal insurance coverage by the end of the next president’s term, though so far he has mostly advocated for minor and politically easy reforms, like computerizing health records. Republican candidate Mitt Romney signed a flawed plan for universal health care when he was governor of Massachusetts, and California Gov. Arnold Schwarzenegger, after vetoing statewide single-payer legislation passed last year, has his own health insurance plan.

There’s reason for hope when leaders across the political spectrum recognize the problem. But there’s no guarantee that such agreement will lead to a good solution. For more than a decade, conventional wisdom has dictated that only incremental steps should be taken. Now more politicians are willing to consider bolder steps — but the right is still determined to push its agenda. And many progressive reformers are cautious about pursuing their ideals, as they continue to nurse scars from the fight business interests waged against the Clinton plan.

“Overwhelmingly, people are trying to find incremental responses instead of a national response,” says Marilyn Clement, national coordinator of Healthcare-NOW, a coalition advocating a public insurance program as the single payer of health care bills. “They are still putting forward the same proposals as last summer, such as ‘The first step is to get national health care for children.’ Well, that’s good, but we won the election. It’s time to escalate our hopes.”

The first crucial step is to define the problem. For many people, it’s the rising number of Americans without health insurance, now nearly 47 million. But equally problematic is the decline in quality and scope of coverage for those who have insurance. And much of the public ranks the cost of health care as their top medical and economic concern. Focusing primarily on insuring everyone won’t necessarily solve those problems. Indeed, the skyrocketing cost of health care is the main reason that the ranks of the uninsured continue to grow. Faced with rising insurance premiums, businesses have been trying to cut costs by evading responsibility for providing health insurance, leading Stern to declare that “the employer-based health care system is dead.”

But the more fundamental problem is our reliance on private, for-profit corporations to provide health insurance — the real monster in this saga. They’re the main reason for rising costs (making health insurance in the United States about twice as expensive as in most industrial countries), for the growing number of uninsured, and for the inferior health results for the average American. In 2004, the United States spent $6,100 per capita on health care, compared to $2,250 per capita on average by the countries in the Organization for Economic Cooperation and Development, which have national health insurance programs. Because public expenditures cover 60 percent of American health care costs, U.S. taxpayers are paying more than the cost of national health insurance, but not receiving it.

“How much can a new system depend on private insurance companies to provide affordable, good health care for everyone?” asks Roger Hickey, co-director of Campaign for America’s Future, a Washington, D.C.-based progressive advocacy group. “That should be the debate.”

Now the country is faced with two radically different proposals for reform. The first, pushed by conservatives and embraced by Bush in his new plans, would make individuals more responsible for buying their own health insurance. While giving them tax breaks to help pay the premiums, it would push them in the direction of lower-cost, less comprehensive plans (partly by taxing employer-provided insurance as income). As part of this strategy, conservatives have also undermined Medicare, first, by subsidizing private insurance companies to provide Medicare insurance and, second, by establishing a prescription program only available through private insurers.

The Bush strategy would be a boon for wealthy and healthy individuals, as well as employers and insurance companies, but it would ultimately leave most Americans paying more for less health security. The harsh edges of the plan could be softened — by regulating the insurance companies’ attempts to charge more or deny coverage to people seeking insurance, or by offering tax credits or direct subsidies to the poor instead of tax deductions. But these changes still embody what economist Jared Bernstein, of the progressive think tank the Economic Policy Institute, calls YOYO (“You’re On Your Own”) economics.

The diametrically opposite alternative is to recognize that “we’re in this together” (WITT, in Bernstein’s schema) and move towards social insurance, or a plan like Medicare. In this case, the federal government — through a public agency — would provide comprehensive insurance. It would be financed directly by progressive taxes on individuals and business, unlike the current system, which provides $200 billion a year in economically regressive and largely unrecognized tax deductions to subsidize employer-based health insurance. The public insurance agency would then bargain with health care providers, drug companies and others to control prices and improve quality of care.

The Bush YOYO strategy assumes that when health care consumers — otherwise known as patients — confront costs of medical care, they’ll consume less, and overall medical costs will go down. But Americans already spend more out-of-pocket on health care and use doctors and hospitals less than citizens of almost every other industrialized country. Yet, while the overall health cost in the United States is much higher, the outcomes — by virtually every measure of health — are worse. U.S. health care costs more mainly because of private insurance: Overhead at insurance companies runs close to 20 percent of total revenues, compared to less than 4 percent for Medicare. When the extra administrative costs imposed on providers are counted, the overall overhead that private insurance imposes on the system eats up about one-third of what Americans spend on health care. Eliminating those costs, as proposed by Rep. John Conyers (D-Mich.) and supported by Ohio Rep. and Democratic presidential candidate Dennis Kucinich, could finance most of a Medicare expansion to cover all Americans much more comprehensively than the program does now.

MOST PROGRESSIVE REFORMERS acknowledge that Medicare for everyone would best slay the health crisis monster, but many strategists worry that trying to eliminate the private insurers will provoke a withering counterattack. Consequently, many current proposals try, as Hillary Clinton did in 1993, to preserve a more regulated role for the insurance companies and at the same time expand public programs, on the model of Medicare, to provide a competitive alternative to private insurers.

Edwards’ plan would require employers to cover employees or help pay for their insurance (what’s widely known as “pay or play”). Everyone would have to buy insurance, taking advantage of tax credits, expanded programs such as Medicaid and the State Children’s Health Insurance Program, or new regional “health markets” that would provide a choice of competitive private plans and a public plan. Along the same lines, but with a simpler design and more robust public component, Yale political scientist Jacob Hacker proposes that everyone not in Medicare be covered either by insurance at work or a public insurance pool, including both regulated private plans and a Medicare-like plan.

Both these proposals move in the direction of Medicare for all, but strike a compromise with the existing system, losing the potential for better efficiency and more equity in the bargain. Why not push for universal Medicare (aka, a “single payer” plan)? Proponents of compromises say Medicare for all is a political non-starter. Americans, they argue, are suspicious of government, like choices and often like the private insurance they already have. And besides, they say, the insurance industry — along with most business interests and political conservatives — would launch a scorched earth campaign against such a proposal.

“There are a lot of dedicated, smart people who have made the judgment that taking some steps toward a comprehensive system with a public health care plan is better than waiting for the perfect system,” says Hickey, whose organization supports Hacker’s proposal. The labor movement, which was divided over support of a single-payer system in the ’90s, seems even more cautious now. “The political will isn’t there now, but it could get there for single-payer,” says AFL-CIO health care lobbyist JoAnn Volk. A close union ally adds, “Most of the labor movement has already accommodated to the reality that we’re not going to get a pure single-payer system. They have made the judgment that it’s just not within the range of possibility.”

SEIU’s Stern — who has argued that the United States needs an “American” plan, and not a foreign model like Canada’s single-payer system — says, “First we should create [a health care system] in which everyone is covered, then we can figure out how to rationalize it. It will cost more money than if we did it the other way [i.e, pursing the best alternative], but I think we have more chance of getting it done. The perfect cannot be the enemy of the good.”

ALTHOUGH A SMALL but rebounding movement for some form of Medicare-for-all exists, some progressive groups that would be its natural partisans are reluctant to commit themselves to a specific plan. William McNary, president of USAction, a national group of statewide citizen organizations, notes that many of their allies are splintering over proposals. “Things are fracturing,” he says, “it would be best for us to line up behind principles,” and not a plan. Jim Dean, chairman of Democracy for America, a liberal movement within the Democratic Party, thinks the United States is ripe for universal health care, but worries about both infighting over the best plan and the specter of corporate attacks. He wonders, “Can we figure out a way to talk about this so as not to get bogged down, sway, with “Harry and Louise” commercials [that the insurance industry used against President Clinton’s plan]?”

But there’s no guarantee that insurance companies won’t launch a war against these compromises, especially any that curtail insurance industry profits. And corporations that support universal health insurance will almost certainly oppose any plan that doesn’t seriously reduce their financial responsibility, which would threaten to shift costs to individuals. “Everyone says they’re for universal health care,” says Don Bechler, chair of the California Universal Health Care Organizing Project. “But the fundamental question is, ‘Who pays?’ Is [universal health care going to be] a sliding scale health care plan where everyone is entitled to first class health care, or a flat tax to sell junk insurance?”

When Clinton tried to finesse such political opposition by making insurance companies central to his plan, he suffered merciless attacks. No plan worth having will win without a massive grassroots organizing and education campaign. And Medicare for all is the one most likely to do so, while simultaneously strengthening progressives politically.

The American people are at least open to the argument. In a 2003 Washington Post poll, one of the few to pose alternatives fairly, 62 percent of respondents said they would prefer a universal health insurance program like Medicare, run by the government, to the current health insurance program. And support for the Medicare program remained nearly as high even if it limited the choice of doctors or led to waiting lists for non-emergency procedures.

Eventually, Medicare-for-all advocates might have to settle for a compromise. But the opportunity for major change in the health care system doesn’t come around very often. Since any change will require a massive effort, why not fight for the best?

California Nurses Association/NNOC Joins AFL-CIO following Endorsement of Single Payer Healthcare, Affiliation Unites 325,000 RNs in Federation

For Immediate Release
March 9, 2007

The California Nurses Association, and its national arm, the National Nurses Organizing Committee was granted a charter Thursday to join the AFL-CIO, uniting 325,000 registered nurses into the leading voice of America’s working people. CNA/NNOC represents 75,000 RNs in all 50 states.

Significantly, the affiliation came two days after the Federation adopted a sweeping new healthcare policy statement endorsing a single-payer type system premised on “updating and expanding Medicare benefits” to all Americans.

Rose Ann DeMoro, executive director of CNA/NNOC, said it was thrilled to be joining the AFL-CIO and also praised the Federation’s embrace new healthcare policy.

“We look forward to being a part of a Federation that has distinguished itself as the national voice of working people in the U.S., and is the leading national champion for all Americans on a broad range of critical issues, including jobs, retirement security, economic opportunity, workplace safety, civil rights, civil liberties, and public safety.”

The AFL-CIO’s new policy statement on healthcare symbolizes that leadership role, DeMoro said. CNA has been actively campaigning for enactment of bills in Congress, HR 676, and California, SB 840, that represent the type of reform endorsed by the AFL-CIO.

In statements after the policy was adopted, United Steelworkers President Leo Gerard, chair of the AFL-CIO’s Legislation Committee, welcomed the new policy as “a roadmap to universal coverage” and the Federation’s health policy specialist Gerald Shea specifically cited HR 676.

Labor has been at the center of a growing grassroots movement to enact HR 676. The bill has been endorsed by 245 union organizations in 40 states including 64 Central Labor Councils and Area Labor Federations and 17 state AFL-CIOs.

CNA/NNOC, DeMoro noted, “is especially pleased to be a part of the 325,000 RNs now represented by the AFL-CIO who will have such a prominent voice in that effort.” RNs, she said “who are at the heart of our healthcare system, have an especially unique role to play with all of labor and our many community allies to transform our current dysfunctional system to achieve guaranteed, universal healthcare for all, based on an improved and expanded Medicare.”

In addition to building “a stronger movement to end the nation’s national healthcare nightmare,” DeMoro praised other positions taken by the AFL-CIO, including mobilizations to:

* Enact the Employee Free Choice Act, recently passed by the House, to protect the democratic rights of workers to form unions

* Support the United Steelworkers’ Goodyear workers in their efforts to protect the health and welfare of their members

* Protect public health and defend public healthcare workers, as in the current fight by AFSCME and CNA/NNOC to overturn budget cuts in Chicago

* Overturn the attempt by the Bush Administration to privatize Social Security

* Confront moves by the Bush Administration’s labor board to erode workers’ rights, as in the “Kentucky River” challenge to the union representation rights of registered nurses

* Challenge globalization and the de-industrialization of America

* Defeat some of the most reactionary members of Congress and state legislators in the 2006 elections

“As CNA/NNOC is steeped in analytical work which is central to our advocacy for RNs and patients, we particularly appreciate the creative leadership of the AFL-CIO in developing and promoting an alternative economic model to the disastrous policies espoused by a number of politicians that have eroded the safety net and security of so many Americans.”

“CNA/NNOC is excited to be joining the AFL-CIO and all appropriate bodies of the federation at this critical juncture, and the opportunities we have to build a militant, united labor movement that is so essential to the future of our nation and the international labor movement,” DeMoro said.

For more information about CNA/NNOC, see www.calnurses.org.

The Health Care Monster Returns: Even Republicans acknowledge its ravages, but what’s the best way to slay the beast?

by David Moberg
In These Times
03/7/07

Like the creature from the Black Lagoon, the health insurance monster has returned, creeping back onto the public stage. After President Clinton’s jury-rigged pen to contain the monster collapsed in 1994, it never really went away. Political leaders tried to ignore the beast or deal piecemeal with its ravages, but it pushed more unsuspecting civilians into the uninsured pit, devoured more family budgets, squeezed even giant corporations’ ability to compete globally, and raised fear and insecurity among the populace.

Now its depredations have become too loathsome to ignore for even cautious politicians and business executives — who still are inclined to see the monster as one of their own. After a rebuff in the fall elections, when voters ranked health care as one of their top concerns, President Bush offered a plan that almost certainly would not deliver his promise of “quality, affordable health care for all Americans.”

Recently, chief executives like Lee Scott of Wal-Mart — under attack for its skimpy health insurance coverage of employees — and Steve Burd of Safeway — which endured a long strike by southern California grocery workers to cut their health insurance — joined progressive leaders like Service Employees Industrial Union (SEIU) President Andy Stern, head of the nation’s largest health workers union, to call for major changes in the health care system. Under fire from both other labor unions and many citizen health care groups for joining with strange bedfellows on behalf of very broad principles, Stern argues that “the most essential change is to get everyone in a system where they have health care,” then work to improve it.

Although the war in Iraq is likely to dominate the already energetic Democratic presidential primary race, health care is emerging as the leading domestic issue in both parties. Shortly after announcing his candidacy, John Edwards laid out a comprehensive health care plan. Barack Obama said that the nation should provide universal insurance coverage by the end of the next president’s term, though so far he has mostly advocated for minor and politically easy reforms, like computerizing health records. Republican candidate Mitt Romney signed a flawed plan for universal health care when he was governor of Massachusetts, and California Gov. Arnold Schwarzenegger, after vetoing statewide single-payer legislation passed last year, has his own health insurance plan.

There’s reason for hope when leaders across the political spectrum recognize the problem. But there’s no guarantee that such agreement will lead to a good solution. For more than a decade, conventional wisdom has dictated that only incremental steps should be taken. Now more politicians are willing to consider bolder steps — but the right is still determined to push its agenda. And many progressive reformers are cautious about pursuing their ideals, as they continue to nurse scars from the fight business interests waged against the Clinton plan.

“Overwhelmingly, people are trying to find incremental responses instead of a national response,” says Marilyn Clement, national coordinator of Healthcare-NOW, a coalition advocating a public insurance program as the single payer of health care bills. “They are still putting forward the same proposals as last summer, such as ‘The first step is to get national health care for children.’ Well, that’s good, but we won the election. It’s time to escalate our hopes.”

The first crucial step is to define the problem. For many people, it’s the rising number of Americans without health insurance, now nearly 47 million. But equally problematic is the decline in quality and scope of coverage for those who have insurance. And much of the public ranks the cost of health care as their top medical and economic concern. Focusing primarily on insuring everyone won’t necessarily solve those problems. Indeed, the skyrocketing cost of health care is the main reason that the ranks of the uninsured continue to grow. Faced with rising insurance premiums, businesses have been trying to cut costs by evading responsibility for providing health insurance, leading Stern to declare that “the employer-based health care system is dead.”

But the more fundamental problem is our reliance on private, for-profit corporations to provide health insurance — the real monster in this saga. They’re the main reason for rising costs (making health insurance in the United States about twice as expensive as in most industrial countries), for the growing number of uninsured, and for the inferior health results for the average American. In 2004, the United States spent $6,100 per capita on health care, compared to $2,250 per capita on average by the countries in the Organization for Economic Cooperation and Development, which have national health insurance programs. Because public expenditures cover 60 percent of American health care costs, U.S. taxpayers are paying more than the cost of national health insurance, but not receiving it.

“How much can a new system depend on private insurance companies to provide affordable, good health care for everyone?” asks Roger Hickey, co-director of Campaign for America’s Future, a Washington, D.C.-based progressive advocacy group. “That should be the debate.”

Now the country is faced with two radically different proposals for reform. The first, pushed by conservatives and embraced by Bush in his new plans, would make individuals more responsible for buying their own health insurance. While giving them tax breaks to help pay the premiums, it would push them in the direction of lower-cost, less comprehensive plans (partly by taxing employer-provided insurance as income). As part of this strategy, conservatives have also undermined Medicare, first, by subsidizing private insurance companies to provide Medicare insurance and, second, by establishing a prescription program only available through private insurers.

The Bush strategy would be a boon for wealthy and healthy individuals, as well as employers and insurance companies, but it would ultimately leave most Americans paying more for less health security. The harsh edges of the plan could be softened — by regulating the insurance companies’ attempts to charge more or deny coverage to people seeking insurance, or by offering tax credits or direct subsidies to the poor instead of tax deductions. But these changes still embody what economist Jared Bernstein, of the progressive think tank the Economic Policy Institute, calls YOYO (“You’re On Your Own”) economics.

The diametrically opposite alternative is to recognize that “we’re in this together” (WITT, in Bernstein’s schema) and move towards social insurance, or a plan like Medicare. In this case, the federal government — through a public agency — would provide comprehensive insurance. It would be financed directly by progressive taxes on individuals and business, unlike the current system, which provides $200 billion a year in economically regressive and largely unrecognized tax deductions to subsidize employer-based health insurance. The public insurance agency would then bargain with health care providers, drug companies and others to control prices and improve quality of care.

The Bush YOYO strategy assumes that when health care consumers — otherwise known as patients — confront costs of medical care, they’ll consume less, and overall medical costs will go down. But Americans already spend more out-of-pocket on health care and use doctors and hospitals less than citizens of almost every other industrialized country. Yet, while the overall health cost in the United States is much higher, the outcomes — by virtually every measure of health — are worse. U.S. health care costs more mainly because of private insurance: Overhead at insurance companies runs close to 20 percent of total revenues, compared to less than 4 percent for Medicare. When the extra administrative costs imposed on providers are counted, the overall overhead that private insurance imposes on the system eats up about one-third of what Americans spend on health care. Eliminating those costs, as proposed by Rep. John Conyers (D-Mich.) and supported by Ohio Rep. and Democratic presidential candidate Dennis Kucinich, could finance most of a Medicare expansion to cover all Americans much more comprehensively than the program does now.

MOST PROGRESSIVE REFORMERS acknowledge that Medicare for everyone would best slay the health crisis monster, but many strategists worry that trying to eliminate the private insurers will provoke a withering counterattack. Consequently, many current proposals try, as Hillary Clinton did in 1993, to preserve a more regulated role for the insurance companies and at the same time expand public programs, on the model of Medicare, to provide a competitive alternative to private insurers.

Edwards’ plan would require employers to cover employees or help pay for their insurance (what’s widely known as “pay or play”). Everyone would have to buy insurance, taking advantage of tax credits, expanded programs such as Medicaid and the State Children’s Health Insurance Program, or new regional “health markets” that would provide a choice of competitive private plans and a public plan. Along the same lines, but with a simpler design and more robust public component, Yale political scientist Jacob Hacker proposes that everyone not in Medicare be covered either by insurance at work or a public insurance pool, including both regulated private plans and a Medicare-like plan.

Both these proposals move in the direction of Medicare for all, but strike a compromise with the existing system, losing the potential for better efficiency and more equity in the bargain. Why not push for universal Medicare (aka, a “single payer” plan)? Proponents of compromises say Medicare for all is a political non-starter. Americans, they argue, are suspicious of government, like choices and often like the private insurance they already have. And besides, they say, the insurance industry — along with most business interests and political conservatives — would launch a scorched earth campaign against such a proposal.

“There are a lot of dedicated, smart people who have made the judgment that taking some steps toward a comprehensive system with a public health care plan is better than waiting for the perfect system,” says Hickey, whose organization supports Hacker’s proposal. The labor movement, which was divided over support of a single-payer system in the ’90s, seems even more cautious now. “The political will isn’t there now, but it could get there for single-payer,” says AFL-CIO health care lobbyist JoAnn Volk. A close union ally adds, “Most of the labor movement has already accommodated to the reality that we’re not going to get a pure single-payer system. They have made the judgment that it’s just not within the range of possibility.”

SEIU’s Stern — who has argued that the United States needs an “American” plan, and not a foreign model like Canada’s single-payer system — says, “First we should create [a health care system] in which everyone is covered, then we can figure out how to rationalize it. It will cost more money than if we did it the other way [i.e, pursing the best alternative], but I think we have more chance of getting it done. The perfect cannot be the enemy of the good.”

ALTHOUGH A SMALL but rebounding movement for some form of Medicare-for-all exists, some progressive groups that would be its natural partisans are reluctant to commit themselves to a specific plan. William McNary, president of USAction, a national group of statewide citizen organizations, notes that many of their allies are splintering over proposals. “Things are fracturing,” he says, “it would be best for us to line up behind principles,” and not a plan. Jim Dean, chairman of Democracy for America, a liberal movement within the Democratic Party, thinks the United States is ripe for universal health care, but worries about both infighting over the best plan and the specter of corporate attacks. He wonders, “Can we figure out a way to talk about this so as not to get bogged down, sway, with “Harry and Louise” commercials [that the insurance industry used against President Clinton’s plan]?”

But there’s no guarantee that insurance companies won’t launch a war against these compromises, especially any that curtail insurance industry profits. And corporations that support universal health insurance will almost certainly oppose any plan that doesn’t seriously reduce their financial responsibility, which would threaten to shift costs to individuals. “Everyone says they’re for universal health care,” says Don Bechler, chair of the California Universal Health Care Organizing Project. “But the fundamental question is, ‘Who pays?’ Is [universal health care going to be] a sliding scale health care plan where everyone is entitled to first class health care, or a flat tax to sell junk insurance?”

When Clinton tried to finesse such political opposition by making insurance companies central to his plan, he suffered merciless attacks. No plan worth having will win without a massive grassroots organizing and education campaign. And Medicare for all is the one most likely to do so, while simultaneously strengthening progressives politically.

The American people are at least open to the argument. In a 2003 Washington Post poll, one of the few to pose alternatives fairly, 62 percent of respondents said they would prefer a universal health insurance program like Medicare, run by the government, to the current health insurance program. And support for the Medicare program remained nearly as high even if it limited the choice of doctors or led to waiting lists for non-emergency procedures.

Eventually, Medicare-for-all advocates might have to settle for a compromise. But the opportunity for major change in the health care system doesn’t come around very often. Since any change will require a massive effort, why not fight for the best?

Humana shifts risk to competitor

Feds probe Humana over Rx drug patients

By Jeffrey Young
The Hill
March 8, 2007

Federal officials are investigating whether one health-insurance company that sells prescription-drug coverage to Medicare beneficiaries inappropriately diverted its most expensive customers to a competitor.

Sierra Health Services, which offers Medicare Part D prescription-drug plans under the brand name SierraRx, alleges that Humana Inc. telephoned its highest-cost customers and recommended they purchase coverage from Sierra instead.

Sierra President and Chief Executive Anthony Marlon delivered the bad news: “As we looked at the first month’s results, it became apparent that the pharmacy costs on this product were much higher than we and our independent actuaries had projected.”

Sierra will discontinue the money-losing plan next year, Marlon assured the analysts.

According to Marlon, “We believed our level of adverse selection was in part due to certain high-utilizing members being referred to us by another PDP provider. We did not agree to these referrals.”

Humana counters that it merely passed along information to its customers about a competing product that might better suit their needs, and said federal regulators approved its actions.

Humana redesigned its Complete product (Part D drug benefit) for 2007 by eliminating brand-name doughnut hole coverage and raising the premium to about $80.

All Part D plans are required to send letters by Oct. 31 to beneficiaries explaining any changes in their drug coverage for the coming year, which Humana did.

Humana went one step further. In December 2006, Humana customer-service representatives contacted an undisclosed number of Complete customers by telephone.

During the call, Humana employees again explained that the brand-name doughnut hole coverage was being cut out. They also told beneficiaries that other insurance companies were offering that benefit in 2007, including Sierra Health Services.

“Our goal was to make sure these people continued to have access to prescription coverage,” Humana’s director of media and public relations, Dick Brown, said. Humana also asserts that CMS (Centers for Medicare and Medicaid Services) approved the script the company used for these calls.

Brown would not explain, however, whether the company contacted each of the more than 400,000 Complete customers with the same information or if Humana targeted the calls to a subset of these beneficiaries such as those with the highest drug costs, as Sierra implied.

http://thehill.com/leading-the-news/feds-probe-humana-over-rx-drug-patients-2007-03-07.html

Comment:

By Don McCanne, MD

Getting rid of high-cost patients is a very wise business move for an investor-owned insurer. But what about the interests of the patients?

In the business world, premium increases due to adverse selection are known as the death spiral, which results in withdrawal of those insurance products from the market. Humana escaped from its death spiral by forcing a new death spiral on a competitor. As a result, comprehensive Part D coverage will no longer be available for those with very high drug costs. The business model works for the investors, but not for the patients.

A drug program in the traditional Medicare program would never have been designed to deprive those with the greatest needs of their drug benefits. To the contrary, it would have been designed to be certain that patients would have affordable access to the drugs that they need.

The complicity of our public stewards is consistent with the current administration’s goal to shift public insurance to the private sector. Maybe we need new public stewards. After all, patients deserve more than to be pawns for passive investors.