PNHP

Mayes and Berenson on Medicare Prospective Payment

Mayes and Berenson on Medicare Prospective Payment

Medicare Prospective Payment and the Shaping of U.S. Health Care

By Rick Mayes, Ph.D. and Robert A. Berenson, M.D.
The Johns Hopkins University Press

From the Introduction

The biggest and most intense battle within the U.S. health care system during the past two decades has been over two interrelated questions: first, who will control the manner in which medical care is paid for, and second, how much will it cost? The primary argument of this book is that – contrary to conventional wisdom and whole libraries of books and articles that point to managed care as the biggest “change agent” in American medicine in the last twenty years – the private sector neither initiated this battle nor provided the critical innovation that transformed health care in the United States. Instead, it was Medicare’s transition to a prospective payment system (PPS) that triggered and repeatedly intensified the economic restructuring of the U.S. health care system. With prospective payment, “Medicare sets prospectively the payment amount (rates) providers will receive for most covered products and services and providers agree to accept them as payment in full,” according to the Medicare Payment Advisory Commission (MedPAC). “Thus, in most instances, providers’ payments are based on predetermined rates and are unaffected by their costs or posted charges.”

Medicare payment reforms have empowered the federal government, making it similar to health care systems in other Western countries. They have given the U.S. government control over the price of most medical care and ended the era – dating back to the 1920s – in which doctors and hospitals’ authority over medical prices and decision making went virtually unquestioned. The key to Medicare’s role as the leading catalyst for change in the U.S. health care system is the program’s immense size and influence. As the single largest buyer of health care and the “first mover” in the annual payment game between those who provide medical care and those who pay for it, Medicare invariably drives the behavior of medical providers and private payers.

From the Conclusion

We think that the Medicare program is well positioned to take on many of the most important stewardship responsibilities for the government, while continuing to serve as a crucial social insurance program for the more than forty-two million seniors and people with disabilities who depend on the program. Medicare’s prospective payment systems have created a stable funding base for the nation’s providers. They have led to important changes in how providers deliver care, producing improved quality and efficiency that have spilled over to better the care provided to Americans. Medicare can shape health care in other ways as well – such as improving access to care, expanding individuals’ protection against the cost of illness, and lowering administrative costs – if allowed to do so.

http://www.press.jhu.edu/books/title_pages/3463.html

And…

Medicare: Not Just an Advantage, But a Stacked Deck

By Rob Cunningham
Health Affairs Blog
January 24, 2007

Are private plans inherently more efficient than government? There is more than a little room for doubt. In a brilliant new book by Rick Mayes of the University of Richmond and the Urban Institute’s Bob Berenson, the success of Medicare’s prospective payment system in holding down cost growth is demonstrated convincingly — findings echoed in a recent Congressional Budget Office monograph.

http://healthaffairs.org/blog/2007/01/24/medicare-not-just-an-advantage-but-a-stacked-deck/

Comment:

By Don McCanne, MD

Getting health care spending right means balancing the need to provide adequate funding to ensure patient access to beneficial services, while limiting spending to covering legitimate costs and fair profits for the delivery system.

Mayes and Berenson have demonstrated that Medicare has been quite effective in this endeavor, whereas the private sector has largely limited its role to following Medicare’s lead. In fact, the private sector’s experiment with managed care demonstrated that they could achieve payment control only by distorting this balance, which impaired patient access and failed to establish compensation tied to legitimate overhead plus fair profit.

The efforts of the Medicare stewards to improve the payment system is and always will be a work in progress, as the current struggle with the Sustainable Growth Rate (SGR) demonstrates. The point is that a government system, as long as it is manned by people who believe in the legitimate stewardship responsibilities of government, will always strive for a system that ensures patient access by adequately funding an effective health care delivery system, while limiting waste. The inefficient, fragmented private insurance system can never do that, but can only add to the waste and inefficiency that has placed such a heavy burden on us.

As academic purists, Mayes and Berenson avoid the political minefield by suggesting that Medicare’s leadership can be advanced while maintaining the status quo of a social insurance program limited to seniors and people with disabilities. I’ll gladly step into that minefield. A tremendous amount of waste, inefficiencies, and inequities result from the dysfunctional private insurance system that follows Medicare’s lead only with an unbelievable amount of imprecision and evasion. We need to dump the private plans and continue to focus on financing reform that provides the best health care value for all of us.

Kucinich renews pitch for universal health care

By THOMAS J. SHEERAN
Associated Press Writer

CLEVELAND — U.S. Rep. Dennis Kucinich, whose anti-war views have gained wider acceptance since he ran for president in 2004, hopes a similar public opinion shift will boost chances for enacting universal health care.

Kucinich, a Cleveland Democrat making another run for the presidency, was one of 42 co-sponsors of a bill reintroduced by Rep. John Conyers Jr., D-Mich., Conyers aide Alexia Smokler said.

Trying to distance himself from fellow Democratic presidential candidates on the issue, Kucinich said the proposal introduced Wednesday would be the “only bill in Congress that would assure universal health-care coverage (and) control cost.”

In 2004, Kucinich posted single digits in most primary elections, including Ohio, but stayed in the race until days before John Kerry was nominated by Democrats at their convention.

Americans are ready for universal health care, Kucinich said in a phone interview after the bill was introduced.

“Now Congress may not be ready, but let me tell you: Congress wasn’t ready to get out of Iraq, but people in November showed they wanted a new direction, so Congress is going to have to pay attention to the will of the people,” he said.

In a “Dear colleague” letter Monday, Conyers and Kucinich said the latest version of the bill had been revised to specify that the payroll tax that would help finance the plan would be progressive, meaning the rich would pay more.

President Bush, facing a Democratic-controlled Congress Tuesday night in his State of the Union address, proposed making health insurance more widely affordable by taxing high-premium, employer-provided health plans while giving a tax deduction to other workers.

Reaction to Bush’s plan split along partisan lines.

Democrats argued the plan could encourage employers to drop insurance or healthy workers to opt out of workplace plans, driving prices higher. Rep. John Shadegg, R-Ariz., said the Bush plan “will enable every American to access affordable health care on the same terms.”

Kucinich said Bush was using tax laws to address health-care issues. “The president should not be looking to the tax code to fix the lack of affordable health care,” Kucinich said.

Kucinich said his proposal, a keystone of his White House campaign, “would provide coverage for all medically necessary procedures including dental care, mental health care, long-term care and prescription drug coverage.”

The business-supported National Association of Manufacturers opposes a universal health-care system. “We believe private-market solutions are superior,” spokeswoman Kat Snodgrass said.

Dale Miller, a Cleveland Democrat who holds the Ohio Senate seat that Kucinich once held, said public opinion was moving in the direction of Kucinich’s universal health-care ideas. “I think sentiment is continually moving in that direction,” he said by phone from Columbus.

Kucinich, who was Cleveland mayor when the city went into default in 1978 in a fight with banks, won a sixth term in the House in November and declared his candidacy for the White House in December. His GOP opponent in the congressional race, Michael Dovilla, said Kucinich had misled voters about his political plans when he ran for re-election to the House.

On the Net:

Rep. Kucinich: http://kucinich.house.gov

Rep. Conyers: http://www.house.gov/conyers

Single-payer health only way to go

By Paul Heise
Lebanon Daily News

The only part of the American health-care system that seems to be working is Medicare and Medicaid. Our employment-based, managed-care system is clearly collapsing from inefficiency, rising costs and loss of the industrial base that paid for it. Now, when we don’t have enough health coverage as it is, President George W. Bush proposes fiddling with the tax code to set up tax incentives for workers to buy less insurance. Not to worry. Bush is simply making political noises. He only means to look responsive to health-care complaints, to make sure he reframes the later debate and, more importantly, to distract us from his Iraq surge. Nothing is going to happen to your health care until after the presidential election of 2008. However, that election could well be decided by the health-care issue.

Until then, everyone will lament the lack of progress; the states will tinker with patchwork solutions; and Bush will muddy the waters with the tax code fiddling we heard about in the State of the Union address.

In the interim, it is important to make sure we properly identify the problem and frame the question so we can address it in a national election.

The health-care crisis is real. As a nation, we spend twice as much as others and get worse outcomes. The U.S. spends $2 trillion per year, or 15 percent of our total output, on health care while other industrialized countries spend only six to 10 percent. Using an outcomes-based test, our infant mortality is higher than even some Latin American countries, our life expectancy is less than other rich countries, 15 percent of our people lack insurance, lawyers are undermining physicians, and medical bills are bankrupting even insured workers.

How bad is it? The U.S. spent $6,102 per person on health care in 2004 while Canada spent $3,165, France $3,159 and Australia $3,120, and 47 million people are not covered at all. We have a broken system.

When we round up the usual suspects, we blame soaring health-care costs on new and expensive technology, an aging population, rising expectations, lawyers and soaring drug costs in an ever-more-drug-focused therapy. The problem, aside from our peculiarly litigious nature, is that the rest of the industrialized world shares these “causes” but does not share anything near America’s cost problems.

To begin an intelligent debate, we have to isolate what is different about the American system that makes it the world’s highest-cost system with some of the world’s worst outcomes.

Two things pop up: the administrative costs of our multi-payer system and the control of prices by our suppliers. According to the New England Journal of Medicine, 30 percent, or $600 billion, of that $2 trillion we spend per year on health care goes for the administration, marketing and profits associated with a multiplicity of insurance collectors and payers. Medicare, a single-payer system, and much of the rest of the world pays as little as two percent in administrative costs.

The provision that forbids Medicare to negotiate prices is probably the most absurd thing in these last six years of this government of the absurd. Maybe even worse, the U.S. government pays for the research then gives the patents to the drug companies and research firms and lets them charge monopoly prices.

Medicare, at least Part A–Hospitalization, is the quintessential single-payer system: you choose your own doctor while medical practices, hospitals and pharmaceutical companies remain privately owned and compete. The government acts only as the payer. Part B–Medical, with its confusion of firms and forms, is an unnecessary concession to the insurance companies.

The point of putting health care into the State of the Union message is to reframe the debate away from the real problem, which is affordable health care, and put the focus on affordable insurance. The president has to get hold of this. If the Congress ever started looking at the sources of the increased health-care costs, the dysfunctional insurance industry could lose billions in profit.

The question has to be framed in terms of an affordable health-care system and not availability of insurance. The best way to do that is simply to take the age provisions and Part B firms out of Medicare and apply to all that single-payer system that we know and love.

I’m over 65; it works for me.

http://www.ldnews.com/portlet/article/html/fragments/print_article.jsp?articleId=5084586&siteId=139

A resident of Mt. Gretna, Heise holds a Ph.D. in economics and is professor emeritus of economics at Lebanon Valley College. His column appears every other Thursday. He maintains a web log at weboped.com, and he can also be reached at:

heise@lvc.edu

On Being Partisan

By PAUL KRUGMAN
Op-Ed Columnist
New York Times
January 26, 2007

American politics is ugly these days, and many people wish things were different. For example, Barack Obama recently lamented the fact that “politics has become so bitter and partisan” — which it certainly has.

But he then went on to say that partisanship is why “we can’t tackle the big problems that demand solutions. And that’s what we have to change first.” Um, no. If history is any guide, what we need are political leaders willing to tackle the big problems despite bitter partisan opposition. If all goes well, we’ll eventually have a new era of bipartisanship — but that will be the end of the story, not the beginning.

Or to put it another way: what we need now is another F.D.R., not another Dwight Eisenhower.

You see, the nastiness of modern American politics isn’t the result of a random outbreak of bad manners. It’s a symptom of deeper factors — mainly the growing polarization of our economy. And history says that we’ll see a return to bipartisanship only if and when that economic polarization is reversed.

After all, American politics has been nasty in the past. Before the New Deal, America was a nation with a vast gap between the rich and everyone else, and this gap was reflected in a sharp political divide. The Republican Party, in effect, represented the interests of the economic elite, and the Democratic Party, in an often confused way, represented the populist alternative.

In that divided political system, the Democrats probably came much closer to representing the interests of the typical American. But the G.O.P.’s advantage in money, and the superior organization that money bought, usually allowed it to dominate national politics. “I am not a member of any organized party,” Will Rogers said. “I am a Democrat.”

Then came the New Deal. I urge Mr. Obama — and everyone else who thinks that good will alone is enough to change the tone of our politics — to read the speeches of Franklin Delano Roosevelt, the quintessential example of a president who tackled big problems that demanded solutions.

For the fact is that F.D.R. faced fierce opposition as he created the institutions — Social Security, unemployment insurance, more progressive taxation and beyond — that helped alleviate inequality. And he didn’t shy away from confrontation.

“We had to struggle,” he declared in 1936, “with the old enemies of peace — business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. … Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me — and I welcome their hatred.”

It was only after F.D.R. had created a more equal society, and the old class warriors of the G.O.P. were replaced by “modern Republicans” who accepted the New Deal, that bipartisanship began to prevail.

The history of the last few decades has basically been the story of the New Deal in reverse. Income inequality has returned to levels not seen since the pre-New Deal era, and so have political divisions in Congress as the Republicans have moved right, once again becoming the party of the economic elite. The signature domestic policy initiatives of the Bush administration have been attempts to undo F.D.R.’s legacy, from slashing taxes on the rich to privatizing Social Security. And a bitter partisan gap has opened up between the G.O.P. and Democrats, who have tried to defend that legacy.

What about the smear campaigns, like Karl Rove’s 2005 declaration that after 9/11 liberals wanted to “offer therapy and understanding for our attackers”? Well, they’re reminiscent of the vicious anti-Catholic propaganda used to defeat Al Smith in 1928: smear tactics are what a well-organized, well-financed party with a fundamentally unpopular domestic agenda uses to change the subject.

So am I calling for partisanship for its own sake? Certainly not. By all means pass legislation, if you can, with plenty of votes from the other party: the Social Security Act of 1935 received 77 Republican votes in the House, about the same as the number of Republicans who recently voted for a minimum wage increase.

But politicians who try to push forward the elements of a new New Deal, especially universal health care, are sure to face the hatred of a large bloc on the right — and they should welcome that hatred, not fear it.

Copyright 2007 The New York Times Company

James Winkler's Statement from PNHP/CNA Press Conference

Jim Winkler spoke at a January 24, 2007, press conference hosted by Physicians for a National Health Program and the California Nurses Association at the National Press Club in Washington, D.C. Here is his statement.

How to Get Healthy

by Jim Winkler

I speak today as national co-chair of Healthcare-NOW!, a growing movement committed to a national quality healthcare system with single-payer financing and as general secretary of the General Board of Church and Society of the United Methodist Church. Our denomination supports a single-payer health insurance program.

Last night President Bush highlighted the crisis of affordable and available health care in his State of the Union address. He would not have given this matter as much time and attention as he did if we were not in the middle of an unfolding tragedy. He noted that “many” Americans cannot afford a health insurance policy. “Many” is an interesting word choice. I think we’ve reached a point where the use of phrases such as “tens of millions” and “too many” are the only ones that work.

One could argue that instead he chose to focus on solutions. Very well. It may be that his recommendation for a standard tax deduction for health insurance will help. He says this will mean more than 100 million men, women, and children who are now covered–already covered, that is–will benefit from lower tax bills.

The President also says the tax deduction will put a basic, private health insurance plan within the reach of those Americans who cannot purchase health insurance on their own. The question before us today is whether we say, “Thank you, Mr. President, for giving some help to the American people” or do we say, “This is not the time for half or quarter or one-eighth measures?” The answer to that is clear: we must have a better and comprehensive single-payer solution to this problem.

The President says the best health care decisions are made not by government and insurance companies, but by patients and their doctors. Yet, he remains committed to the insurance companies. They have to get their vig, their cut, of the health care dollar. Every city in the United States has one or more tall buildings dotting its skyline built by the insurance companies from the excess money they have collected from ordinary Americans. This is money that could be used for better and less expensive health care, for clinics and doctors and nurses, for education and prevention.

And yet these skyscrapers stand as monuments to corporate egos, undeserved profits, and greed. This wasted money prevents patients and doctors from making the best health care decisions. What we want is to eliminate the middle man, the corporate paper-pushers who have bought up the politicians of both major parties in our land, so that health care can become efficient and trustworthy.

Just last night, I was reading the February 2007 issue of Money magazine. Allyson Ranallo of Westlake Village, Calif., wrote to Ellen McGirt who pens the “Money Helps” column. Ms. Rannallo said her husband was treated at an urgent-care facility last March. Afterward she and her husband called their health insurer to confirm this was covered and they were told it was. They mailed the receipt and waited to be reimbursed. They followed up repeatedly and did not receive a check.

Ms. McGirt intervened on their behalf. PacifiCare spokeswoman Cheryl Randolph investigated and found their paperwork fell into “a bureaucratic black hole.” Randolph was mystified as to why the claim was refused. Eventually, they received their check. There are far, far too many people facing the same insurance company denials and obfuscation who do not have a magazine ombudsperson to intervene on their behalf.

Throughout the scriptures, God warns us that nations and rulers who do not care for the sick and the poor and the widows and the orphans will fall, that those nations are corrupt and rotten. Ours is a nation filled with people who study and believe the Bible, but too many have been seduced by the false gods of the market ideology.

Private health insurance has failed us. “Surging” private health insurance will fail just as “surging” the war in Iraq will fail. When you are going down the wrong road, the answer is not to continue traveling in the wrong direction more forcefully. It is to go down the right road.

Date: 1/24/2007

(c) 2005-2006

Mass. 'Universal' Health Plan Already Falling Short

Less than a year after Massachusetts’s controversial healthcare initiative was first revealed, evidence is accumulating to bolster critics who said the system is faulty by design.

by Megan Tady
TheNewStandard

Jan. 26 — Members of a panel charged with implementing the Massachusetts “universal” healthcare plan redirected some insurers this week to make their premiums more affordable. But critics of the plan say it’s the government that needs to go back to the drawing board.

In April, the Massachusetts legislature passed what supporters called a universal healthcare initiative: one that forces state residents to obtain health insurance. The plan offers a sliding-scale subsidy for residents who earn up to three times the poverty level. Those who exceed the income-eligibility threshold for subsidies are required to purchase their own health insurance without help or face tax penalties and fines.

Then-Governor Mitt Romney pledged that healthcare plans would be affordable for everyone and predicted that low-cost plans would be offered for about $200 a month. Romney vetoed a provision in the bill that would have penalized employers for not offering affordable healthcare to their employees.

Last Friday, a subcommittee of the Commonwealth Health Insurance Connector Authority (the Connector), reviewed insurance company proposals for Minimum Credit Coverage — plans that are the cheapest consumers can purchase.

Disappointed by the high costs of the minimum insurance plans — which average around $340 to $380 per month — the Connector told insurers to “sharpen their pencils and come back with more affordable options,” said Joe Landolfi, spokesperson for Connector chair Leslie Kirwan.

But critics of the state’s plan have been warning the government that universal health care achieved through the requirement to buy private insurance will lead to bloated premiums and bare-bones coverage for middle-income residents who can only afford the minimum plans.

“We should not let these board members get away with telling us that they’re surprised [about the costs for the minimum plans],” said Steffie Woolhandler, a physician at Cambridge Hospital and the co-founder of Physicians for a National Health Program, a nonprofit organization pushing for comprehensive national health plan.

In an April interview with The NewStandard, Woolhandler predicted: “Many people will be forced to pay thousands of dollars for a policy that is only a piece of paper. If someone actually does get sick, the policy will be so full of gaps — like large co-pays — that they could go bankrupt. They’ll be facing the worst of both worlds: [being] forced to hand over thousands of dollars to the private health-insurance companies, and finding that they’re not actually covered when they get sick.”

Benjamin Day, executive director of Mass-Care, a coalition advocating a single-payer healthcare system for Massachusetts, said making a low-cost but effective private-insurance plan is impossible.

“You can’t just tell insurers to provide more-affordable health insurance,” Day told TNS. “Unless they’re willing to erode the quality of the plan, they’re not going to get an affordable plan because health insurance is just not affordable [through private insurers].”

Day said the US’s fragmented private insurance system keeps administrative costs — such as marketing expenses — too high to offer cheaper insurance. According to analysis by the Kaiser Family Foundation, administrative costs have risen from $85 in 1986 to $421 in 2003.

Day predicted insurers will offset the cheaper plans by raising deductibles and co-payments — the amount consumers have to pay out of pocket before their insurance kicks in. “It’s not making it more affordable,” he said. “It’s just shifting the money around.”

Day and Woolhandler’s predictions are already materializing. At the same time the subcommittee called for lower premium costs, committee members lowered their expectations for what benefits lower-cost plans should offer.

The recommendations include a cap on out-of-pocket medical expenses at $5,000 per year for individual coverage, and between $7,500 and $10,000 for family coverage. According to a chart released by the Connector, in November, the board had discussed a $3,000 – $4,000 cap on out-of-pocket expenses.

However, insurance companies are not even required to follow these downgraded recommendations in order to get a “seal of approval” from the Connector; spokesperson Landolfi said they are simply guidelines for the insurers to follow, not mandates.

Asked what would happen if insurance companies dismissed the guidelines, Landolfi said on behalf of the Connector chair: “We’ll cross that bridge when we come to it. We think everyone wants this plan to succeed.”

He added there were some plans submitted that were affordable and “well within the range that we had anticipated. We’re confident that in the next couple of weeks… the carriers will submit plans that will address most of all of the recommendations.”

But Landolfi would not provide TNS with details of the plans that he said met the recommendations.

Even if insurers follow the Connector’s suggestions, critics say health care will remain unaffordable for many people.

“Most people don’t have $5,000 lying around in a bank account,” said Woolhandler, of the recommended maximum out-of-pocket expenses subscribers could incur.

Judy Dugan, research director of the California-based Foundation for Taxpayer and Consumer Rights (FTCR), predicted that plans like the Massachusetts initiative and one proposed for his state could leave families in dire situations.

“For a family who is just above the limit on subsidized insurance, if they have a family member that falls seriously ill and needs treatment year-after-year, that $10,000 out-of-pocket can be a formula for bankruptcy,” Dugan told TNS.

Several of the committee’s recommendations were not unanimous, possibly giving insurance companies a sense of further discretion on the minimum plans offered. For instance, three members of the committee favored a ceiling on deductibles, while one member opposed such a cap and another member abstained.

The committee also could not decide on a number of covered routine doctor visits the plans should offer.

Critics of the plan say it’s the government, not the insurance companies, that needs to roll up its sleeves to fix the problem, particularly as other states — such as California and Maine — consider copying the Massachusetts model.

FTCR said states implementing individual healthcare mandates need to couple affordable health care with insurer oversight.

“Something has to give: either the big-bucks lifestyle of insurers and the rest of the medical industry or policyholder benefits,” said Carmen Balber, consumer advocate with FTCR, in a press statement. Regulation would rein in “the excesses of the

medical establishment to make benefits affordable,” Balber added.

But both Woolhandler and Day said no matter what controls are in place, states can never achieve meaningful universal health care through the current system of private bureaucracies.
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“It’s asking people to buy their own way out of their predicament — I call it a ‘Marie Antoinette’ policy,” Woolhandler said. “Private insurance is the problem, not the solution.”

James Winkler’s Statement from PNHP/CNA Press Conference

Jim Winkler spoke at a January 24, 2007, press conference hosted by Physicians for a National Health Program and the California Nurses Association at the National Press Club in Washington, D.C. Here is his statement.

How to Get Healthy

by Jim Winkler

I speak today as national co-chair of Healthcare-NOW!, a growing movement committed to a national quality healthcare system with single-payer financing and as general secretary of the General Board of Church and Society of the United Methodist Church. Our denomination supports a single-payer health insurance program.

Last night President Bush highlighted the crisis of affordable and available health care in his State of the Union address. He would not have given this matter as much time and attention as he did if we were not in the middle of an unfolding tragedy. He noted that “many” Americans cannot afford a health insurance policy. “Many” is an interesting word choice. I think we’ve reached a point where the use of phrases such as “tens of millions” and “too many” are the only ones that work.

One could argue that instead he chose to focus on solutions. Very well. It may be that his recommendation for a standard tax deduction for health insurance will help. He says this will mean more than 100 million men, women, and children who are now covered–already covered, that is–will benefit from lower tax bills.

The President also says the tax deduction will put a basic, private health insurance plan within the reach of those Americans who cannot purchase health insurance on their own. The question before us today is whether we say, “Thank you, Mr. President, for giving some help to the American people” or do we say, “This is not the time for half or quarter or one-eighth measures?” The answer to that is clear: we must have a better and comprehensive single-payer solution to this problem.

The President says the best health care decisions are made not by government and insurance companies, but by patients and their doctors. Yet, he remains committed to the insurance companies. They have to get their vig, their cut, of the health care dollar. Every city in the United States has one or more tall buildings dotting its skyline built by the insurance companies from the excess money they have collected from ordinary Americans. This is money that could be used for better and less expensive health care, for clinics and doctors and nurses, for education and prevention.

And yet these skyscrapers stand as monuments to corporate egos, undeserved profits, and greed. This wasted money prevents patients and doctors from making the best health care decisions. What we want is to eliminate the middle man, the corporate paper-pushers who have bought up the politicians of both major parties in our land, so that health care can become efficient and trustworthy.

Just last night, I was reading the February 2007 issue of Money magazine. Allyson Ranallo of Westlake Village, Calif., wrote to Ellen McGirt who pens the “Money Helps” column. Ms. Rannallo said her husband was treated at an urgent-care facility last March. Afterward she and her husband called their health insurer to confirm this was covered and they were told it was. They mailed the receipt and waited to be reimbursed. They followed up repeatedly and did not receive a check.

Ms. McGirt intervened on their behalf. PacifiCare spokeswoman Cheryl Randolph investigated and found their paperwork fell into “a bureaucratic black hole.” Randolph was mystified as to why the claim was refused. Eventually, they received their check. There are far, far too many people facing the same insurance company denials and obfuscation who do not have a magazine ombudsperson to intervene on their behalf.

Throughout the scriptures, God warns us that nations and rulers who do not care for the sick and the poor and the widows and the orphans will fall, that those nations are corrupt and rotten. Ours is a nation filled with people who study and believe the Bible, but too many have been seduced by the false gods of the market ideology.

Private health insurance has failed us. “Surging” private health insurance will fail just as “surging” the war in Iraq will fail. When you are going down the wrong road, the answer is not to continue traveling in the wrong direction more forcefully. It is to go down the right road.

Date: 1/24/2007

(c) 2005-2006

Mass. ‘Universal’ Health Plan Already Falling Short

Less than a year after Massachusetts’s controversial healthcare initiative was first revealed, evidence is accumulating to bolster critics who said the system is faulty by design.

by Megan Tady
TheNewStandard

Jan. 26 — Members of a panel charged with implementing the Massachusetts “universal” healthcare plan redirected some insurers this week to make their premiums more affordable. But critics of the plan say it’s the government that needs to go back to the drawing board.

In April, the Massachusetts legislature passed what supporters called a universal healthcare initiative: one that forces state residents to obtain health insurance. The plan offers a sliding-scale subsidy for residents who earn up to three times the poverty level. Those who exceed the income-eligibility threshold for subsidies are required to purchase their own health insurance without help or face tax penalties and fines.

Then-Governor Mitt Romney pledged that healthcare plans would be affordable for everyone and predicted that low-cost plans would be offered for about $200 a month. Romney vetoed a provision in the bill that would have penalized employers for not offering affordable healthcare to their employees.

Last Friday, a subcommittee of the Commonwealth Health Insurance Connector Authority (the Connector), reviewed insurance company proposals for Minimum Credit Coverage — plans that are the cheapest consumers can purchase.

Disappointed by the high costs of the minimum insurance plans — which average around $340 to $380 per month — the Connector told insurers to “sharpen their pencils and come back with more affordable options,” said Joe Landolfi, spokesperson for Connector chair Leslie Kirwan.

But critics of the state’s plan have been warning the government that universal health care achieved through the requirement to buy private insurance will lead to bloated premiums and bare-bones coverage for middle-income residents who can only afford the minimum plans.

“We should not let these board members get away with telling us that they’re surprised [about the costs for the minimum plans],” said Steffie Woolhandler, a physician at Cambridge Hospital and the co-founder of Physicians for a National Health Program, a nonprofit organization pushing for comprehensive national health plan.

In an April interview with The NewStandard, Woolhandler predicted: “Many people will be forced to pay thousands of dollars for a policy that is only a piece of paper. If someone actually does get sick, the policy will be so full of gaps — like large co-pays — that they could go bankrupt. They’ll be facing the worst of both worlds: [being] forced to hand over thousands of dollars to the private health-insurance companies, and finding that they’re not actually covered when they get sick.”

Benjamin Day, executive director of Mass-Care, a coalition advocating a single-payer healthcare system for Massachusetts, said making a low-cost but effective private-insurance plan is impossible.

“You can’t just tell insurers to provide more-affordable health insurance,” Day told TNS. “Unless they’re willing to erode the quality of the plan, they’re not going to get an affordable plan because health insurance is just not affordable [through private insurers].”

Day said the US’s fragmented private insurance system keeps administrative costs — such as marketing expenses — too high to offer cheaper insurance. According to analysis by the Kaiser Family Foundation, administrative costs have risen from $85 in 1986 to $421 in 2003.

Day predicted insurers will offset the cheaper plans by raising deductibles and co-payments — the amount consumers have to pay out of pocket before their insurance kicks in. “It’s not making it more affordable,” he said. “It’s just shifting the money around.”

Day and Woolhandler’s predictions are already materializing. At the same time the subcommittee called for lower premium costs, committee members lowered their expectations for what benefits lower-cost plans should offer.

The recommendations include a cap on out-of-pocket medical expenses at $5,000 per year for individual coverage, and between $7,500 and $10,000 for family coverage. According to a chart released by the Connector, in November, the board had discussed a $3,000 – $4,000 cap on out-of-pocket expenses.

However, insurance companies are not even required to follow these downgraded recommendations in order to get a “seal of approval” from the Connector; spokesperson Landolfi said they are simply guidelines for the insurers to follow, not mandates.

Asked what would happen if insurance companies dismissed the guidelines, Landolfi said on behalf of the Connector chair: “We’ll cross that bridge when we come to it. We think everyone wants this plan to succeed.”

He added there were some plans submitted that were affordable and “well within the range that we had anticipated. We’re confident that in the next couple of weeks… the carriers will submit plans that will address most of all of the recommendations.”

But Landolfi would not provide TNS with details of the plans that he said met the recommendations.

Even if insurers follow the Connector’s suggestions, critics say health care will remain unaffordable for many people.

“Most people don’t have $5,000 lying around in a bank account,” said Woolhandler, of the recommended maximum out-of-pocket expenses subscribers could incur.

Judy Dugan, research director of the California-based Foundation for Taxpayer and Consumer Rights (FTCR), predicted that plans like the Massachusetts initiative and one proposed for his state could leave families in dire situations.

“For a family who is just above the limit on subsidized insurance, if they have a family member that falls seriously ill and needs treatment year-after-year, that $10,000 out-of-pocket can be a formula for bankruptcy,” Dugan told TNS.

Several of the committee’s recommendations were not unanimous, possibly giving insurance companies a sense of further discretion on the minimum plans offered. For instance, three members of the committee favored a ceiling on deductibles, while one member opposed such a cap and another member abstained.

The committee also could not decide on a number of covered routine doctor visits the plans should offer.

Critics of the plan say it’s the government, not the insurance companies, that needs to roll up its sleeves to fix the problem, particularly as other states — such as California and Maine — consider copying the Massachusetts model.

FTCR said states implementing individual healthcare mandates need to couple affordable health care with insurer oversight.

“Something has to give: either the big-bucks lifestyle of insurers and the rest of the medical industry or policyholder benefits,” said Carmen Balber, consumer advocate with FTCR, in a press statement. Regulation would rein in “the excesses of the

medical establishment to make benefits affordable,” Balber added.

But both Woolhandler and Day said no matter what controls are in place, states can never achieve meaningful universal health care through the current system of private bureaucracies.
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“It’s asking people to buy their own way out of their predicament — I call it a ‘Marie Antoinette’ policy,” Woolhandler said. “Private insurance is the problem, not the solution.”

Buying only the insurance you need – Tonik

Blue Cross of California
Tonik plans

Benefits Summary List – Thrill-Seeker (T755)

$5000 deductible

Enrollment Guidelines

The Tonik plans are designed and priced for an Individual policyholder. Only the named policyholder is eligible for benefits under the policy. Other persons, including, but not limited to, the policyholder’s dependents, such as spouse, newborn, legal ward, natural and/or adopted child, are not eligible for coverage under the same policy as the policyholder.

We believe that the cost of covering someone whose health can be predicted to require costly care should not be subsidized by someone with minimal health care needs. That’s why Blue Cross offers various levels of coverage, ensuring an overall balance of risk. To determine individual medical risk factors, all enrollments are subject to medical underwriting.

Blue Cross may change or terminate coverage for all covered persons with the same plan, rating area and deductible (if applicable), including changing rates, with 30 days prior written notice.

Tonik health insurance plans:
http://www.tonikplans.com/

Blue Cross of California Thrill-Seeker Tonik plan:
http://www.tonikplans.com/thrill_seeker_CA.pdf

Comment:

By Don McCanne, MD

Many of the leading proposals for health care reform are running into the same stumbling block. They would reduce the numbers of uninsured by requiring individuals to purchase private health plans, but the premiums for private plans that provide adequate coverage are no longer affordable.

So what is being proposed as a solution? Many contend that individuals should no longer have to pay for insurance benefits that they will never use, but instead they should insure themselves only for the risks that they are more likely to experience. An example of this coverage is the Tonik program for young, invincible thrill seekers. Use of high deductibles in a young, healthy population can keep premiums affordable. Is this wise from the policy perspective?

By prohibiting coverage of spouses and dependents, once the insured passes through his/her stage of invincibility and becomes a more responsible member of society, the Tonik plan will have to be abandoned in order to obtain coverage for the family. But what is also abandoned is guaranteed renewability. The insured is once again subject to medical underwriting: the process used by insurers to deny coverage to those who really need it.

What if, in the interim, the insured developed diabetes or hypertension or HIV infection or depression or any of a host of other problems that people actually do develop? The individual is no longer able to purchase the coverage he/she needs but is stuck with an inadequate plan.

You can be assured that the Blue Cross executives thought this one out carefully. They know that most individuals will drop their plans once they enroll in employer-sponsored coverage. Those that remain in the individual market will want to upgrade to more appropriate plans as their needs and risk tolerance change. The Tonik plans eliminate the unhealthy while providing Blue Cross with a 100% healthy market for those upgrading their plans. It is a devious method of circumventing the guaranteed renewability provisions of state insurance regulations.

There is a theoretical risk for Blue Cross, but they’ve covered that base as well. Suppose other insurance products become less available, and the Tonik plans are stuck with an aging, higher-cost population of former invincibles who are then developing chronic diseases. Simple. Send out notices that in 30 days their premiums will increase eight fold (or whatever). The death spiral then eliminates this would-
be albatross from Blue Cross’ neck.

Since it is impossible to predict which of us amongst the 80 percent who are healthy will shift into the pool of the 20% with major health problems, it is also impossible to define a lower level of coverage that is “only the insurance that you will need.” The only solution that will work is to provide full coverage for everyone and establish an equitable method of funding the pool that will pay for the care needed.

That leads us to the most shocking statement in Blue Cross’ Benefits Summary: “We believe that the cost of covering someone whose health can be predicted to require costly care should not be subsidized by someone with minimal health care needs.”

This is an obscene, explicit statement by the largest health insurer in the nation that we should reject the fundamental purpose of insurance: pooling risk. This industry is using hundreds of billions of our health care dollars to escape their fiduciary responsibility to provide financial security for those with health care needs, as they dump on us, the taxpayers, the burden of footing that monstrous bill. (According to Uwe Reinhardt, two-thirds of our nation’s health bill is paid through the tax system.)

It is long past time for the citizens of this nation to exercise our own fiduciary responsibility by expelling these thieves and establishing our own public insurance program. We not only owe it to ourselves, we’d be negligent if we didn’t do it!

Special request: Please circulate as widely as possible this quote from WellPoint’s Blue Cross of California:

“We believe that the cost of covering someone whose health can be predicted to require costly care should not be subsidized by someone with minimal health care needs.”

http://www.tonikplans.com/thrill_seeker_CA.pdf

Really. Send it out now. The nation must understand that the insurance industry believes that they should no longer be insuring risk. And we don’t need the superfluous administrative garbage that they are selling us now.

Tin-Plated Health Insurance

By Amy B. Monahan

President Bush has recently proposed ending the favorable tax treatment provided to employer-sponsored health insurance, and instead providing all Americans with a standard deduction for health insurance premiums, regardless of employment status or health insurance provider. This, the White House argues, will allow each family and worker to “choose the balance of wages and health insurance that is right for them, without the tax code distorting their decisions.” It is true that our current system distorts such decisions. By providing an exclusion for employer-provided health care without a corresponding exclusion for individually-purchased health insurance, our system favors the purchase of “overly expensive, gold-plated” employer-provided health insurance.

But the Bush plan doesn’t cure distortions in health insurance purchasing decisions, it just creates new ones. Bush’s proposal would encourage individuals to purchase the lowest cost insurance available. This is because the proposed standard health insurance deduction ($15,000 for family coverage, $7,500 for individual coverage) would be available, in full, to anyone who purchases health insurance, regardless of the cost of that insurance. As a result, the economically rational decision would be to seek the lowest priced health insurance policy. The amount by which the standard deduction exceeds the actual health insurance premium becomes a bonus tax deduction. The individual, meanwhile, ends up with a “tin-plated” health insurance plan that will generally require either a high deductible, high levels of cost-sharing, or limited coverage for services.

Why would the administration favor a tax policy that creates such incentives? It’s part of the broader ownership society health care movement, which aims to introduce individual responsibility and market incentives into health care. By creating this incentive to buy the lowest price health insurance policy available, the administration is encouraging the purchase of high deductible health insurance policies, which can be used in conjunction with tax-favored health savings accounts.

While touted as contributing to health care reform, ownership society health care policy also functions as a tax shelter for the wealthy. Under the President’s proposal, assume that a wealthy individual can buy high deductible health insurance for her family for $7,500. She can then deduct the full $15,000 standard deduction for health insurance. In addition, she can establish a health savings account and take an additional deduction of up to $4,500 each year. It ends up being a great tax break – provided she can afford to meet a high deductible each year. Lower-income individuals, on the other hand, faced with the same incentive to buy cheap insurance, may face out-of-pocket costs they cannot afford. Thus, under the Bush plan, the wealthy will get a tax break, while lower-income Americans will be encouraged to underinsure.

Amy B. Monahan is an associate professor of law at the University of Missouri-Columbia.