PNHP

GAO report – Don't choose an HSA if you need health care

GAO report – Don't choose an HSA if you need health care

Early Enrollee Experiences with Health Savings Accounts (HSA) and Eligible Health Plans (HDHP)
Consumer-Directed Health Plans
Government Accountability Office (GAO)
August 2006

GAO estimated that HSA-eligible plan enrollees would incur higher annual costs than PPO plan enrollees for extensive use of health care, but would incur lower annual costs than PPO plan enrollees for low to moderate use of health care.

HSA-eligible plan enrollees generally had higher incomes than comparison groups. Fifty-one percent of tax filers reporting HSA contributions had an adjusted gross income of $75,000 or more, compared with 18 percent for all tax filers under age 65 in 2004.

Most participants said they would recommend HSA-eligible plans to healthy consumers. Some participants said they enrolled in the HSA-eligible plan specifically because they did not anticipate getting sick, and many said they considered themselves and their families as being fairly healthy.
However, participants would not recommend these plans to people who use maintenance medication, have a chronic condition, have children, or may not have the funds to meet the high deductible.

http://www.gao.gov/new.items/d06798.pdf

Comment:

By Don McCanne, MD

Advocates of health savings accounts (HSA) with their HSA-eligible high-deductible plans (HDHP) refute the challenge that the plans primarily benefit the healthy and wealthy. They claim that they are suitable for everyone, including low-income individuals with greater health care needs.

The claim of opponents of HSAs that they benefit the healthy and wealthy is based specifically on the design of the plans. These plans use regressive tax policies that benefit the wealthy but not the poor. They also provide an additional retirement benefit, but only for those who remain healthy and are able to fund the accounts.

This GAO study confirms that the healthy-wealthy benefit of the plans is recognized by the participants. Not only do they understand the benefit for themselves, but they also understand the disadvantages for those with greater health care needs. The healthy and wealthy do not recommend these plans for the sick and poor. This GAO report should put an end to that debate.

Health policies that take good care of the healthy but not the sick are irrational. It’s time to abandon these policies and to become serious about adopting policies that would ensure that the sick will always have affordable access to the health care that they need. It’s time for national health insurance.

46 million uninsured focus of meeting

Mandatory insurance among plans debated

By Laura Ungar
lungar@courier-journal.com
The Courier-Journal

Celeste Vanskike has worked at preschools for 25 years but can’t afford health insurance — meaning she’s had to put off doctor visits and leave a thyroid condition untreated.

“Here I am, I’ve got a good work ethic and I’m barely eking out an existence. … And there’s so many of us out here without insurance,” said the 56-year-old Louisville woman, who earns less than $20,000 a year. “More has to be done. It has to be brought to light.”

Yesterday, the Kentucky Medical Association focused its annual meeting on the estimated 46 million uninsured Americans and more than half a million uninsured Kentuckians.

Called “Breaking the Barriers,” the meeting attempted to dissect the problem and present possible solutions, including a Massachusetts program mandating residents have insurance, an American Medical Association plan promoting “incremental” health-care reform, and a national health-care system like the one in Canada.

“For a number of our members, the issue of the uninsured in the state is a bigger problem” than the rising cost of malpractice insurance, said Daniel W. Varga, chief medical officer for Norton Healthcare and outgoing president of the KMA.

Dr. Stephanie J. Woolhandler, an associate professor at Harvard Medical School and co-founder of Physicians for a National Health Program, said America is morally bound to care for the uninsured. According to the Institute of Medicine, a nonprofit organization that advises the government on medical issues, about 18,000 Americans die each year because they lack insurance.

“We don’t just live in an economy,” she said. “We live in a society and we have a responsibility to protect and care for each other.”

Kentucky below average

About 14 percent of Kentuckians, and a similar portion of Indiana residents, lack health insurance. Although these figures are below the national average, speakers said the problem in Kentucky is compounded by poverty and one of the unhealthiest populations in the nation.

There’s also an increasing number of middle-class, underinsured Kentuckians facing some of the same problems as the uninsured in getting the care they need, said Michael E. Samuels, a University of Kentucky professor and rural health expert.

He pointed to statistics from a recent telephone survey of 2,100 households by the University of Kentucky, the University of Louisville and the Kentucky Long-Term Policy Research Center. It showed that 54 percent of uninsured residents and 21 percent of insured residents skipped a medical test because of cost.

“The one thing we don’t want to do is prevent people from getting necessary preventive care and the necessary screenings,” he said.

Samuels said several trends are converging: Employers are shifting more insurance costs to workers, fewer small companies offer health benefits and a growing number of personal bankruptcies are linked to medical costs.

Those most likely to be among the uninsured include low-wage workers, young people entering the labor force and those who retire early. About half of Kentuckians with no health insurance have done without it for more than three years, the survey found.

Vanskike, who has an associate’s degree, lives in an apartment and has no car, said she’s been uninsured since 2003. Although her current employer offers health insurance, she said she can’t afford the premiums.

When she was insured, she took medication for an underactive thyroid. But she said she hasn’t been able to get a clinic appointment to get her prescription renewed and can’t afford a private doctor. Without treatment, she said, the condition causes her to gain weight and saps her energy.

Vanskike said she would support a national health-insurance plan. “I’m all for the government helping people.”

Financial incentives

Woolhandler said there are many financial reasons for adopting national health care. For instance, she said, health-care costs for auto companies were $1,309 per car for Ford but only $97 per car for Toyota in Japan, which has a system of universal health coverage.

She said administrative health-care costs have risen dramatically in the United States and are much lower in countries with national health care. Meanwhile, life expectancy is higher in several of these countries.

She acknowledged problems with national systems, such as some waits for care in Canada. But she said the percentage of people with unmet health-care needs is about the same for Canadians as for insured Americans.

“The problems have been grossly exaggerated in the U.S. media,” Woolhandler said.

Other speakers provided different remedies for the nation’s health-care woes.

Dr. Jack T. Evjy, of the Massachusetts Medical Society’s task force on universal access, said that state is putting into place a program that mandates residents have insurance and helps them by expanding Medicaid eligibility and providing subsidies for low-income residents to buy insurance. The program, modeled on the requirement for car insurance, penalizes those who don’t get insurance by July 2007.

“I think it’s going to succeed,” Evjy said. “A lot of our experience can apply here in Kentucky.”

Dr. Jeremy A. Lazarus, vice speaker of the AMA House of Delegates, outlined that group’s approach, which boils down to giving people money to buy health insurance through tax credits. The plan also involves giving people a choice of coverage plans and rewarding them for staying insured.

Lazarus said the AMA will work to make coverage of the uninsured one of the top priorities in the 2008 national elections.

He said, “There’s really a moral imperative to get something done and get something done soon.”

Reporter Laura Ungar can be reached at (502) 582-7190.

Why do the uininsured decline to buy individual plans?

Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families

By Sara R. Collins, Jennifer L. Kriss, Karen Davis, Michelle M. Doty, and Alyssa L. Holmgren
The Commonwealth Fund
September 2006

Low participation in the individual market likely reflects the difficulty people have finding affordable and suitable coverage. The survey asked adults whether they had sought coverage in the individual market in the past three years. About 58 million adults ages 19 to 64 reported either that they had coverage purchased through the individual market or had considered buying, or tried to buy, a plan. Of these, nearly 90 percent never bought a plan.

The survey asked respondents about particular challenges they encountered in attempts to purchase a health plan in the individual market. These included ease of finding a plan with suitable or affordable coverage or being turned down for a preexisting condition. One-third (34%) of those in the individual market said they found it very difficult or impossible to find a plan with the coverage they needed. This problem was particularly pronounced among people with health problems: 48 percent of those with health problems (fair or poor health status, any one of four chronic conditions, or a disability) found it very difficult or impossible to find a plan with the coverage they needed.

Even greater numbers of people had difficulty finding an affordable plan.
Nearly three of five (58%) adults who had ever shopped for coverage in the individual market found it very difficult or impossible to find a plan they could afford. This problem was especially evident among those with health problems and low incomes. More than 70 percent of people with health problems or incomes under 200 percent of the federal poverty level found it very difficult or impossible to find an affordable plan.

http://www.cmwf.org/usr_doc/Collins_squeezedrisinghltcarecosts_953.pdf

And…

Most Consumers Seeking Health Insurance in Individual Market Approved for Affordable Coverage Commonwealth Fund study based on flawed methodology

America’s Health Insurance Plans (AHIP)
September 14, 2006

The Commonwealth report… claims that “most adults who seek to purchase insurance coverage through the individual market never end up buying a plan, finding it either very difficult or impossible to find one that met their needs or is affordable.” However, those defined as “seeking” coverage include any respondent who “ever thought about” buying individual coverage in the past three years.

AHIP’s member survey, however, is based on the experiences of several million consumers who actually did seek coverage in the individual market, and it found that even in states that allow insurers to consider an applicant’s medical history, nearly nine out of ten people who completed the application process for non-group insurance were offered coverage.

“The data could not be clearer: coverage purchased in the individual market is accessible and affordable,” said AHIP President Karen Ignagni.

http://www.ahip.org/content/pressrelease.aspx?docid=17543

Comment:

By Don McCanne, MD

Last week, The Commonwealth Fund released their widely-quoted report demonstrating that, of those adults who “had sought coverage in the individual market in the past three years… nearly 90 percent never bought a plan” primarily because they had difficulty finding affordable and suitable coverage.

Immediately, the opponents of reform released statements based on AHIP’s press release stating that Commonwealth’s finding was flawed because “nearly nine out of ten people who completed the application process for non-group insurance were offered coverage.”

The facts are clear. Most individuals who are confronted with a health insurance premium that they cannot afford do not bother to submit an application. Karen Ignagni’s statement that “coverage purchased in the individual market is accessible and affordable” applies to only the very small percentage of individuals who actually purchased coverage because they could afford it.

The statements in the AHIP release are not lies, but they are blatantly dishonest because they leave the reader with the belief that almost any of the uninsured can afford to buy comprehensive coverage, when, in fact, most of them cannot. How long are we going to leave these flimflammers in charge?

Albany Med chief calls for hospital reform and single-payer system

The Business Review (Albany)
September 8, 2006

As chief executive officer of Albany Medical Center, James Barba has a unique perspective on the health care industry both regionally and nationally. What he sees is a broken system in which costs are rising and competition is increasing, with no cure in sight.

That has led Barba to the conclusion–unpopular with many–that universal, government-run health care is the only solution.

Barba recently sat down with Business Review reporter Barbara Pinckney to share his thoughts and ideas on the future of health care.

What is your general view of the health care system?

There is no American health care system. What we have, at best, is a loose configuration of various interest groups who even when they operate in absolute good faith–and I think, for the most part, they do–cannot bring sense, order or rationality to what we call American health care and what I refuse to call an American health care system. You can’t make it a system. I think that’s the bottom line.

What’s the answer?

Well, I think the answer lies in understanding the problems. And even once one does that analysis, I’m certain that many will not agree with where I come out on it, because I think you can come out in a couple different places. But I think, after you analyze the problems, I break them into two convenient categories: the problems of cost and the problems of constituencies. Why can’t we control the costs? Why are the costs running away? Two trillion dollars in 2005. And who are the constituencies of American health care and why have we not been able to align their interests and their goals?

I come out and say that what we have now is a market-driven system and it has failed us terribly. And the opposite of that is what I think we will inevitably move toward, and that is a regulated system. So once I make that leap–based, I hope, on decent analysis–the answer is you have to look at the government and say “What is its track record in delivering health care? What might we reasonably expect in the future? And can it work?”

Is universal health care a realistic possibility?

Is it realistic that we might have a government-run system? It is. In the end, I think it’s going to be the only practical answer.

I always like to start an explanation of that answer by pointing to the Medicare system. Medicare has been around for 40 years now. It is, I think, universally regarded as a good system for delivering health care to people 65 and older. Not perfect, but we’ll never have a perfect system. The cost for administering the program is 3 percent–the cheapest administrative cost of any health care payer in the nation. So the federal government–the bureaucracy, if you can believe it–spends 3 cents on administering Medicare and 97 cents on actually delivering health care, both in the hospital and through physician payments. That’s extraordinarily efficient. If we could replicate that efficiency in a system that was national, I think we would have achieved something. We actually will have created an American health care system.

What’s kind of interesting to me–and I like to just sometimes theorize about what we could have done and what we can still do, I guess–we have this Medicare system which covers everyone 65 and older. We have in New York state Child Health Plus, but there’s a similar program in virtually every state of the union which covers those 18 and younger whose families meet certain income criteria. If we had started, let’s say, 15 years ago when the Clintons were trying to “reform” health care, to “up-age” Child Health Plus and “down-age” Medicare [and had] taken off two years in each direction in each of the last 14 years, we’d be there by now.

And I guess once I get to that point I say well, OK, the last 15 years have not been wasted; they’ve just taught us, I think that we are not going to solve the problems of costs and constituencies by doing more of the same. It only gets worse. So why don’t we start now and start “up-aging” Child Health Plus and “down-aging” Medicare and see when they meet in the middle, and that analysis will be a matter of how much we can afford it.

Would you like to see the whole private payer system–the Blues, the HMOs–done away with?

Well, they’re going. I don’t know how we can justify a payer system with hundreds, if not thousands, of insurance companies, each one of which has a completely different set of rules for what it will pay, and who it will pay, and how it will pay, and when it will pay, and why it will pay, etc. That replication in and of itself costs hundreds of billions of dollars every year. If we could do away with it all, all of that waste, and just concentrate on a single payer with a single set of rules, and everyone understood what they are and knew what was covered and what wasn’t, some experts estimate that we could save between $300 billion and $400 billion. That’s a lot of money!

As I’ve thought about it, the best I can come up with is transitional roles for [the insurers], having them continue to serve the role that they serve as we go to a single-payer system. We’re struggling under the weight of all these extraneous costs. I don’t want to leave myself, the hospitals, out because hospitals add to it as well. We just happen to be talking about the HMOs right now. But, ultimately, I don’t see any role for them. I know that’s not a popular position but my prediction is it is one that we’ll get to.

Would the role of the hospitals change?

I think in terms of hospitals, we have to take a hard look at ourselves and ask a couple of fairly fundamental questions. One, do we need as many hospitals as we currently have? And the answer to that is “No, we do not need as many hospitals as we have currently throughout the country.”

And second, is there a way to more intelligently design a hospital delivery system than the way we’ve designed it now? Why is it that hospitals in any given region–and I’ll use this one because this is the one with which I’m most familiar–why is it that we’re engaged in an arms race, for example, a technology arms race? [Albany Med makes a purchase and] predictably that will set off in the board rooms and CEO offices of other hospitals in the region the conversation that says “Do we need a new X type of scan or Y type of scan? Albany Medical Center is going to do that and they’ll get ahead of us competitively.” All of that adds unnecessarily and wastefully to costs.

Now, why can’t I just sit down with my fellow CEOs and agree to divide up the market so we don’t do it that way? Albany Med does one thing and St. Peter’s does another? The answer is because we’d all go to jail. That violates the federal anti-trust laws. We cannot do it and so, there again, if hospitals are to be reformed we’re going to need some guidance from the federal government as to how we can intelligently design the services that are being offered. We can’t do it without some help from Congress because it’s all illegal otherwise.

On a statewide level, what are you hoping to see from the Commission on Health Care Facilities for the 21st Century?

I’m hoping to see a sober, analytic document that speaks about what we should be doing vis-à-vis the hospitals in the state. Apparently, from what I read, if the next governor is Eliot Spitzer–and it appears sitting here today it’s going to be–he’s made some statement, I believe, that he’s not going to be bound by that report, and that’s understandable. The question is, can the report in and of itself have sufficient gravitas, or weight, so that even a new governor and a new administration will have to say, “This is pretty important stuff and while we may not want to implement every last recommendation, we have to take it seriously because serious people spent a lot of time thinking and listening and analyzing and came up with these conclusions.” So I think that’s the best thing we’re going to get out of the commission’s report.

What keeps you awake at night?

There is one thing I worry about. As I think most of the country now understands and appreciates, we’ve been working with a nursing shortage for at least a half-dozen years. But I don’t think the public is yet appreciating that there is an impending physician shortage and that shortage is going to happen at the worst possible time in the history of this country, namely at a time when that huge demographic–the baby boomer generation–is moving into an age when they are going to require more and more medical assistance.

The Association of American Medical Colleges for quite a few years was saying that it did not see a physician shortage coming and then, maybe six months ago, it just changed its mind and said, “Yes, in fact, it is going to happen and we’re asking the 125 medical colleges over the next 10 years to increase their enrollment by 30 percent.” Leaving aside the virtual impossibility of just overnight increasing class size by 30 percent, the underlying issue–a physician shortage at a time of enhanced demand–is going to be something that could cause some real dislocation in American health care and it provides another reason for us to try to create something more rational than what we have currently.

What in the health care system gives you the most hope?

There are tremendous bright spots. Look at this medical center. We call it an academic health sciences center–the only one in the region. Ten years ago when I became CEO, I said–and I think people thought I was exaggerating–“This is a place where miracles are performed every day.” I wasn’t exaggerating then and I’m not exaggerating today. I think the statement is more pertinent and more accurate today than it was 10 years ago.

We do wonderful things with science and with medicine to treat conditions that were either totally untreatable and terminal only a decade ago, or that were chronic and wasteful and now they are no longer.

Take a look at the work, for example, that we’ve done with AIDS. I’m very, very proud of the role this specific institution has played with that particular disease. We worked with the science a dozen or more years ago–the protease inhibitors–and now, by and large, these new medications and the treatments that were developed here and elsewhere, and delivered here, are turning what was an absolute death sentence, by and large, into a chronic disease.

We could go down the list: Look at the transplant programs, look at the advances in childhood cancer; those are all good-news stories.

Sacramento Bee attacks Schwartzenegger on "Socialized" Bogeyman

Editorial: Socialized bogeyman

Government has real role in providing health care solutions for residents
Sacramento Bee
10-SEP-06

Careful, Gov. Arnold Schwarzenegger. Your ghostwriter seems to have just made you an opponent of Medicare.

The opinion piece in question was designed to detail your reasons for vetoing Senate Bill 840 by Sheila Kuehl, D-Santa Monica. SB 840 would have revolutionized the state’s health care system. Private insurers would have gone out of business. The state would have started paying directly for the health care of millions of Californians.

“I cannot support a government-run health care system,” you wrote (or, more accurately, someone wrote for you).

Hmm. So what exactly is Medicare? Or, more important, what are Republicans and Democrats really fighting about when it comes to providing affordable health care to more Californians, and how can anyone find the elusive political compromise?

SB 840 sought to create one payer of health care _ the state _ for residents of California. That would be the so-called “single-payer”
solution to our health care ills. The very term “single payer” tends to create political divides. And along those divides, the very real role of government in health care gets misunderstood.

“Socialized medicine is not the solution to our state’s health care problems,” wrote Schwarzenegger in vetoing SB 840. Actually, socialized medicine is as American as apple pie. No greater example is Medicare.

Medicare is essentially a single-payer form of health care. One payer _ the federal government _ provides the bulk of the funds to hospitals and doctors for the necessary care of millions of senior citizens.

Yes, those over the age of 65 pay part of the cost. Some can join HMOs as an alternative. But the federal government “runs” Medicare. And it also “runs” Medicaid (known as Medi-Cal in California), the single-payer program that underwrites care to the poor and disabled.

The political mainstream isn’t clamoring to get rid of those established forms of socialized U.S. medicine. So why do hard philosophical viewpoints suddenly emerge when the same solution is discussed for working Americans and their children?

Our problem with SB 840 was how the Democrats dangled it as veto bait from the get-go. No quest for common ground ever appeared evident, either by Democrats or Schwarzenegger. It was all about Democrats embracing government as the solution and Republicans denouncing it. In vetoing SB 840, Schwarzenegger followed the script.

Real progress in lowering health care costs and insuring more Californians will take a far more serious effort than the theater surrounding SB 840. It will start with the recognition that government is not the bad guy, and that government has an indispensable role in any solution.

Medicare Costs to Increase for Wealthier Beneficiaries

By ROBERT PEAR
New York Times
September 11, 2006

WASHINGTON, Sept. 9 — Higher-income people will have to pay higher Medicare premiums than other beneficiaries next year, as the government takes a small but significant step to help the financially ailing program remain viable over the long term.

The surcharge is a major departure from the traditional arrangement under which seniors have generally paid the same premium.

It is expected to affect one million to two million beneficiaries: individuals with incomes exceeding $80,000 and married couples with more than $160,000 of income. For individuals with incomes over $200,000, the premium, now $88.50 a month, is expected to quadruple by 2009.

The surcharge was established under a little-noticed provision of the 2003 law that added a prescription drug benefit to Medicare.

Supporters of the surcharge say it makes sense for wealthy people to pay more at a time when Medicare costs are soaring. But some Medicare experts worry that wealthy retirees will abandon the program and rely on private insurance instead, leaving poorer, sicker people in Medicare.

The premium in question is for Part B of Medicare, a voluntary program that covers doctors’ services, diagnostic tests and outpatient hospital care.

“The higher premiums could drive people with higher incomes out of Medicare,” said Samuel M. Goodman, a 73-year-old retiree in Derwood, Md. “Medicare would then become a welfare program, rather than a universal social insurance program, and it would be easier to attack.”

Federal officials have repeatedly said that Medicare is financially unsustainable in its current form.

Congress said the surcharge would “begin to address fiscal challenges facing the program.”

Joanne S. Shulman, who worked at the Social Security Administration for 35 years, said, “The surcharge will come as a shock to many people because they have not received any warning.”

Most beneficiaries now pay the same premium for Part B of Medicare. That amount has been increasing rapidly even without a surcharge. The standard premium has shot up an average of 12 percent a year since 2001, when it was $50 a month.

The premium is set each year to cover about 25 percent of projected spending under Part B of Medicare, which has been growing because of increases in the number and complexity of doctors’ services. General tax revenues pay 75 percent of the cost.

The Bush administration plans to announce the standard premium for 2007 later this month. In July, Medicare officials estimated that it would be $98.40 a month. The surcharge will be phased in from 2007 to 2009.

Here is how it will work: The surcharge for 2007 will be computed by the Social Security Administration, using income data obtained by the Internal Revenue Service from tax returns for 2005. If an individual has modified adjusted gross income of $80,000 to $100,000, the surcharge will be 13.3 percent, which adds about $13 to the monthly premium, for a total of about $111.50. For a single person with income of more than $200,000, the surcharge will be 73.3 percent, or about $72 a month, for a total premium of about $170.50.

When the transition is complete in January 2009, according to Medicare actuaries, the total premium for a person with income of $80,000 to $100,000 will be 1.4 times the standard premium. A person with income of $100,000 to 150,000 will pay twice the standard premium. A person with income of $150,000 to $200,000 will pay 2.6 times the standard premium, and a beneficiary with more than $200,000 of income will pay 3.2 times the standard amount.

If the basic premium rises 10 percent a year — a relatively conservative forecast — the most affluent beneficiaries will be paying premiums of more than $375 a month in 2009.

Under current law, the $80,000 threshold and the income brackets will be adjusted each year to keep pace with inflation, as measured by the Consumer Price Index.

President Bush recently proposed eliminating these annual adjustments, so that more people would pay a surcharge. “This change gives beneficiaries increased participation in their health care,” he said.

More than 40 million people are in Part B. Medicare officials estimate that 2 percent of them will have to pay a surcharge next year. The Congressional Budget Office says 5 percent of beneficiaries will be affected. The Social Security Administration puts the figure at 4 percent to 5 percent. Most people have their premiums deducted from monthly Social Security checks.

Fiscally conservative Republicans supported the surcharge. But so did some Democrats, who saw it as a progressive way to finance Medicare without cutting benefits or raising payroll taxes.

Senator Dianne Feinstein, Democrat of California, argued that “high-income beneficiaries can afford to pay a larger share of Medicare’s costs,” in part because Congress has cut their taxes in recent years.

The Congressional Budget Office estimates that the surcharge will raise $15 billion from 2007 to 2013.

Representative Nita M. Lowey, Democrat of New York, recently introduced a bill to repeal the surcharge, which she says will hit “more and more middle-class seniors.” Some advocates for older Americans, including the Senior Citizens League, with 1.2 million members, are lobbying for repeal.

A beneficiary can obtain relief from the surcharge by showing that the I.R.S. data was incorrect or that the person’s income declined because of a “major life-changing event” like the death of a spouse or the loss of pension benefits.

Theodore R. Marmor, a professor of political science at Yale, said the surcharge was more important for the politics of Medicare than for the financing of the program.

“The new income-related premium is fundamentally at odds with the premises of social insurance,” Mr. Marmor said. “Large numbers of upper-income people will eventually want to find alternatives to Part B of Medicare and will no longer be in the same pool with other people who are 65 and older or disabled. Congress will then have less reluctance to cut the program.”

The only health care solution: single-payer system

By Aaron E. Carroll, M.D.
The Indianapolis Star, Sept. 10, 2006
 
The new uninsured statistics released recently by the U.S. Census provide a sobering reminder of the failures of the U.S. health-care system. In Indiana the number of uninsured has risen to 871,000: Nearly one of every seven residents lacks coverage. Even for those lucky enough to be insured, ever-skimpier private policies helped push an estimated 28,000 Indiana families into medical bankruptcy in 2001.
 
As a physician who faces our state’s health care crisis day in and day out, I support a single-payer “Medicare for All” system for Indiana and for the nation.
 
Nearly everyone, regardless of ideology, agrees that reform to establish universal coverage is necessary. But the most important question is “how,” and here not all proposals are created equal. Because our current non-system is based on insurance companies whose natural market behavior is to compete to cover healthy people while shunning the sick, proposals that preserve our reliance on them are destined for failure:
 
* “Individual Mandates” (like the much-celebrated Massachusetts plan) simply force the poor and near poor to buy overpriced policies that offer grossly inadequate coverage, guaranteeing an epidemic of medical bankruptcies.
 
* Reforms which force employers to contribute more for coverage, encourage them to cut jobs, wages, or other benefits.
 
* “Consumer-directed” health plans are nothing but a euphemism for substandard coverage, offering families no protection in the event of medical need.
 
Other countries have figured out how to provide higher-quality coverage to all their citizens for far less than we spend. Recent studies have detailed how Brits and Canadians have lower rates of nearly every chronic disease and enjoy superior access to care. An exhaustive 2004 study of 21 international health quality indicators in five countries found that – despite double the outlay on health care – the U.S. performed noticeably better on only two.
 
How can the U.S. spend so much more and get so much less? Anyone who has ever had to deal with the nightmarish paperwork of giant insurance companies already knows the answer: It’s our reliance on private insurers.
 
Insurance companies stay profitable by keeping those who actually need health care from getting it. To do this, they erect a giant, expensive bureaucracy whose only purpose is to fight claims, issue denials and screen out the sick. They consume care dollars, but produce only paperwork headaches. Doctors and hospitals must maintain costly staffs to deal with insurance hassles, and businesses are saddled with the burden of administering their own health benefits. In total, this administrative waste consumes nearly one-third of our health spending.
 
Research has shown that streamlining payment through a single public payer could save the U.S. more than $350 billion per year. Such a system could have saved Indiana $6 billion in 2003. That’s $8,266 per uninsured resident, enough to provide high-quality coverage to everyone. Everyone would be covered for all doctor, hospital, long-term, mental health, dental and vision care, and prescription drugs. Patients would have free choice of doctor and hospital, and physicians would be unleashed from corporate dictates over patient care.
 
In the U.S. opponents resort to cries of “socialized medicine,” but don’t be fooled. In a “socialized” system (like the U.S. Veterans’ Administration) the government employs the doctors and owns the hospitals. In a single-payer system, they stay private.
 
Similarly, much hysteria has been printed about alleged “rationing” of care in other nations. The truth is that the U.S. rations care more harshly than any other country. According to the Institute of Medicine’s most conservative data, 18,000 Americans die every year due to lack of insurance. Millions more go without needed care due to cost. Now that’s rationing. What’s more, Canadians don’t even wait very long for care. The median wait time for non-emergency, elective surgery was four weeks in 2005. Service was so fast that in a recent survey only 3.5 percent of Canadians reported feeling they waited too long for care. Considering we spend twice what they do, a U.S. system should be able to eliminate waits entirely.
 
Single-payer offers the only real solution for Indiana and for our nation. It’s time for politicians to stand up to the insurance giants – as they have in California – in the interest of the public.
 
Dr. Aaron E. Carroll is assistant professor of pediatrics and director of the Children’s Health Services Research Fellowship at the Indiana University School of Medicine in Indianapolis.

BC/BS of Minnesota's individual mandate proposal

BlueCross BlueShield of Minnesota
Unfinished Business
A discussion paper on the need for universal health coverage in Minnesota

A Universal Coverage Model (a few selected features)

* A mandate for all Minnesotans to have coverage

* People who do not comply with the mandate to have coverage are subject to a “fair share” penalty based on income and related to what they would pay for coverage. As an added incentive to comply when the mandate takes effect, people who are noncompliant could be subject to a pre-existing condition limitation for a specified time period when they do apply for coverage.

* Enforcement through employers and the tax reporting system, with a mechanism created to which employers can refer their uninsured employees to asses subsidy eligibility or what their fair-share penalty is. Employers could then deduct this amount from payroll.

* All insurers doing business in the small and large group markets must participate in the individual market by offering at least three pre-defined products.

* Losses for insurers’ high-risk pool are subsidized through a fund that is subsidized by the state.

* Continued support for disease management programs

* Regulatory flexibility to allow for new benefit structures and cost-sharing models

* The proposal assumes a set of benefits for modeling purposes, but the ethical discussion of how a coverage mandate can be made affordable must be undertaken by all Minnesotans, to have a chance of successfully achieving universal coverage.

http://www.bluecrossmn.com/bc/wcs/groups/bcbsmn/@mbc_bluecrossmn/documents/public/mbc1_univ_cov_paper.pdf

And…

Will Mandatory Health Insurance Work?
by Greg Scandlen
National Center for Policy Analysis
September 6, 2006

Policymakers can get an idea of how well mandatory health insurance would work to reduce the number of uninsured by looking at another type of mandated coverage. Consider:

* All but three states mandate automobile insurance, but 14.6 percent of America’s drivers remained uninsured in 2004, according to the Insurance Research Council.

* No state mandates health insurance, but 17.2 percent of the population lacked health coverage in 2004, according to the Employee Benefit Research Institute.

…perhaps the biggest lesson from these comparative statistics is the success of a completely voluntary market. Not one state yet mandates health insurance, but people are covered anyway – at virtually the same rate as auto insurance.

States should not consider mandating the purchase of something unaffordable and inefficient before pursuing policies that make coverage more affordable for more Americans.

Conclusion. There are no easy solutions to America’s health insurance problem. The current notion that a state legislature can solve the problem through mandatory coverage is naïve at best and a distraction from the hard work of finding real solutions.

http://www.ncpa.org/pub/ba/ba569/

Comment:

By Don McCanne, MD

The BC/BS of Minnesota plan is obviously self-serving. It would expand their market to everyone, allow them to sell innovative plans with increased administrative income but decreased protection for patients, and would shift the losses of high-risk patients to the taxpayers. In this report, BC/BS specifically acknowledges the fundamental problem of all individual mandate programs: they have not been able to figure out the ethics of making an individual mandate affordable. Do they make insurance premiums affordable and expose patients to great financial risk? Or do they provide bona fide insurance coverage that many cannot afford, and then punish them for failing to buy it?

Greg Scandlen is an advocate of consumer-directed health care, especially health savings accounts and high-deductible health plans. Although we certainly disagree on our respective models of reform (single payer versus consumer-directed), we do agree that the concept of an individual mandate in the private insurance market should be laid to rest.

It's all about health information technology?

GAO (U.S. Government Accountability Office) September 1,2006 Testimony Before the Subcommittee on Federal Workforce and Agency Organization, Committee on Government Reform, House of Representatives Health Information Technology HHS is Continuing Efforts to Define Its National Strategy Statement of David A. Powner

In summary, Mr. Chairman, our work shows that HHS is continuing its efforts to help transform the use of IT in the health care industry. However, much work remains. While HHS, through the Office of the National Coordinator for Health IT and the American Health Information Community, has initiated specific actions for supporting the goals of a national strategy, detailed plans and milestones for completing the various initiatives and performance measures for tracking progress have not been developed. Until these plans, milestones, and performance measures are completed, it remains unclear specifically how the President’s goal will be met and what the interim expectations are for achieving widespread adoption of interoperable electronic health records by 2014.

http://www.gao.gov/new.items/d061071t.pdf

And…

Domestic and Offshore Outsourcing of Personal Information in Medicare, Medicaid, and TRICARE
GAO
September 2006
Report to Congressional Committees
Privacy

Federal contractors and state Medicaid agencies widely reported domestic outsourcing of services involving the use of personal health information but little direct offshore outsourcing. Among those that completed GAO’s survey, more than 90 percent of Medicare contractors and state Medicaid agencies and 63 percent of TRICARE contractors reported some domestic outsourcing in 2005.

However, some federal contractors and state Medicaid agencies also knew that their domestic vendors had initiated offshore outsourcing. Thirty-three Medicare Advantage contractors, 2 Medicare fee-for-service (FFS) contractors, and 1 Medicaid agency indicated that their domestic vendors transfer personal health information offshore. Moreover, the reported extent of offshore outsourcing by vendors may be understated because many federal contractors and agencies did not know whether their domestic vendors transferred personal health information to other locations or vendors.

In responding to GAO’s survey, over 40 percent of the federal contractors and state Medicaid agencies reported that they experienced a recent privacy breach involving personal health information. By survey group, 47 percent of Medicare Advantage contractors reported privacy breaches within the past 2 years, as did 44 percent of Medicaid agencies, 42 percent of Medicare FFS contractors, and 38 percent of TRICARE contractors.

http://www.gao.gov/new.items/d06676.pdf

Comment:

By Don McCanne, MD

As leaders in Congress and in the administration dodge the issue of their failure to address the real problems in health care, they frequently attempt to divert our attention by advocating for their surrogate solution for our health care problems: health information technology.

How serious are they? “Plans, milestones, and performance measures… have not been developed,” and it remains unclear how the goal can be achieved by 2014. And what we do have in place has been outsourced to private contractors, with over 40 percent reporting privacy breaches of personal health information.

Now that’s leadership!

Vermont Central Labor Council Endorses HR 676

Submits Resolution to State AFL-CIO Convention

Montpelier, VT The Washington-Orange-Lamoille Labor Council became the first in Vermont to endorse HR 676, single payer universal health care legislation introduced by Congressman John Conyers (D-MI). Representative Bernie Sanders, that state’s only member of the US House of Representatives, is among the 75 co-sponsors of HR 676.

The council’s resolution will be submitted to the state AFL-CIO convention which meets in mid September. Representative Sanders is expected to address the convention.

Currently, Sanders is running for the U.S. Senate. Single payer advocates in Vermont are working to persuade Sanders, who is leading in the polls, to agree to introduce a companion bill to HR 676 in the Senate once he is elected to that new position.

###

HR 676 now has 75 congressional co-sponsors in addition to John Conyers. It would institute a single payer health care system in the U.S. by expanding a greatly improved Medicare system to every resident.

HR 676 would cover every person in the U. S. for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, chiropractic and long term care. HR 676 ends deductibles and co-payments. HR 676 would save billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

HR 676 has been endorsed by 175 union organizations including 39 Central Labor Councils and Area Labor Federations and seven state AFL-CIO’s (KY, PA, CT, OH, DE, ND & WA).

For further information, a complete list of union endorsers, or a sample endorsement resolution, contact:

Kay Tillow
All Unions Committee For Single Payer Health Care-HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551, (502) 459-3393
Email: nursenpo@aol.com

The political reality of the California veto

Schwarzenegger runs no political risk by vetoing health care bill

By Dan Walters — Bee Columnist
The Sacramento Bee
September 6, 2006

The Public Policy Institute of California, in its most recent survey of the state’s voters, asked, “Which one issue would you most like to hear the gubernatorial candidates talk about before the Nov. 7 election?”

Immigration, especially illegal immigration, was the top response, but was mentioned by just 21 percent of the likely voters questioned, followed by public schools at 18 percent, jobs and the economy at 9 percent, the state budget deficit and taxes at 8 percent, and the environment at 6 percent.

Only 4 percent of voters contacted by the PPIC cited health insurance coverage — so few that they weren’t worth tabulating in the survey’s summary. And the same poll found that Republican Gov. Arnold Schwarzenegger holds a 13-percentage-point lead over Democratic challenger Phil Angelides.

The juxtaposition of those two poll results is this: Schwarzenegger runs almost no political risk by declaring, as he did Tuesday, that he’ll veto the latest version of universal health care enacted by a Democrat-controlled Legislature — which probably also explains why Angelides backed away from the measure even as he promised to pursue universal coverage if elected.

Schwarzenegger has not yet vetoed Senate Bill 840, but in an op-ed article published in the San Diego Union-Tribune, he declared that he would reject it, saying, “Socialized medicine is not the solution to our state’s health care problems,” and adding, “Such a program would cost the state billions and lead to significant new taxes on individuals and businesses, without solving the critical issue of affordability. I won’t jeopardize the economy of our state for such a purpose.”

SB 840, carried by Sen. Sheila Kuehl, D-Santa Monica, and backed by a broad coalition of health access and labor groups, would replace existing public and private health care programs with a single system operated by a new agency — and in the process more than double the financial size of state government.

The veto would not be unexpected, given the Schwarzenegger campaign’s unrelenting criticism of Angelides for supporting, in concept, universal health care, citing it as one example of the Democrat’s supposed eagerness to expand government and taxes.

Angelides’ circular positions, however, have been downright perplexing.
Earlier this year, while campaigning for the Democratic nomination, Angelides described universal health care as “my commitment.” While saying it should come from the federal government, he declared that “we’re not going to wait. We’re going to do it here in California, universal health care for every Californian, it’s my commitment to you.”

Angelides was even listed for a while as one of SB 840’s supporters, before formally declaring that he’s neither a supporter nor an opponent and refusing to say whether he would have signed SB 840 had he, rather than Schwarzenegger, been sitting at the governor’s desk. He recently described his position on SB 840 as “a moot point” because Schwarzenegger was likely to veto the bill, while still pledging to seek universal coverage if elected.

Why, one might wonder, is Angelides splitting semantic hairs? Health care is a shibboleth for liberal Democrats, so Angelides must endorse it, at least in concept, as he struggles to unify his party behind him. The PPIC poll found that just 58 percent of Democratic voters favored his election. But it’s not a burning issue, as the PPIC poll found, for the broader expanse of voters, perhaps because only a tiny percentage of those voters lack health coverage themselves. Therefore, the upside of endorsing the bill is not strong enough to offset the downside of giving Schwarzenegger’s campaign new ammunition to describe the Democrat as a tax-loving liberal who wants to double the size of state government.

That’s not to say, of course, that having about 6 million Californians — most of them from working poor families — without health care coverage is not a serious public policy issue. California, with its diffused, semi-seasonal economy and its multicultural, immigrant-heavy population, has an especially large proportion of medically uninsured. But as a political issue with the capacity to move voters, it doesn’t make the cut.

http://www.sacbee.com/content/politics/story/14318557p-15240808c.html

Comment:

By Don McCanne, MD

Those of us in the health professions who have watched so many suffer and die merely because of the flaws in our dysfunctional system of financing health care are greatly offended when we see that there is enough money already being spent to provide the care needed to prevent these adverse outcomes. Dan Walters is an astute political observer. The voters, most of whom have health insurance, aren’t moved by the tragic consequences of our flawed system. The truth hurts.

Is P4P about patients, or providers?

Exploring the Nexus of Quality and Cost

By Denise Remus
Premier
August 31, 2006

Executive Summary

This document describes analyses examining quality of care, patient outcomes and cost. The quality measures were collected as part of the Centers for Medicare and Medicaid Services (CMS) / Premier Hospital Quality Incentive Demonstration (HQID) project, a groundbreaking national pay-for-performance (P4P) project involving more than 260 hospitals. The HQID was designed to provide a combination of financial rewards and public recognition to hospitals that demonstrate high quality performance in caring for five clinical populations in the acute care setting. The purpose is to facilitate improvement in the quality and efficiency of patient care.

Participants in the project achieved statistically significant improvements in quality of care, as measured by thirty-three process and outcome measures, in the five clinical areas of:

* Pneumonia (PN)
* Coronary Artery Bypass Graft (CABG)
* Acute Myocardial Infarction (AMI)
* Hip and Knee Replacement Procedures (Hip/Knee)
* Heart Failure (HF)

While this demonstration project has shown that pay-for-performance programs have the potential to increase clinical quality and save lives, Premier was interested in examining whether higher quality of care could result in lower costs and improved patient outcomes. Earlier analyses focused on the relationship of quality and cost at the hospital level and minimal correlation was found. This study focused on quality, outcomes and cost at the patient level. The study found that patients who receive high quality care have fewer complications and fewer readmissions; significantly lower hospital costs, significantly shorter length of stay; and, for coronary artery bypass graft (CABG) patients, significantly lower mortality rates.

http://www.premierinc.com/p4p/press/quality-cost-methods-paper3.pdf

And…

Pay-For-Performance: Too Much Of A Good Thing? A Conversation With Martin Roland Interview

by Robert Galvin
Health Affairs
September 5, 2006

Abstract

As the United States moves down the road of pay-for-performance (P4P), concerns about unintended consequences are foremost in the minds of policymakers. Initial results from the world’s most ambitious P4P program, the United Kingdom’s Quality and Outcomes Framework (QOF), indicate that while quality improvements exceeded expectations, so too did the amount of funds paid out, straining the National Health Service (NHS) budget. Martin Roland, one of the leading U.K. health services researchers and an adviser to the QOF, gives his views on what went right and what went wrong, and he offers his advice to the United States about using financial incentives to improve quality.

>From the interview:

Galvin: One of the ideas to achieve budget-neutrality is that doctors with poor performance get paid less. What do you think of that idea?

Roland: Well, that’s inevitable in zero sum, isn’t it? Some get more, some get less, and the budget is overall neutral.

Galvin: It could play out that doctors get less of an increase versus an actual decrease. But either way, how do you think that this might affect doctors’ sense of professionalism?

Roland: Well, again, it’s much easier to give somebody a smaller increase than it is to reduce his or her pay. I think that most people in most jobs would find it pretty demotivating to get less pay. You can only introduce a zero-sum pay-for-performance scheme fast if you are prepared to have a substantial number of doctors losing significant amounts of money.

And…

Roland: I don’t think that providing health care is quite the same as manufacturing computers.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w412

Comment:

By Don McCanne, MD

Pay for performance (P4P); what a simple concept. When the providers (physicians and hospitals) demonstrate higher performance on quality and costs, reward them with extra payment. To maintain zero-sum budget neutrality, fund those rewards with financial penalties against those with lower performance scores; that will motivate them to shape up.

But what have we learned from Premier? At the provider (hospital) level, there was only a minimal correlation between quality and cost. However, when assessed at the patient level, favorable correlations between quality, cost and outcomes were demonstrated. And isn’t health care really about the patient?

Is rewarding physicians for better performance measures a good idea? The British experience suggests that any financial rewards should be very modest, or spending will increase since you can’t bankrupt the portion of the system with lower scores. Physicians in difficult practice environments, facing chronic under-funding, poverty, poor patient compliance, and impaired access by patients, will have lower scores even though their actual performance may be superior. On the other hand, physicians in well-financed, uptown practices might well benefit from manipulations of their practice managers who develop expertise in making certain that the quality scores are optimal. P4P would shift funds from the former to the latter. Is that sound policy?

The field of medicine still stands apart. In the computer business, higher quality brings financial rewards. But in medicine, higher quality brings healthier patients. And penny ante rewards will never distract physicians from that sacrosanct obligation to try their very best to attain better health status for their patients.