PNHP

Consumer decisions in the individual insurance market

Consumer decisions in the individual insurance market

Consumer Decision Making In The Individual Health Insurance Market
A study in California suggests that the individual market is an important source of long-term coverage for many who purchase it.
Health Affairs
May 2, 2006
by M. Susan Marquis, Melinda Beeuwkes Buntin, José J. Escarce, Kanika Kapur, Thomas A. Louis, and Jill M. Yegian

Abstract:

This paper summarizes the results from a study of consumer decision making in California’s individual health insurance market. We conclude that price subsidies will have only modest effects on participation and that efforts to reduce nonprice barriers might be just as effective. We also find that there is substantial pooling in the individual market and that it increases over time because people who become sick can continue coverage without new underwriting. Finally, we show that people prefer more-generous benefits and that it is difficult to induce people in poor health to enroll in high-deductible health plans.

Study Results

Continuity of coverage.

Our study of the California market… suggests that the market is an important source of long-term coverage for a sizable fraction of those who purchase it. About 60 percent of new coverage episodes continue more than one year, and more than 30 percent continue for more than three years.

Access for poor health risks.

Underwriting might prevent some high-risk market candidates from obtaining insurance because insurers are free to deny coverage. Those who obtain health insurance are in better health than those who remain uninsured.

Turnover and pooling of health risks.

Although the individual market is a source of long-term coverage for a large share of subscribers, as reported above, it also serves a population of people who enroll for only a short period of time.

The role of price in consumers’ decisions.

Although price has only a small effect on the decision about whether or not to buy, it has a bigger effect on the decision about which product to buy.

The role of benefit design on demand.

Consumers in poor health are more likely than healthier consumers to demand generous benefits.

Nonprice barriers to purchasing coverage.

Choice in the individual market means that the complexity of the shopping task is also high.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w226v1/DC1

Comment:

By Don McCanne

This RAND study celebrates the fact that only 69 percent of beneficiaries in the individual insurance market have left their plans by the end of three years. Their finding that substantial pooling takes place over time certainly does not apply to the great majority of these individuals.

Rather than the positive message of how well the individual market is working, the other results reported only further confirm the inequities and deficiencies of the individual insurance market. The flaws won’t be repeated here since you can read several of them above.

The article also “offers some lessons for policymakers looking for strategies to encourage more of the uninsured to participate in this market.” The suggestions offered constitute minimal tweaking of the plans, only perpetuating the injustices permeating the individual insurance market.

The primary lesson for policymakers should be that we need efficient, affordable, comprehensive coverage for everyone through a single, national health insurance program. As a think tank, RAND should go back and do some more thinking on this one.

Unions Should Break With Managed Care

by Kip Sullivan
May 2006

During the 1980s and ’90s, cost-control tactics pioneered by HMOs spread throughout the entire health insurance industry. Those tactics, known collectively as “managed care,” were applied by the insurance industry first to employees of large-employers, and then to small-employers.

Even though it has been obvious since the mid-1990s that managed care has failed to cut costs or improve quality of care for private-sector employees, the insurance industry is attempting to take over the last islands of unmanaged medicine – the nation’s Medicare and Medicaid programs. They argue that managed care is just the ticket for what allegedly ails these programs, and their arguments are succeeding. About half of all Medicaid recipients, and at least 13 percent of Medicare recipients, are in HMOs, and the percents grow every year.

UNIONS EMBRACED HMOS

The AFL-CIO helped create this mess. It did so by endorsing the concept of the “health maintenance organization” when it was first proposed by Richard Nixon in 1971, and, over the ensuing decades, by repeatedly endorsing the diagnosis of the health care crisis promoted by HMO advocates (namely, that doctors order too many services and someone has to do the dirty work of telling doctors and patients no).

The Nixon administration concocted the phrase “health maintenance organization” in February 1970. In March 1970, the administration announced that this new-fangled form of insurance would be the centerpiece of Nixon’s health policy. With the critical support of the AFL-CIO, Nixon’s proposal, known as the HMO Act, became law in 1973. This is the law that created the planet’s first HMO industry. The HMO Act subsidized the formation of HMOs and required employers with more than 24 employees to offer an HMO to their employees if an HMO existed in their area.

The definition of an HMO in the 1973 law was extraordinarily vague. Informally, experts said then, and say now, that an HMO is an insurance company which uses managed care tools – financial incentives to get doctors to deny care and second-guessing of doctors if the financial incentives don’t work – and which imposes restrictions on choice of doctor. HMOs limit choice of doctor because that enhances the power of managed-care tools (doctors with higher proportions of their patients insured by an HMO are more likely to cooperate with the HMO).

BIPARTISAN SUPPORT

Because Democrats controlled Congress at the time, Nixon obviously needed considerable Democratic support to get his HMO Act passed. He got it, in part because the AFL-CIO was so enthusiastic about HMOs. Democrats such as Senators Ted Kennedy, Walter Mondale, and Warren Magnuson, and Representatives Wilbur Mills and Paul Rogers, all lent their names to HMO legislation introduced during the 1971-73 period.

In testimony presented to the Senate Subcommittee on Health on October 5, 1971, the AFL-CIO heaped lavish praise on HMOs. The testimony was presented by Andrew J. Biemiller, then director of the federationfs Department of Legislation. Biemiller, a former member of Congress himself, opened his testimony with this statement: “Let me say at the outset that the AFL-CIO has had differences … with this [the Nixon] Administration. However, we are in complete accord on the importance of utilizing public funds to stimulate the development of … Health Maintenance Organizations.”

Biemiller went on to say that HMOs “can provide better quality medical care at lower cost than the fragmented fee-for-service system” and that the savings HMOs could achieve were “enormous.” His only significant reservation about Nixonfs HMO bill was that it would have subsidized for-profit HMOs. But because there is no evidence that managed care is less toxic in the hands of nonprofit than for-profit HMOs, this reservation was of little significance.

At the time that Biemiller testified in favor of HMOs, there were only three dozen HMOs in existence in the country. In part because of AFL-CIO support, the 1973 HMO Act passed, and that in turn facilitated the takeover of the U.S. health insurance industry by managed care insurers.

Whereas there was no powerful industry promoting HMO propaganda in 1971, today there is, thanks in part to the AFL-CIO. Today, virtually the entire health insurance industry promotes managed care.

BLOCKING SINGLE PAYER

Today the insurance industry uses its great economic power to oppose single-payer legislation (which would drastically reduce the size and influence of the industry) and to support further privatization of Medicare and Medicaid. They support their arguments the same claim Andrew Biemiller presented in 1971 – that managed care is a necessary tool in the fight against health care inflation.

Despite solid evidence that turning Medicare and Medicaid over to HMOs raises the costs of these programs and damages quality of care, politicians of both parties continue to support the further privatization of both programs.

To give you some idea of how solid the data against privatization of Medicare and Medicaid are, consider just two studies. A 2003 study of California’s Medicaid program, which is partially privatized, by a University of Maryland economist concluded that privatization raised that program’s cost by 20 percent.

In a 1999 report to Congress, the U.S. General Accounting Office stated, “[N]umerous studies conducted by us … and others demonstrated that the Medicare program spent more on beneficiaries enrolled in health plans than it would have if the same individuals had been in FFS [‘fee for service,’ which refers to the traditional Medicare program].”

Unions do not wield as much influence with Democrats today as they did in 1971, but they remain a critical part of the Democratic base and could play a very important role in sharpening and strengthening Democratic health policy. The AFL-CIO could help the nation extract itself from this health care mess if it were to renounce its endorsement of managed care and undertake a campaign to roll back the privatization of Medicaid and Medicare.

It would be even more helpful if the federation would also endorse single-payer legislation that has been introduced every year in the U.S. House of Representatives since 1991. But the mere renunciation of the AFL-CIO’s longstanding support for managed care would be very helpful to the single-payer movement.

Kip Sullivan is the author of The Health Care Mess: How We Got Into It and How We’ll Get Out of It.

Massachusetts' 'Universal Coverage' Bill is No Such Thing

By Kip Sullivan
In These Times, May 8, 2006

Odds are good that Romney will rue the day he took credit for this bill.

Legislators around the country are looking to the law recently passed in Massachusetts for answers on how to cope with the health care crisis in their states. Will Massachusetts really be the first state to achieve universal health insurance? Should Republican voters across the country see this legislation as evidence that Republican Governor Mitt Romney, who is likely to seek his party’s nomination for president, is an effective leader, or a “Republican In Name Only” who believes in too much government?

Proponents of the new law say it will result in near-universal coverage in the state by 2010, reducing the uninsured rate in Massachusetts to 1 percent from its 2004 rate of 11 percent. Beginning July 1, 2007, the law will require uninsured Massachusetts residents to either buy health insurance or face fines. Romney signed the bill on April 12.

The law has drawn an enormous amount of media coverage, much of it superficial. On April 12, the Associated Press reported, “The bill, intended to extend coverage to Massachusetts’ estimated 550,000 uninsured, is being touted as a national model, thrusting the state to the forefront of the national debate about how to provide near-universal health care coverage without creating a single government-controlled system. It’s also a political coup for Romney as he weighs a potential run for the Republican presidential nomination in 2008.”

Romney, who has repeatedly stated that the bill represents his thinking more than that of the Democratically controlled House and Senate, told the New York Times, “This is really a landmark for our state because this proves … that we can get health insurance for all our citizens without raising taxes and without a government takeover. The old single-payer canard is gone.”

However, Romney’s expectations of the law are going to be dashed, and his obituary for single-payer will prove to be premature. The fundamental flaw of the Massachusetts law is that it does little to reduce health care cost inflation. The bill attempts to improve coverage by funneling money through the bloated insurance industry. Insurance companies allocate roughly 20 percent of their revenue to cover their administrative costs (which include marketing, telling doctors how to practice medicine, providing dividends, and financing high management salaries). That is 10 times the overhead of Medicare, which allocates only 2 percent of its expenditures to overhead, and about 20 times that of Canada’s single-payer system, which allocates 1 percent. Moreover, a system of multiple insurers drives up the administrative costs of clinics and hospitals. This is especially true if all or most of the insurers practice managed care.

Nor is it likely that lowering the uninsured rate in Massachusetts will lower total health spending and premium inflation. Although the argument is often made that the cost of extending coverage to the uninsured will be more than offset by the reduction in medical costs due to improvements in the health of the formerly uninsured, there is little evidence for this claim. It is true that having health insurance is associated with better health. But it is also true that the insured use many more medical services than the uninsured do–some studies have estimated nearly twice as many.

The failure of the Massachusetts law to cut health care costs will be aggravated by its method of reducing the number of uninsured: It requires all Massachusetts residents to buy health insurance. Health insurance, in other words, will be treated like car insurance–you have to have it or youfll be in violation of state law and subject to a fine.

This provision, known as an “individual mandate,” is supported primarily by Republicans. AFL-CIO president John Sweeney characterized it as a regressive measure that only Gingrich Republicans would support. “Forcing uninsured workers to purchase health care coverage or face higher taxes and fines is the cornerstone of Mr. Gingrich’s health care reform proposals,” Sweeney said. “It is unconscionable that Massachusetts has adopted this misguided individual mandate.”

To meet their obligations under the mandate, most employed Massachusetts residents will continue to buy health insurance from their employer. But because the law does little to reduce premium inflation, employer flight from the health insurance market will continue, forcing more and more employees to purchase insurance on their own. In Massachusetts today, it costs employers about $4,000 per year to insure an employee without dependents and $11,000 a year to insure an employee with dependents.

So, how will the state’s uninsured be able to afford such a big-ticket item? The law requires the state to pay the entire premium for those under the federal poverty level (about $10,000 in annual income for an individual), and to provide sliding scale subsidies for those between poverty level ($20,000 for a family of four) and 300 percent of poverty (about $29,000 for an individual). Unfortunately, it is impossible from reading the law to know what the minimum level of coverage will be, how much insurance companies will charge for it, and how much the subsidy will be for any given income level. The law merely tells us that a state board with the odd name “board of the connector” will determine what constitutes “minimum creditable coverage,” and that this board will determine how big the subsidies have to be to make the coverage “affordable” to residents. (The term “connector” in the board’s title reflects its central task of assembling individuals who don’t have insurance through work and small employers into a large pool so that they can purchase insurance at the lower rates large employers get.)

To get some sense of how the law is going to work, we must turn to statements by the lawmakers who wrote it. They claim they can reduce insurance premiums for individuals, for example, from $4,000 down to $2,400 a year. This seems extremely unlikely. The only way the Massachusetts insurance industry can reduce premiums even a little, never mind by 40 percent, will be by offering substantially reduced coverage. This will not endear residents to Governor Romney and his “model” legislation. If, on the other hand, coverage is not reduced and premiums therefore remain near current levels, subsidies will have to be raised, which means taxes will have to go up, which won’t endear Romney to Massachusetts residents or to voters, especially Republican voters, in other states.

What will probably infuriate residents most will be the enforcement of this bill. The bill requires employers, providers, and residents to make reports to the government about who has insurance, and it punishes the uninsured with fines enforceable by the Department of Revenue. Residents who donft have insurance in 2007 will lose their personal income tax exemption (worth about $150). In succeeding years they will be fined half the price of the cheapest health insurance policy that the “connector” deems to be “creditable coverage”: about $1,200 if premiums indeed fall to the $2,400 range, and closer to $2,000 if premiums are in todayfs $4,000 range. Penalties for families will apparently be even higher.

The spectacle of hundreds of thousands of Massachusetts residents having to buy insurance with awful coverage that they cannot afford, and many refusing to buy insurance and taking steps to avoid paying their fines (such as not filing income taxes) will come into focus in the latter half of 2007 and the first half of 2008–that is, in the year leading up to the 2008 Republican national convention. The media, in short, will have plenty of time to unearth horror stories about Romney’s “model” legislation. Odds are good that Romney will rue the day he took credit for this bill.

Kip Sullivan sits on the steering committee of the Minnesota Universal Health Care Coalition. He is the author of The Health Care Mess, available at authorhouse.com.

Making a Case for a Single-Payer System

A CONVERSATION WITH QUENTIN YOUNG, M.D.

Leaving health care in the hands of a market groping for direction is feeding a public outcry that this physician says is…Making a Case for a Single-Payer System
Originally Published by MANAGED CARE March 1999. ©1999 Stezzi Communications

Quentin Young, M.D., is careful to point out that he doesn’t oppose markets or organized health care systems. But Young, national coordinator for Physicians for a National Health Program, thinks that combining the two to create a market-based health system has been a disaster. He points to turmoil among for-profit health care companies and increased public sentiment for tighter regulation of managed care as signs that the current system is heading for a fall. He believes a single-payer plan should replace it.

Young’s views are grounded in more than 40 years as a practicing internist, including a stint as chairman of the internal medicine department at Cook County Hospital in Chicago. In 1980, Young founded the Health and Medicine Policy Research Group as an advocate for poor and medically underserved residents of Chicago. He is immediate past president of the American Public Health Association.

A long-time activist, Young recently shared his thoughts on health reform with Senior Contributing Editor Patrick Mullen.

MANAGED CARE: After the Clinton health plan failed in 1994, a lot of politicians concluded that large-scale health reform is impossible.

QUENTIN YOUNG, M.D.: That is the prevailing wisdom.

MC: Another piece of prevailing wisdom today is that market-based health care is here to stay. What’s your view of those two premises?

YOUNG: I believe both are flawed. We at the Physicians for a National Health Program advocate a national single-payer health system. Regarding the notion that this country can’t have such a program, I defend the argument that we can’t have anything but. It’s the only solution, because of problems created by the transformation of health care into a corporate-dominated sector. I feel that we’re on the eve of the failure of marketplace strategies.

MC: Why?

YOUNG: There remain only three issues: cost, quality, and access, and the system is failing on all three. More than 43 million Americans lack health insurance, and a larger group has such poor insurance that a serious illness would wreck them. Those numbers are going up by an average of 125,000 per month. This was predictable. As costs went higher and competition got greater, it became less attractive for employers to cling ideologically to being the center of finance for health care. The paradox is that business, because of its honest and profound mistrust of government and its hostility to taxes, has clung to a task that is unique to America. In every other industrial democratic country, health care, on one level or another, is the responsibility of society, and usually that means government.

MC: Why are you confident that single payer would work here?

YOUNG: We have a spectacular health work force, with nine million of the best health workers at every level: scientists, technicians, specialists, doctors, nurses. The one major flaw is that we way overshot in training specialists. So physicians are 70 percent specialized, 30 percent primary care, and that’s a burden. The case can be made for 60 percent primary care and 40 percent specialists, but certainly 50/50. There are all sorts of costs associated with the excess. Everything specialists do costs more. Just as anteaters eat ants, specialists do what they were specially trained for. It’s a self-fulfilling arrangement that is very costly to the system. That phenomenon was one of the large stimuli for managed care replacing the old laissez-faire system. We certainly have the money for universal coverage. In 1997, the last year for which figures are complete, health care spending in this country reached $1,170,000,000,000. That is $4,005 for every person in the country, more than any other nation. The next country is Switzerland, at $2,400 per capita. Germany spends $2,300 per capita. Canada, with its universal system that has its flaws, spends $2,200.

MC: How is the present system irrational?

YOUNG: The irrationality is essentially a definition of the power of the forces that, for economic or ideological reasons or both, like the way things are. My thesis is that we’re in a time of gathering dismay with the current system, a kind of a protophase.

MC: How is the dismay playing out?

YOUNG: First, the rush toward oligopoly, toward combinations of bigger and bigger companies, some of which have fallen of their own weight. Take these physician practice management organizations. Their collapse is a fantastic thing. It isn’t as though we had a bad storm last week. Practices were disrupted. Organized medicine and the profession as a whole largely created the conditions for this catastrophic event in American health care. Then there is the accumulating, almost cascading public dismay with the system. The turning point came when the mainstream press ceased writing as if HMOs and the marketplace solution were foregone and immutable. Press coverage changed to something quite different, to a frontal critique. It started with the gag clause. A doctor with a gag on his face on Time magazine’s cover is the kind of thing that captures the public’s imagination. Since then, the press coverage has been harsh, although I don’t necessarily think unfair. There’s no more sense that managed care is inevitable or is the highest form of human health endeavor.

MC: Yet the political debate today is over ways to fix managed care. I don’t sense much of a debate over broad national reform.

YOUNG: The main form of political protest has been the so-called “patients bill of rights,” which is on the national agenda and a form of which I understand is in every single state legislature. Lawmakers pass a reform or a series of things, like giving women two days in the hospital after a delivery or 36 hours after a mastectomy. Even though I identify with those efforts and support them, they are not solutions. It’s one of the bad fallouts from this whole era. It’s a mistake to have 50 state legislatures and the federal government rewrite each state’s Medical Practice Act, which says that medical practice standards are defined by the profession. That’s a profoundly important professional ethic. There are characteristics of the medical profession besides having an M.D., such as peer review and guaranteeing a standard of practice. I would argue that the profession has honored many of these crucial social compacts, these commitments to society. Peer review and discipline of our colleagues who are incompetent or venal or criminal — and all those kinds exist — have only laterally gotten any attention, largely because of consumerist demands. That failure to guarantee the product was a prelude to the managed care event, as was the huge number of unnecessary operations as recently as the early 1980s. These elements clearly were grist for the managed care mill. Even as harsh a critic of managed care as I can say managed care plans had every reason to assault that misconduct and, to the extent possible, eliminate it.

MC: In your view, where did managed care head down the wrong path?

YOUNG: The fatal event was in the operation of the HMO Act during the Reagan years. It opened the doors to venture capital and corporate investment in health delivery, notably HMOs and hospital chains. From an investor’s point of view, it was like a gold mine waiting to be tapped. The health system was very bloated, had no controls, and was inefficiently run. Most of the doctors who ran it were notoriously poor business people. Hospitals were run on a cost-plus basis, so the more inefficient they were, the more money they made. These arguments are legitimately made by many managed care proponents and I can’t resist that part of the argument. They are absolutely right, but I hasten to point out that it doesn’t make sense to put it in the marketplace.

MC: Why not?

YOUNG: Just as I don’t oppose organized prepaid medical systems, I don’t oppose markets. You’d have to be pretty doctrinaire and probably blind not to notice how market-based economies, product development, and production have spectacularly benefited this country. But in health care, based on my experience, it just doesn’t make sense. Say the people who own the company, the investors or their designated executives, hire a prudent and efficient manager. The manager’s goal, again putting the best face on it, is to deliver the best product for the least dollars to the clients, who usually are the employers who bought the health plan. The employer has an interest in a happy and healthy work force. On the plus side, a for-profit health plan is going to do more or less what the not-for-profit prepaid group practices did: Give the best product for the least amount of expenditure.

MC: And on the minus side?

YOUNG: Enter venture capital, and the people who have taken their hard-earned money and put it at risk. In keeping with the basic laws of Adam Smith, they want maximum profits. The pressures, then, are toward what can best be summed up as denial of care. The ways you do that vary greatly and are getting ever more sophisticated. There are some basic ways. One, you avoid sick people. That’s documented in the experience with Medicare HMOs. Data underscore how people joining Medicare HMOs use less of the system even though they pay the median annual expenditures in their region. Another remarkable fact is that people who leave the HMOs become much higher utilizers. The system works to get rid of high utilizers. That is elementary good sense when the bottom line is what you’re looking at. But it’s the exact opposite of what a health system should do.

MC: How has market-based medicine changed patient-physician relations?

YOUNG: The biggest thing that I deplore is that it has adversely transformed the terms of engagement in the consultation room. This has happened in a very brief period. We’re talking about 20 years max of high HMO reality. I’m invoking my long years of practice in Cook County Hospital Clinic, in my own practice in a middle-class neighborhood in Chicago, and in the variety of other venues where I’ve worked. There was, in that one-on-one environment, almost invariably an optimistic, hopeful, friendly, even affectionate mood. The doctor had your interest in mind and was going to try to help you — not always, not invariably, but that was the prevailing mood. That has been transformed. I don’t mean 100 percent, but I do think that there’s a growing feeling among patients that the doctor’s interest can somehow become contrary to theirs. That is to say the doctor will make money or be rewarded for withholding care. I’m not arguing that it’s universally true.

MC: But patients feel that it might be true.

YOUNG: That’s right. That’s what intruded. In the early days of the debate, the marketeers had a model of the health care consumer as kind of a kid in a candy store. The argument was that if you don’t put economic barriers in front of them, they’ll want everything. They’ll want to have their appendix out every day, and prenatal care before they’ve become pregnant. The reality is, people don’t like health care. If you’re going to the doctor when you’re sick, there’s apprehension, there’s nervousness. Did I have a heart attack? What’s he going to be like? Is he going to hurt me when he examines me? If the patient learns happily that things are going to be all right, there are still those needles and tubes and X-rays. Thank God, we doctors have convinced the public that health care may be a way of achieving health, or at least diminishing illness and relieving pain and suffering. That’s the basis of the compact between doctors and patients. The notion that people, if given a chance, would become gluttons for health care, was just fictional, up until recently. That has changed. Now we have patients actually demanding things because they think you’re keeping them from them.

MC: So the bond of trust that patients have for physicians is being frayed.

YOUNG: The irony is that what the market people were saying all the time has come true — thanks to them. They created the aura and the structure of denial. You can’t go to a consultant until you get approval from somewhere.

MC: How do you think a single-payer program would change that?

YOUNG: First, you would get rid of the absolutely useless mountain of paper that has inflicted the American health system. That mountain was growing even before the marketplace thing, just from the plethora of insurance companies and their motivations to be accurate or to avoid payment or whatever the purpose. Making this system work requires that an enormous work force be dedicated to nonproductive work that costs somebody something. Eliminating that would be a huge saving, not to mention the saving in Sturm und Drang.

MC: When Canada’s system is held up as an example, its critics respond by pointing to such things as long waits for elective services. The argument boils down to the view that it does not work there, and it would not work here.

YOUNG: The first downside is one you didn’t mention. It’s the abuse that’s inherent if doctors get paid for everything they do. All you have to say is, “I saw Jimmy Jones and did this and that for him. Send me the money.” In this case, I would hope physicians would take responsibility, the absence of which contributed to the imposition of managed care. Also, in a single-payer system, a doctor who is gaming the system is taking money out of all his honest partners’ pockets, because there is only so much money. So the colleagues would have an economic motivation, in addition to ethical and professional ones, to prevent that. The system would work to prevent it.

Say you have a physician — we’ll just arbitrarily set some criteria — a GP in Calgary, with a panel of 2,000 patients. The age, gender, and illness profile of each patient is easily computerized, and would predict how many electrocardiograms that doctor should do, how many hospitalizations, and so on. Let’s use the example of electrocardiograms. If he does a lot of ECGs, he makes a lot of money. Let’s say the profile suggests he does 350 a year. Two months into the year, he has already billed for 150. For that kind of variation, he might be called by the Health Ministry and told, “You seem to be running a little high. Do you have an explanation?” I am told that on occasion he or she can end the discussion right there. “I admitted 10 people to the hospital with arrhythmias and they need frequent ECGs and I can document this.” If there is not a satisfactory answer, the doctor is invited to meet with a group of his peers appointed by the medical society of Alberta. It’s not an inquisition or a grand jury panel. He will be reviewed by GPs who are, we hope, leaders of their profession. Every two or three weeks, they meet and listen as doctors make their cases. They can conclude that a case is reasonable or unreasonable. Let’s say they find he made some blunders. He’s not shot. They know him. These are his peers. He is urged to take a refresher course in ECG, or maybe get more consultation from his colleagues. The point is that there are prudent ways to control a great deal of the excess we see now, mostly using professional peers.

MC: Let’s talk a bit about the politics of health reform, past and present. Give us your post-mortem on President Clinton’s reform effort.

YOUNG: Clinton’s finest moment, possibly his only fine moment, came when, before both houses of Congress, he held up his pen and said, “I want you to send me a health care bill and I tell you I will not sign anything that is not universal.” It was exciting, no matter where you stood, because he seemed to be putting the maximum weight and prestige of his office behind that commitment. And then nothing happened. It was almost a handbook on how not to get a popular mandate. You do not take 500 people, most of them government employees, and put them behind locked doors to come up with a 1,370-page monstrosity. You can’t wisely write a bill on such an enormous area with so much detail. Every page invited another set of opponents, and Clinton got them.

MC: What did you think of the bill’s content?

YOUNG: The idea had grandeur but it was wrongheaded. I had a lot to criticize about the actual bill. We at Physicians for a National Health Program were critical of it from the beginning. Our single-payer proposal has a simplicity that was starkly absent from Clinton’s proposal. Mrs. Clinton was asked why she didn’t support single payer. She responded, knowledgeably but wrongly, that it’s the best way but it’s unfeasible politically. There’s a huge irony in that. How feasible was their laboriously put together plan? It couldn’t even get out of committee.

MC: How could the Clintons have done things differently?

YOUNG: Instead of working from the premise of feasibility, the president and his wife and the congressional leaders could have had a strategy for victory, by backing the single-payer bill introduced by Rep. Jim McDermott. It had 95 cosponsors in the House, and I would venture the president’s support would have picked up another 50 or 60. It would have been defeated in the House by about 235–200 or something like that. In the Senate, with five sponsors, it might have gotten 10 votes. We would have come to the 1994 elections with a very different script. Here’s a president who promised universal health care. His bill was defeated by a coalition of Republicans and conservative Democrats, thanks to lobbying by the insurance industry and the American Medical Association and all the rest. Clinton could have said in 1994, “This is it, American people, I want you to give me a Congress that will pass this bill.” Rather than the 1994 debacle for the Democrats, he might have gotten a mandate for national health reform.

MC: But that didn’t happen. What’s your political road map for reform today?

YOUNG: Increasingly, I think we’re going to get universal coverage in one or two states, and they may not be the most liberal states, however you define that. Here in Illinois, we have a tailwind behind a proposal to enact a constitutional amendment, the Bernadin Amendment, which is not a commitment to single payer, but to universal coverage. Joseph Cardinal Bernadin [the former Catholic archbishop of Chicago], a highly regarded cleric who died quite graciously from a terrible pancreatic cancer in 1996, wrote and preached extensively on the health matter. He addressed, by invitation, the AMA House of Delegates, Harvard Medical School, and others, and he wrote magnificent pastoral letters on it. Obviously, he wrote from a moral and ethical viewpoint, but also from a good old-fashioned health policy viewpoint. He said, to roughly paraphrase, that health care is so vital to human dignity that society has a responsibility to find health care for all people. In other words, health care is a human right. A lawyer who was at a memorial on the first anniversary of Cardinal Bernadin’s death teased a version of what I just said into a proposed amendment to the state constitution.

MC: What would push states to enact universal coverage?

YOUNG: As much as I’d like it to be, change won’t happen out of altruism or high moral purpose. It will happen out of stern economic necessity and stern health care need. We’re going to see an intensification of the failings of the present system. These include failing to actually deliver care, and the result, for instance, will be that you get a lawsuit because the mastectomy wasn’t done in time because the lump was ignored. Look at how many major companies have backed off of Medicare HMOs. Not least is the debacle that’s assaulting the hospital chains, with Columbia/HCA in the lead. They are still looking at indictments charging billions of dollars of fraud. This is not peanuts, where you just settle and go on. These are destabilizing events. The change will be political in part. You wouldn’t need 250 people elected to Congress on the basis of this issue, but you would need 20 or 30 to win for it to become an issue. Pressure for health reform, a kind of maturing of the reform demand, which was a kind of a wail in the wilderness, is now becoming politically pertinent.

MC: Thank you.

Higher-income uninsured do not receive recommended services

Use of Health Care Services by Lower-Income and Higher-Income Uninsured Adults

By Joseph S. Ross, MD, Elizabeth H. Bradley, PhD, and Susan H. Busch, PhD
JAMA
May 3, 2006

Our study provides recent, nationally representative estimates of the use of recommended services for cancer prevention, cardiovascular risk reduction, and diabetes management for insured and uninsured adults with varying annual household incomes. We found that high numbers of uninsured and lower-income adults are not receiving recommended care-challenging the views of a majority of people in the United States who believe that the uninsured are able to get the care they need from physicians and hospitals.

In addition, our findings indicate that even among higher-income adults, lacking insurance was associated with significantly decreased use of recommended health care services; we found that increased income did not attenuate the association between being uninsured and using fewer recommended health care services for cancer prevention, cardiovascular risk reduction, and diabetes management. The gap in the use of recommended care between uninsured and insured adults did not narrow significantly as income increased for any recommended service we examined. In fact, we found that the gap in the use of recommended care between uninsured and insured adults significantly widened as income increased for use of cervical and breast cancer screening, serum cholesterol screening, and eye examination and influenza and pneumococcal vaccination for diabetes management. In these cases, income not only failed to attenuate the association between being uninsured and using fewer recommended health care services, but the effect of lacking insurance was more pronounced for the higher-income uninsured than the lower-income uninsured. Moreover, when using the comparison between successive income levels rather than the trend across income, we found that for nearly every comparison, increased income did not significantly attenuate the association between being uninsured and using fewer recommended health care services. Thus, our findings are not limited to inferences regarding the highest-income uninsured, but are relevant for uninsured adults of all incomes.

Currently, many of the proposed health care reforms from both the public and private sector involve increased out-of-pocket cost-sharing or deductibles, such as the recent authorization of health savings accounts through the 2003 Medicare Modernization Act. The results of our study suggest that such reforms may increase the number of adults not receiving recommended health care; adults using out-of-pocket funds to purchase health care services, whether they are enrolled in health savings accounts, employer-sponsored high-deductible insurance plans, or plans with substantial cost sharing, may not purchase recommended chronic and preventive care at levels comparable with adults enrolled in traditional health insurance plans.

It is important to note that it is possible that in situations in which the net benefit to the individual is low, the net benefit to society may still be high.

http://jama.ama-assn.org/cgi/content/full/295/17/2027
Abstract:
http://jama.ama-assn.org/cgi/content/abstract/295/17/2027

Comment:

By Don McCanne, M.D.

There is no dispute. Regardless of income level, either the lack of insurance or excessive cost-sharing results in decreased utilization of clearly beneficial health services, with resultant impaired health outcomes.

Some contend that personal choice must prevail over all other considerations. If a person does not want to contribute funds to a risk pool (i.e., health insurance) then the individual should have the freedom to make that choice.

Others, including many conservatives, do not believe that health care costs should be shifted from “free riders” who do not contribute to risk pools, to the rest of us who will bear the cost of those who lose the bet they placed when they declined to participate. Most agree that some form of government intervention is required to be certain that would-be free riders contribute equitably to the costs.

Government precedence over individual choice is certainly not a new concept. We already have in place many requirements that are designed to protect the public from the costs of individuals who make bad choices. Seat belt and helmet laws protect society from financial losses due to injury of others. Auto insurance mandates also prevent free rider status by enforcing risk pooling.

This new study shows that individuals who can afford health insurance are avoiding care that can prevent health care spending that might well be shifted to the rest of us through higher taxes and insurance premiums. When speaking of rights, we should have the right to require that the free riders reduce our exposure to their potential monetary losses from their adverse health events.

Some of us are passionate supporters of national health insurance simply because we believe that everyone should have the right to affordable health care. For those who don’t really share this belief, just the simple concept of fairness dictates that we should eliminate free riders by including everyone in an equitably funded risk pool. And common business sense dictates that the most efficient and effective method would be through a single payer system. We should all be able to agree on this.

Cover the uninsured

New Jersey, EDITORIAL
Sunday, April 30, 2006

Tomorrow begins the fourth Cover the Uninsured Week, a nonpartisan, national effort to urge U.S. leaders to make health coverage for Americans their top priority and to facilitate the enrollment of uninsured people who are eligible for subsidized health-care programs. With some 1,000 public events scheduled nationwide, Cover the Uninsured Week will be the largest such campaign in history. Among those who will make the case for national solutions in forums in Washington, D.C., and around the nation will be business leaders who will describe how rising health expenses limit their ability to provide health insurance for their employees and drive up the cost of competing on a global basis.

Nearly 46 million Americans lack health coverage. New Jersey feels the consequences more harshly than most; our state ranks ninth among the states in the percentage of its residents who are uninsured, according to a report issued last Wednesday by the Robert Wood Johnson Foundation, one of the chief sponsors of Cover the Uninsured Week. The state’s 1.3 million uninsured — 15.3 percent of its population — are four times more likely than its insured residents to have no personal physician or health-care provider, which makes them less likely to receive preventive services, such as mammograms, pap smears, prostate screening tests and colonoscopies. That, in turn, leads to sickness that costs many times to treat — usually at public expense — than the cost of prevention would have been. A similar report last week by the Commonwealth Fund showed a rising number of uninsured among moderate-income and middle-income families: Two in five working-age Americans with annual incomes between $20,000 and $40,000 were uninsured for at least part of 2005, the report said, and 70 percent of the uninsured were in families with at least one working adult.

— — —

Many states are intervening on behalf of their citizens. Earlier this month, for example, Massachusetts forged a bipartisan coalition to adopt the nation’s first universal health-insurance law, requiring all residents to obtain coverage and providing ways to make that coverage affordable for everyone. It’s encouraging that two of New Jersey’s legislative leaders on health care, Sen. Joseph Vitale, D-Woodbridge, and Assemblyman Neil Cohen, D-Union, have promised to meet with employers, consumer groups, insurance firms, hospitals, doctors, drug firms and other key players over the next six months to determine whether the Massachusetts approach could be adapted for this state, possibly as an expansion of New Jersey’s existing FamilyCare program, which provides health coverage to 139,000 working-poor parents and 112,000 children.

Bravo for the states that are trying. But the problem is a national one and must be solved nationally. Our preference, as we have said many times, is for a single-payer system like Canada’s that eliminates the administrative costs that make up such an enormous part of the overall cost of health care. However, any serious attempt by Congress and the White House to cover America’s uninsured would be vastly preferable to the indifference they display today.

© 2006 The Times of Trenton

Unions Back Single-Payer Health Plan

SINGLE-PAYER GOVT. HEALTH CARE BILL GAINS UNION BACKERS AS ‘COVER THE UNINSURED’ WEEK RUNS


By Press Associates, Inc. Staff Writer Mark Gruenberg

WASHINGTON (PAI) – A bill establishing a government-run Canadian style single-payer health care system for the U.S., built on Medicare, is gaining union backers, coincidentally as “Cover the Uninsured” week ran from May 1-7. The measure, H.R. 676 by Rep. John Conyers (D-Mich.), would eliminate the private for-profit health insurance industry by establishing a government-run system.

The “United States National Health Insurance Act” would be funded through the federal budget, says a fact sheet from the Robert Wood Johnson Foundation, which covers health issues and which sponsors the week spotlighting the uninsured.

Momentum for Conyers’ bill – plus the week-long observance and a planned Senate debate the same time on health care issues – comes just after the Massachusetts legislature voted to require every state resident to buy insurance.

GOP Gov. Mitt Romney, who plans to seek his party’s presidential nomination, signed the bill, but used his line-item veto to ax its provisions that required corporations to pay their fair share of health care bills. That prompted AFL-CIO President John J. Sweeney to say “it is simply ridiculous” for Romney to “try to solve Massachusetts’ health care problems by dumping them on the backs of working people.”

“An individual mandate to buy insurance can only work if it is paired with a guarantee of affordable, comprehensive coverage, and the legislation falls dangerously short of that goal,” Sweeney added. He said the result is that a single worker earning $28,000 a year would have to pay $350 a month – or 15 percent of pre-tax income – for health care. Health care now takes slightly more than one-sixth of U.S. gross domestic product – the measurement of the value of all goods and services in the country.

Other health care advocates in the Bay State point to a proposed universal health care state constitutional amendment, to be discussed at a May 10 conference.

The latest backers of Conyers’ bill were the Ohio legislative board of the Brotherhood of Locomotive Engineers and Trainmen/IBT, Letter Carriers Branch 3126 of Royal Oak, Mich., and Graphic Communications Conference/IBT Web Pressmen’s Local 4N of San Francisco. The Ohio BLET said it will take the cause to its conference convention in June and – if it wins – to the Teamsters convention immediately afterwards.

Their endorsements, in late April, came just after that of the Pennsylvania AFL-CIO, on April 6, after lobbying by USW Local 3567 member Janet Hill, who is also secretary of the Pittsburgh-area Coalition of Labor Union Women. Both the Pittsburgh and Philadelphia CLUW chapters had earlier endorsed Conyers’ legislation.

The Pennsylvania AFL-CIO, which claims 900,000 members, is the second state fed to back H.R. 676, after Kentucky’s. Conyers also has 68 U.S. House co-sponsors.

And Amalgamated Transit Union Local 825, which represents bus drivers, mechanics and other workers at New Jersey Transit, also voted to ask its parent international to back Conyers’ bill.

“We believe this is a very important program and we urge our international executive board to consider endorsing HR 676,” Local 825 President Muhsin Rasuul wrote ATU President Warren S. George about the localfs executive board and membership endorsements of the legislation.

But Conyers’ bill may not see the light of day in the GOP-run Congress, which instead is considering legislation – in the Senate – that would supposedly help small businesses band together to get health insurance.

In reality, the AFL-CIO said, that measure, pushed by the so-called National Federation of Independent Business – a key section of the ruling Republicans’ Right-Wing coalition – could raise the premiums on people who are insured and increase the number of the uninsured, now 46 million.

Itfs those uninsured people who are the focus of the week-long “Cover The Uninsured” drive, with the backing of the AFL-CIO, SEIU, several health care groups and even the U.S. Chamber of Commerce. But while the groups all agree there is a health care coverage problem, they are silent on how to solve it.

Conyers’ bill would mandate comprehensive coverage of “all medically necessary services”: primary care and prevention, inpatient and outpatient care, long term care, emergency care, mental health services, prescription drugs, durable medical equip-ment, full dental services (except cosmetic dentistry), substance abuse treatment, chiropractic services and basic vision care and vision correction, the summary says.

“No cost-sharing would be imposed and benefits would only be available from public or non-profit providers,” it adds. “Non-profit HMOs that deliver care in their own facilities and employ clinicians on a salaried basis could participate.”

And there would be no insurance premiums.

Hospitals and nursing homes would get monthly lump-sum payments while doctors and nurses would get fee-for-service payments under a negotiated fee schedule based initially on current prevailing fees or reimbursement, the foundation says.

Data from Americafs Agenda: Health Care For All, a group headed by former UFCW President Doug Dority, shows health insurance premiums rose 60 percent since the year 2000, but “the proportion of premiums that insurers paid out for medical costs declined” in the same time.

The money went into insurers’ profits and claims processing – paperwork. Other data shows private insurers spend approximately one-fifth of their revenue on overhead, including processing. Medicare – the basis for Conyers’ bill – spends three percent.

Barbara Ehrenreich: President Bush, Meet Lorraine

By Barbara Ehrenreich
Published on The Progressive (http://progressive.org)
April 2006 Issue

Here’s the news that rocked my little world this month: We got a message that a family friend, let’s call her Lorraine, who was in an ICU, barely able to breathe on her own. In the last few weeks, there’d been some mumblings about “not feeling a hundred percent,” but no hint of anything seriously wrong. The diagnosis came back in a couple of days: fourth-stage breast cancer, which has spread to a number of other organs, including her lungs. If you know anything at all about breast cancer “staging,” you know there is no fifth stage.

Lorraine has no health insurance. We didn’t know that. In fact, we’d been content to believe that her consulting business was going as well as she said it was. In her late forties now, she’s a former accountant who never could find another decent job–also a news junkie, an avid reader, and an energetic volunteer in a number of worthy causes. But it turns out she’s been struggling with the cell phone bill and the rent. A few weeks ago, unbeknownst to us, she’d moved out of her apartment and into a free room offered by one of the nonprofits she volunteers for. The cost of a mammogram–well over $100–must have been out of reach.

President Bush, in his State of the Union address, said we should each have a “catastrophic” health insurance policy for the big ticket items like breast cancer, plus a tax-deductible savings account for the little things, like mammograms. If we have to take “personal responsibility” for our doctor visits and routine care we’ll be thrifty about it–or so the thinking goes–and the nation’s medical expenditures will stop spiking like an Ebola fever.

It’s an old idea, going back at least to the Clintons, that the problem with the American health system is that we, the consumers, just consume too much. Make us mindful of the costs by raising co-payments and other out-of-pocket costs, and we’ll stop indulging in blood workups, MRIs, prostate exams, and all those other fun things.

President Bush, meet Lorraine. Her problem wasn’t that she feasted on unnecessary care, but that like so many of the forty-five million uninsured Americans, she was’t getting any care at all. Maybe, when she first noticed the lump, she should have staged a sit-in at the nearest clinic until it sprang for a free mammogram. But her idea of “personal responsibility” was not to be a bother to anyone.

And how much does the “personal responsibility” theory even apply to the insured population? I have insurance–at enormous cost, because I’m not part of a group plan and I’m an ex-breast cancer patient myself–but that doesn’t mean I choose what care I get. It’s not my idea to have an annual mammogram and pap smear. The doctor had to threaten tears before I’d submit to a bone scan, and they’ll have to drag me in for a colonoscopy. No one aside from the rare victim of Munchausen’s syndrome goes looking for recreational medical care.

The fact is there’s a big difference between the economics of health care and that of, say, costume jewelry. We the consumers control the demand for costume jewelry; we can splurge on it or leave it alone. But we have precious little control over our demand for health care. Sure, we can exercise and refrain from smoking and sky-diving and swimming with sharks. We can eat right, too (whatever that may mean, with the dietary advice fluctuating from month to month). But it’s the medical profession that determines how often we need our blood drawn, our breasts squished, our cervices scraped, or any of the other nasty interventions they have to offer.

If the medical care we consume was under our own control, I’d say, sure, save up for it and use it wisely. But it’s no more in our control than the wind and floods we insure our homes against.

You think it’s too expensive to have universal health insurance? Let’s be hard-headed about Lorraine’s case. If she’d been diagnosed earlier, she might have gotten by with a mastectomy and a bout of chemotherapy instead of burning up Medicaid dollars in an ICU. She might be out volunteering for the needy right now, instead of lying in terror in a hospital bed.

Barbara Ehrenreich is a columnist for The Progressive. Her latest book is “Bait and Switch: The (Futile) Pursuit of the American Dream.” Her website is www.barbaraehrenreich.com.

Massachusetts' health plan is not single-payer

By Matthew W. Petty
Op-Ed, The Forum (Fargo, ND)
May 4, 2006

The single-payer national health insurance system described by Josh Swanson in his April 23 opinion in The Forum is the best solution to America’s health care crisis. Unfortunately, the Massachusetts legislation Swanson describes is not single-payer, nor does it solve the health care crisis.

The Massachusetts proposal mandates that people buy their own coverage – with little or no help from employers – or pay a hefty fine. Swanson compares health insurance to auto insurance, arguing that if every driver is required to buy auto insurance, it is fair to make every person buy his or her own health insurance. But this argument ignores the critical fact that people have a choice to own a car but no choice about being an all-too-human mortal.

Extending the auto insurance argument to social policy fails to address real crises. For example, no one wo uld suggest ending homelessness and hunger by mandating that all homeless people buy a house and all hungry people buy food.

Requiring the uninsured to purchase health insurance will simply result in a proliferation of health insurance policies not worth the paper they are printed on. A 2005 Harvard study shows that three-quarters of people bankrupted by illness had health insurance when they first became ill. That percentage could skyrocket if the country adopted a Massachusetts-style individual-mandate law thanks to cheap and skimpy insurance policies.

Swanson is correct that many studies show single-payer to be the most cost-effective solution to the health care crisis. Unfortunately, the Massachusetts plan only adds to the health care system’s administrative waste. Massachusetts’ health care system already devotes $13.3 billion to billing, marketing, and other administrative costs. If the state devoted the same percentage as Canada’s single-payer system to bu reaucracy, the state’s health care system could save $9.5 billion annually, enough to cover all that state’s uninsured and to improve coverage for everyone else.

The Massachusetts health care proposal purports to provide health insurance to nearly all state residents. In reality the proposal promotes shoddy coverage with more holes than Swiss cheese. Insurance will remain unaffordable even with tax subsidies, forcing state residents to spend as much as 20 percent of their income for health insurance. The proposal will do nothing to stop employers from dropping coverage for workers, control costs, or reduce paperwork.

Nations with single-payer systems (e.g., Canada, Sweden, Norway, Germany, etc.) have better health outcomes while spending less per capita. Adopting a true single-payer system is the real solution to America’s health care crisis.

Petty is a 2001 graduate of Fargo’s Shanley High School and a 2005 graduate of Northwestern University with a bachelor’s degree in social policy and specialization in health policy. He is currently office manager and research associate with Physicians for a National Health Program, a 14,000-physician-member national nonprofit organization based in Chicago. E-mail matt@pnhp.org.

FOX NEWS on the single-payer solution

In U.S Hospitals, Emergency Care in Critical Condition
By Don Snyder
FOX NEWS
May 1, 2006

Data from the American College of Emergency Physicians, which represents 23,000 ER doctors, paints a chilling picture of a system in decline. The capacity of the nation’s emergency systems has decreased by 14 percent since 1993, ACEP says, as more than one thousand hospitals have closed their emergency departments nationwide. Meanwhile, demand continues to increase, with 114 million ER visits reported in 2003, the highest number the CDC has ever recorded.

Single-Payer Solution?

Doctors interviewed for this article unanimously decried the deterioration of emergency care and see a single-payer universal health plan as the answer. They point out that government programs could meet important health needs and operate with less overhead than private plans designed to make profits and satisfy stockholders.

For example, according to (Dr. Peter Viccellio, the head of the emergency department at Stony Brook University Hospital), Medicare operates with a 3 percent overhead compared to private insurers who spend 30 percent on overhead.

Stony Brook University Hospital spends $15 million dollars a year on billing because the private plans are so different and criteria for payment so complex. A single payer system would eliminate the need for each hospital to operate its own billing department.

“I could vaccinate a lot of kids with the $15 million our hospital would save,” said Dr. Viccellio.

However, the medical community is itself divided on this issue of universal health care.

In August 2003, the prestigious Journal of the American Medical Association proposed a national health insurance program that had been endorsed by more than 8,000 doctors, including two former surgeons general.

The American Medical Association, the largest medical organization in the United States, immediately distanced itself from the article. It said that while JAMA was associated with the AMA, the publication is editorially independent. The AMA has historically opposed a national health insurance system.

AMA president Donald Palmisano, responding in 2003 to the JAMA proposal, acknowledged that “a solution is desperately needed.” However, he said that a national health care system would “ration care, increase bureaucracy and demoralize doctors and patients.”

Doctors who support a national health care plan acknowledge that a prerequisite for adoption of universal health care in the United States is a fundamental change in attitude by Americans.

“The commitment to health care is a commitment by an entire society,” said (Dr. Angela Gardner, head of the task force that studied the nation’s emergency health care facilities). “I think at the moment Americans struggle with how much they are committed to health care for everyone.”

http://www.foxnews.com/story/0,2933,193883,00.html

Comment:

By Don McCanne, M.D.

By including a comment by former AMA president Donald Palmisano dredged from their 2003 files, FOX NEWS has provided a “fair and balanced” report. But even FOX NEWS couldn’t deny that all physicians interviewed for this report were unanimous is seeing “a single-payer universal health plan as the answer.”

Krugman – Death by Insurance

Death By Insurance
By Paul Krugman
The New York Times
May 1, 2006

For lower-income working Americans, lack of health insurance is quickly becoming the new normal. That’s the implication of survey results just released by the Commonwealth Fund, a nonpartisan organization that studies health care. The survey found that 41 percent of nonelderly American adults with incomes between $20,000 and $40,000 a year were without health insurance for all or part of 2005. That’s up from 28 percent as recently as 2001.

Many of the uninsured reported spending their entire savings on health care and/or that they were having difficulty paying for basic necessities. And most uninsured adults reported cutting corners on medical care to save money – failing to fill prescriptions, skipping medications, going without preventive care.

Here’s the other side of the same coin: health insurers’ business is lagging, reports The Wall Street Journal, as “rising premiums and medical costs push more of their traditional-employer customers to shun or curtail company health benefits.” And some investors are feeling the pain. Aetna’s stock price fell sharply last week, on news that its “medical cost ratio” – a term I’ll explain in a minute – rose from 77.9 to 79.4.

Taken together, these stories tell the tale of a health care system that’s driving a growing number of Americans into financial ruin, and in many cases kills them through lack of basic care. (The Institute of Medicine, part of the National Academy of Sciences, estimates that lack of health insurance leads to 18,000 unnecessary American deaths – the equivalent of six 9/11’s – each year.) Yet this system actually costs more to run than we would spend if we guaranteed health insurance to everyone.

How do we know this? The medical cost ratio is the percentage of insurance premiums paid out to doctors, hospitals and other health care providers.

Investors are upset about Aetna’s rising ratio, because it leaves less room for profit. But even after the rise in the cost ratio, Aetna spends less than 80 cents of each dollar in health insurance premiums on actually providing medical care. The other 20 cents go into profits, marketing and administrative expenses.

Other private insurers have similar ratios. And here’s the thing: most of those 20 cents spent on things other than medical care are unnecessary.
Older Americans are covered by Medicare, which doesn’t spend large sums on marketing and doesn’t devote a lot of resources to screening out people likely to have high medical bills. As a result, Medicare manages to spend about 98 percent of its funds on actual medical care.

What would happen if Medicare was expanded to cover everyone? You might think that the nation would spend more on health care, since this would mean covering 46 million Americans who are currently uninsured. But the uninsured already receive some medical care at public expense – for example, treatment in emergency rooms that would have been both cheaper and more effective if provided in doctors’ offices.

And Medicare manages to spend much more of its funds on medicine, as opposed to other things, than private insurers. If you do the math, it becomes clear that covering everyone under Medicare would actually be significantly cheaper than our current system.

And this calculation doesn’t even take into account the costs our fragmented system imposes on doctors and hospitals. Benjamin Brewer, a doctor who writes an online column for The Wall Street Journal, recently commented on the excess expenses he incurs trying to deal with 301 different private insurance plans. According to Dr. Brewer, he currently employs two full-time staff members for billing, and his two secretaries spend half their time collecting insurance information. “I suspect,” he wrote, “I could go from four people in the paper chase to one with a single-payer system.”

Many pundits see red at the words “single-payer system.” They think it means low-quality socialized medicine; they start telling horror stories – almost all of them false – about the problems of other countries’ health care. Yet there’s nothing foreign or exotic about the concept: Medicare is a single-payer system. It’s not perfect, it could certainly be improved, but it works.

So here we are. Our current health care system is unraveling. Older Americans are already covered by a national health insurance system; extending that system to cover everyone would save money, reduce financial anxiety and save thousands of American lives every year. Why don’t we just do it?

http://select.nytimes.com/2006/05/01/opinion/01krugman.html?hp

Comment:

By Don McCanne, M.D.

Why don’t we?