Speaker – Page 1075

Health insurance imploding

Wednesday, October 19, 2005
San Francisco Chronicle
Page C1

By David Lazarus

And so the demolition derby that is the U.S. health care system shifts into high gear.

Mighty General Motors, the world’s largest automaker and biggest private-sector purchaser of health insurance, said this week that it’ll slash its $5.6 billion annual health care spending for workers, retirees and their families by about $1 billion a year.

For its part, the United Auto Workers, one of the nation’s most powerful unions, is apparently prepared to swallow this hit to organized labor’s most sacrosanct benefit to forestall additional job cuts.

We have reached a critical turning point in the decline of health care in the United States, one almost certain to expand the already appalling figure of 45 million people lacking health coverage nationwide.

“It’s not just a breaching of the social contract that’s existed between companies and workers,” said David Autor, an associate professor of economics at the Massachusetts Institute of Technology. “It’s a reflection of how health care costs are out of control.

“Hopefully this will be an opportunity for government and companies to rethink how health care is provided,” he added. “The old system is clearly breaking down.”

Since World War II, the old system has been predicated on the notion that employers will bear the primary cost of insuring U.S. workers and their families.

That system, as the GM announcement plainly illustrates, is no longer viable in the face of double-digit annual increases in health care costs. Businesses have responded by insisting that workers — and especially retirees — shoulder more of the burden of their health coverage.

To be sure, GM has been rewarding its more than 750,000 union members, retirees and their dependents with an uncommonly generous benefits package. The company also faces numerous other issues that affect its profitability (or lack thereof; GM reported a staggering $1.6 billion loss for the latest quarter).

But health care is undeniably one of the automaker’s biggest headaches. GM estimates that health care adds about $1,500 to the cost of every vehicle it sells in North America.

The company’s chief exec, Rick Wagoner, told employees on Monday that health care is an issue “of great importance for the future of overall U.S. competitiveness.”

He also all but pleaded with political leaders to do something about the situation.

“We would welcome a more proactive role from elected officials at the national and state levels in broad-based strategies to address the U.S. health care crisis,” Wagoner said.

Helen Darling, president of the National Business Group on Health, a nonprofit organization composed of some of the country’s largest employers, told me that more and more companies will follow GM’s example and significantly scale back health coverage for workers.

For example, Ford and DaimlerChrysler are already negotiating similar concessions from the UAW.

“There’s no one in the business world who doesn’t share the position that the U.S. health care system has a crisis,” Darling said. “The issue here isn’t General Motors. The issue is the unaffordability of health care.”

So what do we do about it?

I’ve written repeatedly about how a single-payer health care system could provide universal coverage for all Americans at a long-term cost to taxpayers well below what’s now paid annually by employers and workers.

Single-payer systems are the norm in virtually all other developed democracies. While far from perfect — long waits for treatment are a frequent complaint — such systems ensure that any citizen can receive care from any doctor at any hospital.

There are no co-pays or deductibles, no private-sector premiums soaring year after year.

“The basic system is quite good,” said Steffie Woolhandler, an associate professor of medicine at Harvard University. “We just need to fund it adequately.”

As it stands, she said about a third of all health care spending in this country is now squandered on bureaucratic overhead. Under a single-payer system, savings from streamlined paperwork alone would be sufficient to provide coverage for all Americans.

“The meaning of GM’s announcement is that even people working for a powerful company can have their health care cut,” Woolhandler said. “Anyone who gets health insurance from an employer or former employer should be worried.”

The right message: Speaking of the auto industry, senior execs at Delphi, the largest automobile supplier, have said they’ll take voluntary pay cuts until the company emerges from bankruptcy.

The company’s CEO, Robert Miller, will reduce his base salary from $1.5 million to just $1 annually and won’t receive any bonuses. Delphi’s president, Rodney O’Neal, will take a 20 percent pay cut, and other execs will forgo 10 percent of their salaries.

Declared Miller: “Delphi’s transformation message must be unambiguous and marked indelibly by the commitment of Delphi’s leadership.”

Compare that with the top brass at PG&E, who last year handed themselves $83 million in bonuses while the San Francisco utility was still mired in Chapter 11 proceedings.

“It’s become standard to reward executives for sticking around during bankruptcy,” said Kirk Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University.

“Cutting your pay sends a strong message to employees that management understands they’re suffering,” he said.

David Lazarus’ column appears Wednesdays, Fridays and Sundays. Send tips or feedback to dlazarus@sfchronicle.com.

Americans value employment-based health coverage, but…

2005 Health Confidence Survey: Cost and Quality Not Linked
By Ruth Helman, Mathew Greenwald & Associates, and Paul Fronstin, EBRI
Employment Benefit Research Institute
EBRI Notes
November 2005

Increasing health care costs continue to be strongly related to dissatisfaction with the health care system, and those who have experienced increased costs within the past year are more likely than those who have not to be dissatisfied their current health plan and other aspects of the health care.

A majority of Americans with health coverage have experienced health care cost increases in the past year. Those with employment-based coverage and those who report their health status has gotten worse over the past five years are more likely to report these cost increases.

Those who have experienced cost increases have compensated by making changes in the way they use health care. (54 percent) say they now go to the doctor only for more serious conditions or symptoms. (40 percent) have delayed going to the doctor. (21 percent) report cost increases have caused them to not take their prescribed medication. Lower-income Americans and those in poorer health are more likely to report making each of these changes.

Increased health care costs have also affected household finances, and many of those who have experienced cost increases have coped by reducing the amount they save or by depleting their savings. One-quarter report they have decreased their contributions to a retirement plan as a result of the increased cost of health care (26 percent), and almost half report they have decreased their contributions to other savings as a result of the increases (45 percent). One-quarter say they have had difficulty paying for basic necessities, like food, heat, and housing (24 percent), while one-third report difficulty paying other bills (34 percent). Three in 10 indicate they have used up all or most of their savings (29 percent), and 18 percent have borrowed money.

Despite the increasing amount of cost sharing that employers are asking of their workers, most Americans appear to value employment-based health coverage above the actual dollar amount that employers pay toward the care. When employed Americans with health coverage are asked whether they would prefer $6,700 in employment-based health insurance coverage or an additional $6,700 in taxable income, 8 in 10 choose the employment-based health coverage (80 percent). Two-thirds would prefer employment-based coverage to an increase in income even if an employer paid $10,000 toward the coverage(66 percent). Furthermore, this preference for employment-based coverage emerges regardless of demographic characteristics.

http://www.ebri.org/pdf/EBRI_Notes_11-2005.pdf

Comment: (Not addressed in the excerpts nor in these comments is the finding that Americans still have relative confidence in the quality of our health care system.)

The selected excerpts above confirm what we already knew. Americans are very concerned about increasing health care costs, and affordability is having a very significant negative impact on access and on their personal finances.

An important conclusion of this report is that Americans strongly support employment-based health coverage, and would relinquish comparable income increases in order to maintain employer-sponsored coverage. Advocates of reform based on employer-sponsored plans will surely jump on this study as an affirmation of the validity of their model of reform. But is that conclusion really warranted?

Individuals are very concerned about the risk of unanticipated health care costs. Right now, they have up to three options: coverage through their employment, individual coverage, or no coverage at all. Responsible individuals would never accept doing without coverage as being an acceptable option. The greater value and comprehensiveness of employer-sponsored coverage makes it a preferred option to individual coverage. So it is quite logical that most individuals would support plans offered through their employment.

But what if they were offered another option? What if they were told that they could always have coverage regardless of what might happen to their employment? What if they were told that they would need to relinquish only an equitable portion of their income, through a payroll tax, rather than relinquishing an arbitrary amount such as the $10,000 in this survey? What if they were told that comprehensive benefits would always be provided since other more efficient mechanisms, rather than benefit reductions, would be used to maintain affordability?

Today, even General Motors employees might be interested in hearing about such an option. Even the New York Times, in an editorial yesterday, broke new ground by stating “…shame should also be aimed at Washington lawmakers who have done nothing to solve the larger problem, the crying need for national health insurance.”

New York Times editorial:
http://www.nytimes.com/2005/10/17/opinion/17mon3.html

Single-payer advocates push cause in states; challenges likely

At least 18 states have introduced universal health care bills, most based on a single-payer model
By Amy Snow Landa
AMNews correspondent
Oct. 24/31, 2005

From Vermont to California, proponents of single-payer health care have been busy introducing legislation, circulating ballot petitions and broadening their coalitions — all with the hope that at least one state will enact legislation that can be used as a model for national health care reform.

But opponents of single-payer health care, including state medical societies, say they are not worried that all of the activity means that government-run health care will be enacted any time soon.

“We’re not ringing the alarm bell yet,” said Tim Maglione, senior director of legislative affairs at the Ohio State Medical Assn.

Although Ohio has one of the most active single-payer movements in the country, there is little chance that a single-payer bill will pass the state’s Republican-controlled Legislature or be signed into law by Republican Gov. Bob Taft.

“We feel pretty confident the Legislature doesn’t have any interest in pursuing this,” Maglione said.

Single-payer advocates, having drawn the same conclusion, have turned their efforts to a petition drive, said Johnathon Ross, MD, a Toledo internist and a leader of the Single-Payer Action Network of Ohio.

The group is attempting to collect about 100,000 signatures on its petition, which directs the Legislature to vote on the Health Care for All Ohioans Act. So far, they have collected “tens of thousands” of signatures, Dr. Ross said.

If the Legislature then refuses to take action on the bill, supporters will collect a second round of signatures to put single-payer legislation directly on the ballot.

“Our target [for putting it on the ballot] is November 2006 at the earliest,” Dr. Ross said. But the group may put it off if they need more time to prepare for what is likely to be a formidable challenge waged by the insurance industry and other opponents, he said. Single-payer ballot initiatives have been tried in Oregon and California but were unsuccessful when they faced the opposition’s overwhelming resources.

Single-payer advocates don’t want to see that happen in Ohio. “We have to make sure we have a movement” established before taking single-payer health care to the ballot box, Dr. Ross said. “We’re using the petition to drive this movement.”

In addition to Ohio, at least 17 other states have introduced universal health care measures, most of them based on a single-payer model, according to the National Conference of State Legislatures. But so far, none of the bills has been enacted.

The American Medical Association has opposed the establishment of single-payer health care both at the state and federal levels. It has long advocated for using tax credits and other market-based reforms to make health care coverage more affordable.

Vermont’s close call

The state that came closest this year was Vermont, where the Legislature passed a bill in June that would put the state on the road to establishing a single-payer system called Green Mountain Health.

The measure, called an Act Relating to Universal Access to Health Care in Vermont, would have phased in a single-payer system funded through taxes levied on individuals and employers. But Republican Gov. James Douglas vetoed the legislation.

Despite the veto, the Legislature was able to appropriate funds for the Commission on Health Care, a legislative panel that is studying a number of issues related to health care reform, such as governance and financing.

Both the commission and Douglas are holding hearings to solicit recommendations on health care reform. The Vermont Medical Society has been developing its own proposal, which it plans to submit in mid-October, Executive Director Paul Harrington said.

Rather than promote a single-payer system, the VMS proposal would keep in place existing insurance coverage paid for by employers, Medicare and Medicaid. It would offer residents in the individual market a basic benefit plan at an affordable cost through the Office of Vermont Health Access, the agency responsible for the state’s Medicaid and other health programs. The proposal also would subsidize premiums for low-income Vermonters and provide new incentives to encourage employers to offer health insurance to their employees.

Eyes on the prize

Of all the states where single-payer supporters are most active, California is considered the biggest prize because of its sheer size, both in terms of population and health care spending. Nearly $200 billion is spent in California each year — about 13% of the entire nation’s spending on health care, according to the UCLA Center for Health Policy Research.

Activists there have been working for years to enact single-payer legislation, but supporters and opponents have differing views on whether the movement has crested or continues to grow.

“As far as we know, their efforts are not any more prevalent today than they were a year ago or 10 years ago,” said Larry Akey, a spokesman for America’s Health Insurance Plans.

But that’s not the view of Ida Hellander, MD, executive director of the Chicago-based Physicians for a National Health Program. The single-payer movement in California “just continues to grow,” she said. “They have a pretty broad-based movement; they’ve educated a lot of people, and very large, well-organized groups like the California Nurses Assn. are on board.”

In the California Legislature, a single-payer bill passed the Senate in May but faces an uncertain future in the General Assembly. Even if the full Legislature approves the bill, Republican Gov. Arnold Schwarzenegger is likely to veto it.

“The bill is dead for the moment,” said Michael Sexton, MD, president of the California Medical Assn., which opposes the legislation. “We don’t think there should be an ability to ration care based on a global budget,” he said.

Instead, the CMA is working to advance its own proposal, which would cover the uninsured but preserve a public-private system of health care coverage, he said. The plan includes refundable tax credits for the purchase of health care.

ADDITIONAL INFORMATION:

The Vermont Legislature, for information on H 524, an Act Relating to Universal Access to Health Care (www.leg.state.vt.us)

California legislative information page, for information on SB 840, the California Healthcare Insurance Reliability Act (www.leginfo.ca.gov)

The Ohio General Assembly, for information on, HB 263 and SB 263, the Health Care for All Ohioans Act (www.legislature.state.oh.us)

Instability of employer-sponsored coverage

Big Changes for Health Plans
By Kathy M. Kristof
Los Angeles Times
October 9, 2005

Every year, workers are advised to look closely at their benefits package during open enrollment season. This year, they have even more reasons to read the fine print.

Companies are increasingly requiring “active enrollment” – meaning that if employees don’t check the right boxes, they could end up without health insurance, or find themselves enrolled in a “default” plan.

“More and more companies won’t allow passive enrollment, which is when they don’t hear from you, they give you what you had last year,” said Tom Billet, senior consultant with benefits firm Watson Wyatt Worldwide. “Companies are increasingly demanding active enrollment.”

One reason is that benefit choices are changing significantly this year. That’s partly because laws have changed to allow new options such as health savings accounts. It’s also because employers are experimenting with ways to cut costs, which have more than doubled in the last eight years, according to benefit consulting firm Hewitt Associates.

“We are seeing increased deductibles, but also more of a consumer-oriented focus to healthcare,” said Sarah Taylor, annual enrollment leader at Hewitt. “There are a lot of plans that weren’t offered in the past – like health savings accounts and build-your-own plans.”

“You mix and match, and your premium would be based on the things that you choose,” (Taylor) said. “It’s really up to the employee to figure the benefits that have the most value to them.”

“It’s the rare plan today that has no change from year to year,” Billet said. “So making the same election that you made last year may not be the best decision. It’s a really good idea to evaluate the situation with a fresh eye.”

http://www.latimes.com/business/la-fi-perfin9oct09,1,6806534.column?coll=la-headlines-business

Comment: The lesson? The mainstay of private health care coverage, employer-sponsored plans, no longer provides the security of affordable, comprehensive benefits. Rather than deciding for their employees how much insecurity is acceptable, employers are shifting this difficult decision onto their employees.

The conflict is obvious. The employers’ concern is the affordability of health insurance; the employees’ concern is the affordability of health care. As long as health plans are sponsored by employers, there will be a continual effort to drive down insurance costs in the face of escalating health care costs. The burden of the increased health care costs are then shifted to the employees. This dynamic creates instability for our prevalent mechanism of funding health care: employer-sponsored plans.

Although a universal public insurance system would be under continual attack by libertarians, it would be vastly more stable than our current fragmented system of funding health care. Even libertarians don’t want their Medicare messed with.

Small Business Looks to Mexico for Healthcare Plan

Monday, October 03, 2005

LOS ANGELES As the cost of healthcare (search) continues to skyrocket, one businessman in Calexico, Calif., has found a solution to the problem.

Mark Holloway owns the Sam Ellis department store near the U.S. border with Mexico. He has about 50 employees and couldn’t afford health insurance (search) for them until he discovered a cross-border health plan that allows his workers to see doctors in Mexico.

“We were paying an excess of $100,000 a year to provide health insurance and that wasn’t even for all of the staff,” Holloway said. “When Blue Shield came to us and offered us an affordable way to bring down healthcare, we jumped on it.”

In Mexico (search), healthcare costs are about 40 to 50 percent lower than in California. That means patients only have to pay $10 to visit a Mexican doctor. Hospital stays, tests and medications also are more affordable south of the border.

One of Holloway’s longtime employees said the service is better in Mexico.

“I know that doctors across the border will see you that day if not in the morning, the afternoon, the evening. You will call them, they will give you their cells [phone numbers], whatever,” said Josie Llausas.

But some in the medical field in the United States are skeptical about the cross-border plans because of questions over the quality of care, specifically pointing to outdated technology like X-ray machines, ultrasound and MRI equipment.

Mexican doctors say while their equipment might not be state-of-the-art, their training is equivalent to that of American doctors.

NY Times Endorses National Health Insurance

Wrong Solution for the Uninsured
Editorial
The New York Times
October 17, 2005

As well-meaning legislation goes, it would be hard to beat the law recently approved by the New York City Council over the veto of Mayor Michael Bloomberg. It requires certain large grocers to provide health care benefits for their employees. The law – like a handful of similar efforts from Long Island to San Francisco – is a response to the growing strain on Medicaid and other government assistance programs from uninsured workers.

A major inspiration for the legislation is clearly Wal-Mart. One report showed that nearly 9,000 Wal-Mart workers needed public insurance in Wisconsin, and that more than 10,000 children of the store’s workers in Georgia were treated at taxpayer expense. The list goes on. Fed up, Maryland, New Jersey and Pennsylvania are in various stages of trying to force the big employer to take care of its own.

While it’s easy to sympathize with the frustration of local governments left holding the bag, this kind of piecemeal legislation is no answer. For one thing, it’s very possibly illegal – federal law generally protects employers from this kind of local mandate. And while it’s emotionally satisfying to take a whack at the big-box stores, it hardly addresses the real problem. In New York, caring for the city’s working uninsured costs more than $600 million annually, according to a Columbia University report. Wal-Mart can’t be blamed for any of that, as it has been unsuccessful in pursuing a site in the city.

The nation’s health care problems are too complicated to be addressed by a chock-a-block system of overzealous, homespun laws that fail to address the overarching problem of the uninsured and may not hold up in court, anyway. The problem cries out for a federal solution. Without some kind of aid, many small businesses would crumble under the cost of health care benefits – which the New York City law estimates at $5,000 per employee per year.

For right now, there is a commendable effort in Congress to post on the Internet the names of employers with large numbers of workers on public aid, the idea being that shame can be an effective weapon. The same kind of shame, however, should also be aimed at Washington lawmakers who have done nothing to solve the larger problem, the crying need for national health insurance.

PNHP's Frankel Promotes Medicare for All

Doctor prescribing national health plan
By Steve Blow
Dallas Morning News
Sunday, October 9, 2005

In the newspaper business, someone is always upset with how we play stories.

Put one on the front page, and it’s called “sensationalism.” Put it inside, and it’s “buried.”

Well, let me join the chorus. When I read a story the other day at the bottom of the business section, I wondered why in the world it wasn’t on Page 1.

The headline: “Fewer firms are providing health care, survey finds.”

OK, not very sexy, I know.

In fact, I have just divided readers into two groups. First, those of you who felt your interest sag. You have good health insurance at work – or through a spouse, a parent or Medicare.

And second, those who felt your stomachs knot. You are uninsured or on the verge of it – and you’re worried sick about getting sick.

That headline made me think about a local fellow in a small third group – those who are well insured and worried about those who aren’t.

Actually, Gerald Frankel of McKinney belongs to an even smaller group than that. He’s a doctor who favors a national health-care plan.

Dr. Frankel – “Jerry” to his friends – is a urologist on a mission. He says we’ve got to face that our country’s system of providing health coverage through employers is broken.

That recent news story documented the continuing decline in companies offering health insurance – down to 60 percent now, a 9 percent drop in just five years.

I asked Dr. Frankel about his reaction to that story. “I had a whole mess of reactions,” he said. “First, my heart goes out to the people affected by this.

“You don’t see the devastation because you can’t put it in a photograph like you can with Hurricane Katrina. But physicians and nurses see families whose lives have been wrecked on a daily basis. The number of families who have their own Katrina every day is just phenomenal.”

Dr. Frankel’s second reaction: “It’s just another nail in the coffin of the current system,” he said. “But at what point do we say enough is enough? What’s the breaking point?”

The surgeon is frustrated that he can’t make others see what is so obvious to him: People are dying because of the broken system of delivering health care.

“How can this country, which is based on the highest principles, allow this to go on?” he asked. By one study, 18,000 people die each year solely for lack of health care. Thousands more suffer needlessly.

Dr. Frankel understands the natural reluctance to get the government involved. “Government drives everyone crazy. They say, ‘The same people who run FEMA? You’re going to let them take over health care?’ ”

But the government can do some things well, he said, and one of those is deliver decent, affordable health care to all its citizens.

It’s done that way in every other developed nation. And it’s not as foreign as it sounds. We already have it here, and I have already mentioned it – Medicare.

Good old Medicare. It may not be perfect, but older Americans look forward to the day they qualify for it. And Dr. Frankel sees no reason why such a national health plan can’t be expanded to all citizens, not just seniors.

If nothing else, the employer-based, private-insurance system offends Dr. Frankel for its inefficiency. He said about 25 percent of all premiums go to pay administrative costs. With Medicare, it’s 3 percent.

But worst of all, our system is bad medicine. We spend more on health care than any other country, but we’re the worst of developed nations in life expectancy and infant mortality, he said.

Dr. Frankel is active in Physicians for a National Health Program (www.pnhp.org). He tries to spread the message that way.

But he believes change will come only when the middle class is shaken from its comfort zone – only when enough people can’t find a job with health benefits, only when enough families are financially ruined by an illness, only when enough of “us” die unnecessarily.

Dr. Frankel wonders why we have to wait.

E-mail sblow@dallasnews.com

PNHP’s Frankel Promotes Medicare for All