PNHP Fact Sheet: Health Savings Accounts — No Savings
What is a Health Savings Account?
Health savings accounts (HSAs) are promoted by insurers as the “consumer-directed” solution to the health care crisis, and by some conservatives as a way to make individuals more “responsible for their health care choices.”
Please click here to download the(pdf) file
Income Stable, Poverty Rate Increases, Percentage of Americans without Health Insurance Unchanged
U.S. Census Bureau
August 30, 2005
The percentage of the nation’s population without health insurance coverage remained stable, at 15.7 percent in 2004. The number of people with health insurance increased by 2.0 million to 245.3 million between 2003 and 2004, and the number without such coverage rose by 800,000 to 45.8 million.
Press release:
http://www.census.gov/Press-Release/www/releases/archives/income_wealth/005647.html
Health Insurance Coverage: 2004
http://www.census.gov/hhes/www/hlthins/hlthin04.html
Comment: Although the percentage of uninsured is stable at 15.7%, an additional 800,000 individuals have no insurance, for a total of 45.8 million in 2004. The 800,000 individuals added to the list can assure you that there should be no complacency in these numbers.
One very important point not covered is that the security provided by health care coverage is deteriorating, potentially exposing many of the 245 million with coverage to significant debt. An egregious example is that of David and Darlene Henderson. They purchased a $1 million catastrophic plan, through a business association, for a premium of $400 per month. She developed breast cancer, and he had emergency surgery for an aortic aneurysm. Their insurance paid $33,428 and left them with out-of-pocket expenses of $181,855. Although theirs is an extreme example, it does indicate the vulnerability of the insured as innovative trends in coverage play out. (The Sacramento Bee, August 29, 2005:
http://www.sacbee.com/content/business/story/13489439p-14330129c.html)
Our current policies and projected trends will lead us further into disaster. This can be prevented by changing the way we allocate the $1.9 trillion that we are already spending on health care. But that will require a change in national policies. The process can begin only once there is an honest acknowledgement that we need public oversight of a universal system.
Until then, you might want to cover your potential losses by investing in the booming business of collection agencies.
Penn Valley couple shocked by big bills
By Andrew McIntosh
Sacramento Bee Staff Writer
Monday, August 29, 2005
When Darlene Henderson became ill with breast cancer in 2001, the illness devastated her body and soul.
And that was only the start of her misfortunes.
Soon afterward, the Penn Valley woman’s husband, David, was felled by an abdominal aortic aneurism the size of a baseball and rushed to surgery.
As the self-employed couple struggled to recover from three major surgeries each, their only comfort was that they had bought $1 million worth of catastrophic medical insurance through a business association.
Or, so they thought – until a blizzard of medical bills topping $210,000 buried them.
The Hendersons soon learned their insurance would cover less than 20 percent of the bills, plunging them into a financial crisis.
Backed by a Santa Monica-based consumer group, the Hendersons and dozens of others like them statewide are calling on Insurance Commissioner John Garamendi to educate consumers about the perils of such insurance and crack down on companies selling it.
“Like people who have swerved over a cliff on a dangerous road, we feel obligated to petition for a hazard sign to protect others,” David Henderson said.
Garamendi, concerned about the proliferation of what he called “skeletal” health coverage, will examine the sale of limited insurance policies through industry associations at a Sept. 20 public hearing in San Francisco.
Currently, state rules require basic hospital insurance benefits to be “of real economic value to the insured.”
Yet the regulations, last updated in 1972, include a minimum hospital benefit of just $30 a day.
The Hendersons bought their insurance through the National Association of Self-Employed because of promises made by their sales agent, who pitched a policy from the Mega Life and Health Insurance Co. of North Richland Hills, Texas.
For $400 a month, the couple said the Mega sales agent told them, they could buy a group policy that would cover 80 percent to 100 percent of their hospital costs up to $1 million.
In the end, Mega covered $33,428 of the Hendersons’ bills, they said, leaving them quivering when they learned they still owed $181,855.
The agent, the Hendersons said, didn’t emphasize or explain some critical information:
* There was no cap on their out-of-pocket expenses, unlike traditional health insurance available through large employers.
* Their benefits had daily maximums so far below the average cost of medical procedures and hospital stays that the financial security it purported to offer was illusory.
The Hendersons acknowledge that they didn’t read the fine print in the policy. Even if they had, they might not have understood it, said a representative of the California Foundation of Taxpayer and Consumer Rights. The Santa Monica-based consumer group said the complex policies are riddled with exclusions and caps.
“No other policy sells patients health care coverage that promises so much yet delivers so little,” spokeswoman Carmen Balber said.
She said Mega and other association health insurers pay maximum benefits that are so far below the average cost of medical procedures that customers have little or no protection from financial ruin.
David Henderson urged authorities to act fast to protect consumers: “The public has to be protected from these unscrupulous practices.”
Sick and unable to work while trying to care for themselves and Darlene Henderson’s 88-year-old mother, the Hendersons were forced to sell a car and other possessions on eBay to help pay some of their bills, David Henderson recalled.
The couple still owe close to $200,000, with interest. They have sued Mega, its parent and the association in Nevada County’s Superior Court.
The company and the National Association for the Self-Employed deny wrongdoing or any liability. A trial is set for January.
The Hendersons also say that the association, an organization they thought was representing their interests as small-business people, has close ties to Mega.
“The NASE was not an independent entity. It was a marketing ruse,” David Henderson said.
Mega is one of several specialty life and health insurers operated by UICI, a holding company that trades on the New York Stock Exchange.
Mega recruits members for the National Association for the Self-Employed, based near Mega in Grapevine, and sells insurance policies on the association’s behalf.
Mega also sells marketing services to the association, and a company controlled by the children of UICI Chairman Ronald Jensen sells administrative and billing services to NASE, a company spokesman confirmed.
Despite these ties, a spokesman for UICI and its Mega affiliate said that the companies and the association are distinct and separate legal entities, adding that ties between them have been properly disclosed to authorities and policyholders.
In an Aug. 8 securities filing, UICI revealed that its Mega affiliate has been named a defendant in “numerous cases” in California and other jurisdictions by plaintiffs challenging the way it is selling health insurance in the self-employed market.
The insurer’s stock, which rose to a 52-week high of $36.40 in the fall of 2004, sank to $21.31 in April before recovering to the $30-$31 range this month.
Plaintiffs are also challenging the relationship between UICI insurance units such as Mega and the associations that are actively promoting its insurance products to members, the company said, adding it has settled several cases without admitting liability.
The company, which last year reported net income of $161.6 million on revenue of $2.1 billion, said in its most recent quarterly report with the Securities and Exchange Commission that resolving the outstanding cases will not have a material effect on its finances.
In January, Mega and the other defendants paid $1.7 million to settle a lawsuit by court reporter Dana Christensen of Marina Del Rey.
Christensen alleged that the defendants deceived her family into purchasing what she calls a “sham insurance policy.” She sued after her husband died from bone cancer, leaving her with uncovered medical bills totaling $450,000, her attorney Tony Stuart said.
A company spokesman insisted its coverage, limitations and caps were all disclosed and discussed with the Christensen family before they bought their policy.
The spokesman added that the Christensens paid $7,760 in premiums to Mega and received about $167,000 in benefits.
“The impression given is that there was no value to the policy and that it was worthless,” the company spokesman said. “That’s an incorrect impression.”
The lawyer for the Christensens said this amount included payouts totaling only $97,000, but the insurer had boosted the benefit by including medical network care discounts for another $70,000.
Regulators here and in other states are taking action as consumer complaints and lawsuits mount.
In late March, the National Association of Insurance Commissioners named the states of Washington and Alaska to lead “a multistate examination” into the conduct of three UICI affiliates, including Mega, Mid-West National and the Chesapeake Life Insurance Co.
The examination started in May 2005 and officials are hoping to finish it by year’s end, said Bill Ripple, a spokesman for Washington Insurance Commissioner Mark Kreidler.
“The number of complaints we had become a trend, not only here, but elsewhere,” Ripple said.
“We’re looking at practices and procedures, such as marketing, to check that they’re doing what they say they’re doing.”
In March, Washington’s Insurance Department served a cease and desist order on Mega, after finding the insurer was selling “substandard and legally noncompliant” group health insurance that included forms “inconsistent with state law.”
In 2004, Mega and another UICI affiliate were fined $100,000 by California’s Insurance Department after auditors found the companies deliberately delayed paying claims.
—————————————–
ASSOCIATIONS AND YOUR HEALTH
The California Department of Insurance wants to make consumers considering health insurance from an association aware of several facts:
* The department does not regulate the associations that offer the coverage.
* Since the association purchases the policy on behalf of its members, it is the association that dictates or negotiates the coverage.
* The quality of the coverage depends on what the association is willing to pay in most cases.
* Consumers should request a specimen copy of the policy and the plan booklet before submitting an application for coverage. To the best of the department’s knowledge, the industry does not routinely offer this.
Source: California Department of Insurance
For the First Time, More Canadian Physicians Are Returning to the Country Than Leaving
Canadian Institute for Health Information
August 24, 2005
New statistics compiled by the Canadian Institute for Health Information (CIHI) show that for the first time since 1969 (the period for which data are available) more physicians have returned to Canada than moved abroad. In 2004, 317 physicians returned to Canada, and 262 moved abroad. In the period between 2000 and 2004, the number of physicians who left Canada declined by 38%.
“The new data reflect a continuation in the trend we have seen since the mid-1990s of a decreasing number of doctors leaving Canada for opportunities in other countries,” says Steve Slade, consultant on physician databases at CIHI. “The other notable trend is that Canada’s total number of doctors has kept pace with population growth since the late 1990s.”
While the total number of physicians per 100,000 population has remained quite stable, the situation is not the same for both family physicians and specialists. Between 2000 and 2004, the number of family physicians increased from 94 per 100,000 to 98 per 100,000. However the overall number of specialists per 100,000 population declined from 93 to 91 in the same five-year period.
http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=media_24aug2005_e
Full report (139 pages):
http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=PG_385_E&cw_topic=385&cw_rel=AR_14_E
Comment: Opponents of single payer reform will shrug this off as a one-year fluke, but it isn’t. It is a well-documented trend over the past decade that simply passed a threshold this year, resulting in a positive influx of physicians migrating back to Canada.
It would be difficult to attribute this shift to factors such as physician income levels in Canada, or, more simply, the enjoyment of Canadian winters.
More likely, physicians prefer to practice in an environment in which they can advocate for their patients without barriers erected by third party payers or by an inability of the patients to meet out-of-pocket costs – barriers that are characteristic of the U.S. system.
Another major flaw in the health care system in the United States is our weak and rapidly-deteriorating primary care base. Barbara Starfield and others have demonstrated that a strong primary care infrastructure improves quality at a lower cost. Another important trend demonstrated in this study is the renewed emphasis on primary care in Canada.
We can learn much from these Canadian physicians who have checked out “the greatest health care system in the world,” and have decided to go back home.
By Steven Lewis
Winnipeg Free Press
August 21, 2005
The official voice of Canadian doctors has had it with single-tier medicare. Why? Because patients are suffering and dying waiting for care, according to the ineffable Dr. Victor Dirnfeld of British Columbia, with rhetoric unsupported by evidence.
Governments just don’t give Canada’s altruistic doctors the resources to do right by their patients. The solution: Give Canadians a choice to buy their way out of the public lineup.
Last Tuesday, CMA delegates timidly endorsed a private, parallel system by resorting to the convoluted vehicle of the double-negative (voting against a resolution that was against private medicine).
By Wednesday, they were braver. Sixty-four per cent voted in favour of this resolution: “The Canadian Medical Association supports the principle that when timely access to care cannot be provided in the public health-care system the patient should be able to utilize private health insurance to reimburse the cost of care obtained in the private sector.”
Good for the CMA. On Tuesday, the debate was muted, the proceedings oddly preoccupied with wording. No passion, no ringing discussions of principle. Not with a bang, but a whimper. The next day, more spirited to-and-fro. In the end, forced to take a stand, the 200 delegates took one.
It’s folly to blame an interest-group for pursuing its interests. The CMA does not exist to advance the public interest — it is the doctors’ lobby, pure and simple. And, like all sophisticated interest groups, it insists that it is solely preoccupied with the well-being of the public.
Ergo: When a bunch of us doctors set up private clinics for the well-to-do, all Canadians will get better and more timely care. That’s why we’re doing it — nothing to do with money. We deeply admire the public system; we just can’t pass a resolution that declares it to be the best option. We share its values, only it isn’t getting the job done.
Government’s fault — always is.
The CMA has traded the Hippocratic for the Hypocritic with a capital H. But it could show the public just a little respect. We’re quite prepared for your pursuit of self-interest.
You don’t have to pretend you’re doing it for us — you’ve been ambivalent about medicare since the beginning. It’s not about us having a choice, since, by the CMA’s own reckoning, most Canadians won’t be able to buy private insurance. It’s about you having a choice. We’re just fodder for the argument, and collateral damage when you get what you want.
So come clean. Celebrate the lucrative private options for doctors who want to make more money and restrict their practices to those in their own class. Tell us candidly that you favour a minimalist set of core services for the masses, reserving the high-quality diagnostics and fast access to care for successful people like you. That way, you’ll make more money. And, with a stripped-down public system, you’ll pay less tax, too.
And don’t be afraid to chide the thousands of physicians who are naïve enough to commit to the public system. Tell them that their labours are in vain, their system is second-rate, their Toyotas an embarrassment in the hospital parking lot.
Let’s assume that many doctors will want out, and the public system will be under more strain with its capacity temporarily reduced. What can governments and the public do to strengthen the public system and shore it up against further erosion?
There’s a lot that can be done. First, let’s get all the talent in the public system working at full capacity. Get other professionals involved more centrally in primary care. A team of nurses, rehabilitation therapists, psychologists and pharmacists is capable of providing excellent front-line care. If my physician clinic went private and I had the option of seeing a nurse practitioner in a comprehensive clinic, I’d go in a minute. I might go anyway.
Second, if the CMA and its followers want a private and parallel system, make sure it is truly private and parallel. Don’t subsidize it by training its personnel at huge public expense — charge them full tuition ($60,000 a year for physicians). Make them build their own hospitals so the complications from their surgical centres don’t end up taking our space in the public system.
Students at the swish private schools — you know, the ones that the CMA likes to refer to as benign analogies to private medicine — don’t get to use public-school facilities whenever it’s convenient. Let them and their investors put billions of dollars on the table and see if they can make a go of it. You want to be entrepreneurs? Go for it — assemble the capital, take the risk.
Third, regulate profiteering and over-servicing. Provinces can pass laws that opted-out physicians can charge no more per service than the rate in the public system. Some do so already. Require private clinics to undergo regular quality and utilization audits. The U.S. is full of horror stories of investor-driven excess. Examples: A northern California hospital was cracking open chests to perform unnecessary by-pass surgery in response to pressure from the head office to increase profit margins. A southern California outfit was flying in healthy patients from the East Coast to undergo a few days of diagnostic investigations to generate higher revenues.
Impossible here, you say? Think Enron. Think Vioxx. Hell, think Krispy Kreme. Profit is a harsh taskmaster.
Fourth, and importantly, make doctors choose — in or out. No hybrid public and private practices. Take away the safety net: You don’t get to maintain a part-time public practice, where the state pays your fees, while building up your private and parallel business.
You’re entitled to move out — and we’re entitled to change the locks.
But it’s not just governments that have to respond vigorously to the privatization challenge. It’s all of us. Citizens have to make medicare a political issue at both the provincial and federal level. Make parties declare where they stand. If governments get a democratic warrant to preside over the development of a private and parallel system, let it blossom. Canadians deserve a chance to vote on it, one way or the other.
Not everything has to be overtly political. Legions of doctors are philosophically committed to the values of public health care and do their best to make it work. We should support them, honour them, and let the world know who they are. Launch a sticker campaign that certifies medical offices and clinics as medicare-friendly. Voting with one’s feet is always a healthy signal to those who earn their living by serving us. Ask the embarrassing question when making an appointment: “Are you a medicare-friendly clinic? If not, why not?”
And every once in awhile, hit the streets. As the CMA drafts its report on how the public and private systems ought to interact, serenade it with the chants of tens of thousands of citizens in front of their Ottawa head office in support of single-tier health care. Demonstrations in front of provincial medical association offices would be similarly invigorating.
We owe a debt to the CMA for letting us know where it stands. Let’s reciprocate the favour by letting it know, loudly, where we stand. If, in the end, the public sides with the CMA, applaud them one more time.
All that is clear right now is that if medicare is to improve and thrive, it will be in spite of — not because of — the efforts of organized medicine.
Steven Lewis is president of Access Consulting Ltd. in Saskatoon and adjunct professor of health policy at the University of Calgary.
By Sheryl Ubelacker
Canadian Press
August 26, 2005
TORONTO (CP) – When Dr. Kellie Leitch returned to Canada from the United States a few years ago, she joined a growing number of Canadian physicians choosing to come back home to practise. And now, the country’s medical brain-drain has been reversed for the first time in 30 years.
For decades, Canada experienced more drain than gain when it came to doctors departing for so-called greener pastures in the United States or countries overseas. But last year, that trend was reversed for the first time, with more doctors returning home than waving bon voyage to the country’s shores, a new report shows.
The report by the Canadian Institute for Health Information (CIHI), released Wednesday, shows that 317 physicians returned to Canada last year compared to 262 who left.
The net surplus is the first since the institute began collecting this data in 1969, and is “a continuation in the trend we have seen since the mid-1990s of a decreasing number of doctors leaving Canada for opportunities in other countries,” said Steve Slade, co-author of the report.
“That’s not happened once on record with our database, and it’s a first, a historical year for Canada,” he said from Ottawa.
The number of doctors who left Canada stood at 420 in 2000; and in 1994, a whopping 771 physicians crossed the border south or left the country’s shores.
Meanwhile, a 24 per cent rise in the number of doctors returning home in 2004, compared with five years earlier, gave Canada’s physician workforce the net gain.
Leitch, who attended the University of Toronto’s medical school, went to California in 2001 to complete her training in pediatric orthopedic surgery.
There were lots of opportunities in the United States, but Leitch said she jumped at an offer from the University of Western Ontario and returned to Canada in late 2002. Since then, she has been named chair chief of pediatric surgery at the Children’s Hospital of Western Ontario.
“The primary reason I returned to Canada . . . is that the Canadian taxpayers paid for my education,” Leitch, 34, said from London. Ont. “There is a huge investment in educating, in particular specialist physicians . . . and it only made sense to me that the people who had made that huge investment should benefit from that specialty they’ve invested in.”
Leitch said there are only about 60 orthopedic surgeons for children in Canada, and even one leaving would have a huge impact on patient care.
But she doesn’t think returning home makes her unique.
“I think there are a lot of Canadian physicians who were trained in Canada who’ve gone to the United States and are looking for a reason to come home. I think it’s because we have a better quality of life in Canada, I think they see there are opportunities here that weren’t available to them in the United States or elsewhere abroad, and that we are a well-supported community.”
The report by the Canadian Institute for Health Information (CIHI), released Wednesday, shows that 317 physicians returned to Canada last year compared to 262 who left.
The net surplus is the first since the institute began collecting this data in 1969, and is “a continuation in the trend we have seen since the mid-1990s of a decreasing number of doctors leaving Canada for opportunities in other countries,” said Steve Slade, co-author of the report.
“That’s not happened once on record with our database, and it’s a first, a historical year for Canada,” he said from Ottawa.
The number of doctors who left Canada stood at 420 in 2000; and in 1994, a whopping 771 physicians crossed the border south or left the country’s shores.
Meanwhile, a 24 per cent rise in the number of doctors returning home in 2004, compared with five years earlier, gave Canada’s physician workforce the net gain.
Dr. Ruth Collins-Nakai, president of the Canadian Medical Association, said the return of some physicians may be related to Canada luring back doctors to head or staff high-profile research institutes at universities across the country.
“I guess we’re somewhat relieved to see there’s a net increase in physicians coming into Canada, although it doesn’t really help us in overall numbers,” lamented Collins-Nakai. “We are more or less treading water in terms of our overall physician supply.”
The CIHI report shows that the number of doctors across the country rose by five per cent between 2000 and 2004 – to 60,612 from 57,803.
But growth in the country’s population kept pace during that period, leaving the number of doctors per 100,000 residents relatively stable – a status quo that has not made it easier for Canadians to find a family physician or get access to a specialist.
Collins-Nakai said hundreds more medical school entry positions are needed – and professors to replace those retiring to teach them – if Canada is to even approach self-sufficiency in achieving a physician workforce large enough to serve all Canadians in a timely fashion.
“In order to accomplish that, the medical schools, which are currently bursting at their seams, are going to need increased resources,” the cardiologist said from Edmonton.
Complicating efforts to ramp up the number of doctors to meet an aging population’s growing demand for both family practitioners and specialists is the concurrent greying of health-care services.
Baldly put, Canada’s doctors are getting older. In 2000-2004, the average age of physicians increased by one year, to 49 from 48. During the same period, the proportion of physicians under age 40 dropped by 13 per cent.
“That’s like our window into the future, where we see a decrease in the number of really quite recent graduates in Canada,” said Slade.
The report also shows that the doctor supply is made up increasingly by women: in 2004, females accounted for almost one-third of physicians, a 10 per cent increase since 2000. Among doctors 40 and under, women made up nearly half in 2004.
But with more female doctors working shorter hours, access to care is not improving for patients, but declining, experts says.
Making matters worse for patients is the expected retirement of more than six per cent of physicians in the next two years, said Collins-Nakai. “And we expect up to one-third of all physicians to be decreasing hours of work.
“Many physicians over the past half or (full) decade have been doing excessive hours of work to provide access to patients,” she said. “And we know we’ve got increased burnout levels among physicians.”
– Here are some highlights from the CIHI report on doctors:
-In 2000, 420 Canadian physicians moved abroad compared to 262 in 2004, a 38 per cent decrease.
-In 2000, 256 physicians returned to Canada compared to 317 in 2004, a 24 per cent increase.
-For the first time since 1969, when statistics were first compiled, more physicians returned to Canada than left the country.
-Between 2000 and 2004, the number of doctors in Canada grew by five per cent, a rate that kept pace with population growth.
-Among the provinces, Alberta and P.E.I. had the largest percentage increase in the number of physicians in the five-year period – up by 19 per cent and 18 per cent, respectively.
-In 2000, there were 188 physicians per 100,000 population; in 2004, there were 189 per 100,000.
-The proportion of family physicians to population rose slightly, while the proportion of specialists dropped between 2000 and 2004.
-During 2000-2004, the number of international medical graduates in family medicine in Canada rose 12 per cent, while specialist graduates numbers fell 9.4 per cent.
-The average age of physicians increased by one year from 2000-2004, to 49.
The Moral-Hazard Myth: The bad idea behind our failed health-care system
By Malcolm Gladwell
The New Yorker
August 29, 2005
At the center of the Bush Administration’s plan to address the health-insurance mess are Health Savings Accounts, and Health Savings Accounts are exactly what you would come up with if you were concerned, above all else, with minimizing moral hazard. The logic behind them was laid out in the 2004 Economic Report of the President. Americans, the report argues, have too much health insurance: typical plans cover things that they shouldn’t, creating the problem of overconsumption.
John Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”
The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”
“The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance,” the Stanford economist Victor Fuchs says. Health Savings Accounts are not a variant of universal health care. In their governing assumptions, they are the antithesis of universal health care.
The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver… ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.
http://www.newyorker.com/fact/content/articles/050829fa_fact
Comment: Having returned from an escape to the Eastern Sierras, I found my email box stuffed with recommendations to read Malcolm Gladwell’s article. I have. You should too.
The Moral Harzard Myth
The bad idea behind our failed health-care system
By Malcom Gladwell
The New Yorker
August 29, 2005
Tooth decay begins, typically, when debris becomes trapped between the teeth and along the ridges and in the grooves of the molars. The food rots. It becomes colonized with bacteria. The bacteria feeds off sugars in the mouth and forms an acid that begins to eat away at the enamel of the teeth. Slowly, the bacteria works its way through to the dentin, the inner structure, and from there the cavity begins to blossom three-dimensionally, spreading inward and sideways. When the decay reaches the pulp tissue, the blood vessels, and the nerves that serve the tooth, the pain starts—an insistent throbbing. The tooth turns brown. It begins to lose its hard structure, to the point where a dentist can reach into a cavity with a hand instrument and scoop out the decay. At the base of the tooth, the bacteria mineralizes into tartar, which begins to irritate the gums. They become puffy and bright red and start to recede, leaving more and more of the tooth’s root exposed. When the infection works its way down to the bone, the structure holding the tooth in begins to collapse altogether.
Several years ago, two Harvard researchers, Susan Starr Sered and Rushika Fernandopulle, set out to interview people without health-care coverage for a book they were writing, “Uninsured in America.” They talked to as many kinds of people as they could find, collecting stories of untreated depression and struggling single mothers and chronically injured laborers—and the most common complaint they heard was about teeth. Gina, a hairdresser in Idaho, whose husband worked as a freight manager at a chain store, had “a peculiar mannerism of keeping her mouth closed even when speaking.” It turned out that she hadn’t been able to afford dental care for three years, and one of her front teeth was rotting. Daniel, a construction worker, pulled out his bad teeth with pliers. Then, there was Loretta, who worked nights at a university research center in Mississippi, and was missing most of her teeth. “They’ll break off after a while, and then you just grab a hold of them, and they work their way out,” she explained to Sered and Fernandopulle. “It hurts so bad, because the tooth aches. Then it’s a relief just to get it out of there. The hole closes up itself anyway. So it’s so much better.”
People without health insurance have bad teeth because, if you’re paying for everything out of your own pocket, going to the dentist for a checkup seems like a luxury. It isn’t, of course. The loss of teeth makes eating fresh fruits and vegetables difficult, and a diet heavy in soft, processed foods exacerbates more serious health problems, like diabetes. The pain of tooth decay leads many people to use alcohol as a salve. And those struggling to get ahead in the job market quickly find that the unsightliness of bad teeth, and the self-consciousness that results, can become a major barrier. If your teeth are bad, you’re not going to get a job as a receptionist, say, or a cashier. You’re going to be put in the back somewhere, far from the public eye. What Loretta, Gina, and Daniel understand, the two authors tell us, is that bad teeth have come to be seen as a marker of “poor parenting, low educational achievement and slow or faulty intellectual development.” They are an outward marker of caste. “Almost every time we asked interviewees what their first priority would be if the president established universal health coverage tomorrow,” Sered and Fernandopulle write, “the immediate answer was ‘my teeth.’ ”
The U. S. health-care system, according to “Uninsured in America,” has created a group of people who increasingly look different from others and suffer in ways that others do not. The leading cause of personal bankruptcy in the United States is unpaid medical bills. Half of the uninsured owe money to hospitals, and a third are being pursued by collection agencies. Children without health insurance are less likely to receive medical attention for serious injuries, for recurrent ear infections, or for asthma. Lung-cancer patients without insurance are less likely to receive surgery, chemotherapy, or radiation treatment. Heart-attack victims without health insurance are less likely to receive angioplasty. People with pneumonia who don’t have health insurance are less likely to receive X rays or consultations. The death rate in any given year for someone without health insurance is twenty-five per cent higher than for someone with insurance. Because the uninsured are sicker than the rest of us, they can’t get better jobs, and because they can’t get better jobs they can’t afford health insurance, and because they can’t afford health insurance they get even sicker. John, the manager of a bar in Idaho, tells Sered and Fernandopulle that as a result of various workplace injuries over the years he takes eight ibuprofen, waits two hours, then takes eight more—and tries to cadge as much prescription pain medication as he can from friends. “There are times when I should’ve gone to the doctor, but I couldn’t afford to go because I don’t have insurance,” he says. “Like when my back messed up, I should’ve gone. If I had insurance, I would’ve went, because I know I could get treatment, but when you can’t afford it you don’t go. Because the harder the hole you get into in terms of bills, then you’ll never get out. So you just say, ‘I can deal with the pain.’ ”
One of the great mysteries of political life in the United States is why Americans are so devoted to their health-care system. Six times in the past century—during the First World War, during the Depression, during the Truman and Johnson Administrations, in the Senate in the nineteen-seventies, and during the Clinton years—efforts have been made to introduce some kind of universal health insurance, and each time the efforts have been rejected. Instead, the United States has opted for a makeshift system of increasing complexity and dysfunction. Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world’s median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland all have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year—or close to four hundred billion dollars—on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy—a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper—has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers.
America’s health-care mess is, in part, simply an accident of history. The fact that there have been six attempts at universal health coverage in the last century suggests that there has long been support for the idea. But politics has always got in the way. In both Europe and the United States, for example, the push for health insurance was led, in large part, by organized labor. But in Europe the unions worked through the political system, fighting for coverage for all citizens. From the start, health insurance in Europe was public and universal, and that created powerful political support for any attempt to expand benefits. In the United States, by contrast, the unions worked through the collective-bargaining system and, as a result, could win health benefits only for their own members. Health insurance here has always been private and selective, and every attempt to expand benefits has resulted in a paralyzing political battle over who would be added to insurance rolls and who ought to pay for those additions.
Policy is driven by more than politics, however. It is equally driven by ideas, and in the past few decades a particular idea has taken hold among prominent American economists which has also been a powerful impediment to the expansion of health insurance. The idea is known as “moral hazard.” Health economists in other Western nations do not share this obsession. Nor do most Americans. But moral hazard has profoundly shaped the way think tanks formulate policy and the way experts argue and the way health insurers structure their plans and the way legislation and regulations have been written. The health-care mess isn’t merely the unintentional result of political dysfunction, in other words. It is also the deliberate consequence of the way in which American policymakers have come to think about insurance.
“Moral hazard” is the term economists use to describe the fact that insurance can change the behavior of the person being insured. If your office gives you and your co-workers all the free Pepsi you want—if your employer, in effect, offers universal Pepsi insurance—you’ll drink more Pepsi than you would have otherwise. If you have a no-deductible fire-insurance policy, you may be a little less diligent in clearing the brush away from your house. The savings-and-loan crisis of the nineteen-eighties was created, in large part, by the fact that the federal government insured savings deposits of up to a hundred thousand dollars, and so the newly deregulated S. &L.s made far riskier investments than they would have otherwise. Insurance can have the paradoxical effect of producing risky and wasteful behavior. Economists spend a great deal of time thinking about such moral hazard for good reason. Insurance is an attempt to make human life safer and more secure. But, if those efforts can backfire and produce riskier behavior, providing insurance becomes a much more complicated and problematic endeavor.
In 1968, the economist Mark Pauly argued that moral hazard played an enormous role in medicine, and, as John Nyman writes in his book “The Theory of the Demand for Health Insurance,” Pauly’s paper has become the “single most influential article in the health economics literature.” Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”
What Nyman is saying is that when your insurance company requires that you make a twenty-dollar co-payment for a visit to the doctor, or when your plan includes an annual five-hundred-dollar or thousand-dollar deductible, it’s not simply an attempt to get you to pick up a larger share of your health costs. It is an attempt to make your use of the health-care system more efficient. Making you responsible for a share of the costs, the argument runs, will reduce moral hazard: you’ll no longer grab one of those free Pepsis when you aren’t really thirsty. That’s also why Nyman says that the notion of moral hazard is behind the “lack of enthusiasm” for expansion of health insurance. If you think of insurance as producing wasteful consumption of medical services, then the fact that there are forty-five million Americans without health insurance is no longer an immediate cause for alarm. After all, it’s not as if the uninsured never go to the doctor. They spend, on average, $934 a year on medical care. A moral-hazard theorist would say that they go to the doctor when they really have to. Those of us with private insurance, by contrast, consume $2,347 worth of health care a year. If a lot of that extra $1,413 is waste, then maybe the uninsured person is the truly efficient consumer of health care.
The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”
For that matter, when you have to pay for your own health care, does your consumption really become more efficient? In the late nineteen-seventies, the rand Corporation did an extensive study on the question, randomly assigning families to health plans with co-payment levels at zero per cent, twenty-five per cent, fifty per cent, or ninety-five per cent, up to six thousand dollars. As you might expect, the more that people were asked to chip in for their health care the less care they used. The problem was that they cut back equally on both frivolous care and useful care. Poor people in the high-deductible group with hypertension, for instance, didn’t do nearly as good a job of controlling their blood pressure as those in other groups, resulting in a ten-per-cent increase in the likelihood of death. As a recent Commonwealth Fund study concluded, cost sharing is “a blunt instrument.” Of course it is: how should the average consumer be expected to know beforehand what care is frivolous and what care is useful? I just went to the dermatologist to get moles checked for skin cancer. If I had had to pay a hundred per cent, or even fifty per cent, of the cost of the visit, I might not have gone. Would that have been a wise decision? I have no idea. But if one of those moles really is cancerous, that simple, inexpensive visit could save the health-care system tens of thousands of dollars (not to mention saving me a great deal of heartbreak). The focus on moral hazard suggests that the changes we make in our behavior when we have insurance are nearly always wasteful. Yet, when it comes to health care, many of the things we do only because we have insurance—like getting our moles checked, or getting our teeth cleaned regularly, or getting a mammogram or engaging in other routine preventive care—are anything but wasteful and inefficient. In fact, they are behaviors that could end up saving the health-care system a good deal of money.
Sered and Fernandopulle tell the story of Steve, a factory worker from northern Idaho, with a “grotesquelooking left hand—what looks like a bone sticks out the side.” When he was younger, he broke his hand. “The doctor wanted to operate on it,” he recalls. “And because I didn’t have insurance, well, I was like ‘I ain’t gonna have it operated on.’ The doctor said, ‘Well, I can wrap it for you with an Ace bandage.’ I said, ‘Ahh, let’s do that, then.’ ” Steve uses less health care than he would if he had insurance, but that’s not because he has defeated the scourge of moral hazard. It’s because instead of getting a broken bone fixed he put a bandage on it.
At the center of the Bush Administration’s plan to address the health-insurance mess are Health Savings Accounts, and Health Savings Accounts are exactly what you would come up with if you were concerned, above all else, with minimizing moral hazard. The logic behind them was laid out in the 2004 Economic Report of the President. Americans, the report argues, have too much health insurance: typical plans cover things that they shouldn’t, creating the problem of overconsumption. Several paragraphs are then devoted to explaining the theory of moral hazard. The report turns to the subject of the uninsured, concluding that they fall into several groups. Some are foreigners who may be covered by their countries of origin. Some are people who could be covered by Medicaid but aren’t or aren’t admitting that they are. Finally, a large number “remain uninsured as a matter of choice.” The report continues, “Researchers believe that as many as one-quarter of those without health insurance had coverage available through an employer but declined the coverage. . . . Still others may remain uninsured because they are young and healthy and do not see the need for insurance.” In other words, those with health insurance are overinsured and their behavior is distorted by moral hazard. Those without health insurance use their own money to make decisions about insurance based on an assessment of their needs. The insured are wasteful. The uninsured are prudent. So what’s the solution? Make the insured a little bit more like the uninsured.
Under the Health Savings Accounts system, consumers are asked to pay for routine health care with their own money—several thousand dollars of which can be put into a tax-free account. To handle their catastrophic expenses, they then purchase a basic health-insurance package with, say, a thousand-dollar annual deductible. As President Bush explained recently, “Health Savings Accounts all aim at empowering people to make decisions for themselves, owning their own health-care plan, and at the same time bringing some demand control into the cost of health care.”
The country described in the President’s report is a very different place from the country described in “Uninsured in America.” Sered and Fernandopulle look at the billions we spend on medical care and wonder why Americans have so little insurance. The President’s report considers the same situation and worries that we have too much. Sered and Fernandopulle see the lack of insurance as a problem of poverty; a third of the uninsured, after all, have incomes below the federal poverty line. In the section on the uninsured in the President’s report, the word “poverty” is never used. In the Administration’s view, people are offered insurance but “decline the coverage” as “a matter of choice.” The uninsured in Sered and Fernandopulle’s book decline coverage, but only because they can’t afford it. Gina, for instance, works for a beauty salon that offers her a bare-bones health-insurance plan with a thousand-dollar deductible for two hundred dollars a month. What’s her total income? Nine hundred dollars a month. She could “choose” to accept health insurance, but only if she chose to stop buying food or paying the rent.
The biggest difference between the two accounts, though, has to do with how each views the function of insurance. Gina, Steve, and Loretta are ill, and need insurance to cover the costs of getting better. In their eyes, insurance is meant to help equalize financial risk between the healthy and the sick. In the insurance business, this model of coverage is known as “social insurance,” and historically it was the way health coverage was conceived. If you were sixty and had heart disease and diabetes, you didn’t pay substantially more for coverage than a perfectly healthy twenty-five-year-old. Under social insurance, the twenty-five-year-old agrees to pay thousands of dollars in premiums even though he didn’t go to the doctor at all in the previous year, because he wants to make sure that someone else will subsidize his health care if he ever comes down with heart disease or diabetes. Canada and Germany and Japan and all the other industrialized nations with universal health care follow the social-insurance model. Medicare, too, is based on the social-insurance model, and, when Americans with Medicare report themselves to be happier with virtually every aspect of their insurance coverage than people with private insurance (as they do, repeatedly and overwhelmingly), they are referring to the social aspect of their insurance. They aren’t getting better care. But they are getting something just as valuable: the security of being insulated against the financial shock of serious illness.
There is another way to organize insurance, however, and that is to make it actuarial. Car insurance, for instance, is actuarial. How much you pay is in large part a function of your individual situation and history: someone who drives a sports car and has received twenty speeding tickets in the past two years pays a much higher annual premium than a soccer mom with a minivan. In recent years, the private insurance industry in the United States has been moving toward the actuarial model, with profound consequences. The triumph of the actuarial model over the social-insurance model is the reason that companies unlucky enough to employ older, high-cost employees—like United Airlines—have run into such financial difficulty. It’s the reason that automakers are increasingly moving their operations to Canada. It’s the reason that small businesses that have one or two employees with serious illnesses suddenly face unmanageably high health-insurance premiums, and it’s the reason that, in many states, people suffering from a potentially high-cost medical condition can’t get anyone to insure them at all.
Health Savings Accounts represent the final, irrevocable step in the actuarial direction. If you are preoccupied with moral hazard, then you want people to pay for care with their own money, and, when you do that, the sick inevitably end up paying more than the healthy. And when you make people choose an insurance plan that fits their individual needs, those with significant medical problems will choose expensive health plans that cover lots of things, while those with few health problems will choose cheaper, bare-bones plans. The more expensive the comprehensive plans become, and the less expensive the bare-bones plans become, the more the very sick will cluster together at one end of the insurance spectrum, and the more the well will cluster together at the low-cost end. The days when the healthy twenty-five-year-old subsidizes the sixty-year-old with heart disease or diabetes are coming to an end. “The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance,” the Stanford economist Victor Fuchs says. Health Savings Accounts are not a variant of universal health care. In their governing assumptions, they are the antithesis of universal health care.
The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver, or who have to keep their mouths closed because their teeth are rotting ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.
State’s health insurance needs intensive care
By David Lazarus
San Francisco Chronicle
Sunday, August 21, 2005
The United States is spending billions of dollars a year — not including the roughly $60 billion annual tab for the war in Iraq — to fight terrorism.
We’re doing this because terrorists hurt people. The especially proficient ones kill people.
But if keeping people out of the hospital (or morgue) is a primary goal of this lavish spending, how do we explain the catastrophe that is the U. S. health care system?
An increasing number of Americans are going without health coverage as our company-sponsored insurance system continues to erode.
Those without insurance, in turn, are skipping visits to doctors and failing to take preventive measures that could keep an illness from becoming debilitating.
These are two of the findings from a report issued last week by the UCLA Center for Health Policy Research. It showed that the number of California adults covered by company-sponsored health plans is steadily falling.
Perhaps even more troubling, spouses and kids of California workers are increasingly losing health insurance as companies cut back on the scope of coverage.
This is California we’re talking about — the wealthiest state in the wealthiest nation on the planet. And our health care system is failing us.
“California’s problems are the problems of the nation,” said Richard Brown, director of the UCLA center and co-author of the newly released study.
“The cost of health care has continued to increase so rapidly it has outstripped by far workers’ increases in salary and the ability of employers to afford it.”
Indeed, companies that once provided health benefits as a routine matter of employee compensation are increasingly offloading costs on workers in the face of double-digit annual price increases.
Average workers, in turn, are increasingly finding it difficult to provide themselves and their families with the coverage they need to ensure well-being.
More than 6 million Californians now lack health insurance. At the national level, the number of uninsured is a staggering 45 million.
That number will only continue to climb as more companies step back from their traditional role as health-insurance provider.
Rick Wagoner, chief exec of General Motors, told shareholders earlier this summer that GM — the nation’s largest private purchaser of health insurance — will spend $5.6 billion this year on health benefits for workers and retirees.
That’s more than the company spends on steel for its vehicles, and translates to an extra cost of $1,500 for every car or truck produced.
“Our $1,500-per-unit health care expense represents a significant disadvantage versus our foreign-based competitors,” Wagoner said. “Left unaddressed, this will make a big difference in our ability to compete in investment, technology and other key contributors to our future success.”
He added: “It is crystal clear that we need to achieve a significant reduction in our health care cost disadvantage and to do so promptly.”
But how do we do that? If universal coverage for all Americans is our goal, and it must be, what’s the use of pouring more money and resources into a system that’s already out of reach of millions of people and breaking the economic backs of employers large and small?
The answer, obviously, is to admit that the employer-based insurance system that came into being during World War II is no longer capable of accommodating the nation’s health care needs.
“It’s time for employers to take a very close look at a single-payer health care system,” said state Sen. Sheila Kuehl, D-Santa Monica. “They need to see that there is a way to control costs while still providing high standards of health care for everyone.”
Kuehl has introduced legislation — SB840 — that would create such a system in California. The bill was approved by the state Senate in May and is now winding its way through the Assembly.
A single-payer system essentially provides health coverage for everyone, based on taxes collected from companies and individuals. There are no extra co- pays or premiums. Anyone can receive treatment from any doctor at any hospital.
“Single-payer is a really good system,” UCLA’s Brown said. “It’s the most effective way to ensure equity and to control health care spending and costs.”
The beauty of Kuehl’s plan is that it would allow California to serve as a proving ground for the rest of the country. Single payer could be introduced and tinkered with here, then rolled out elsewhere.
Canada adopted a similar approach in gradually expanding a single-payer system to all its provinces. It started with Saskatchewan in the 1940s.
The Canadian system isn’t perfect — far from it. Long waits for treatment are a constant complaint.
Nevertheless, nearly two-thirds of Canadians surveyed still give their health care system a grade of A or B, according to poll results released last week.
When was the last time you spoke with a working man or woman who gave similarly high marks to the U.S. health insurance system?
If anything, the experiences of Canada, Britain and other developed nations that have pursued single-payer systems can show the United States both what works and what doesn’t in shaping a program to meet this country’s needs.
Whatever else, the UCLA study shows that if we don’t do something soon to remedy things, more Americans will go without coverage with each passing year.
“I think we’re finally getting to a point where a significant portion of the business community will stand up and say that it can’t take it anymore,” said Brown. “Maybe that’s when we’ll see something get done.”
David Lazarus’ column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU’s “Mornings on 2.” Send tips or feedback to dlazarus@sfchronicle.com.
Time for a healthy divorce from employment
By Dr. Susanne King
Berkshire Eagle
Tuesday, August 23, 2005
LENOX – “Employers bracing for health bills” cried the headline in The Berkshire Eagle earlier this month. For the past five years, employee health plan costs in Berkshire County and elsewhere have been rising at double digit rates, and the same is predicted for the coming year. For some small business owners, the rate of rise in health insurance prices has been even steeper. A friend who is a self-insured small business woman told me her insurance tripled over the past five years. She said if her premiums continue to rise, she will be unable to afford health insurance.
Cities and towns have also been struggling to pay for health care for municipal employees, which has led to conflict. Unable to afford the rising cost of health insurance, cities and towns are asking their employees to pay for a greater percentage of the cost of their health care. Property owners are affected as well, since property taxes must be increased to pay for health insurance for municipal employees.
The New York Times reported last year that “health premiums are sapping corporate balance sheets even more than the rising cost of energy.”
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Take the case of General Motors. In 2003, GM’s cost to build a midsize car in the United States included $1,400 for health insurance. However, in Canada, GM was able to manufacture a car for $1,400 less than in the U.S. because Canada has a single payer national health insurance program rather than private insurance tied to employment.
Single payer means that the government collects and dispenses health care funds. In other words, the government is the “single payer” and insurance companies are eliminated. Canada’s single payer, national health care system covers everyone regardless of employment. In a single payer system, huge savings occur because administrative expenses are approximately 3 percent compared to 39 percent when hundreds of American insurance companies are involved. Single payer health care would be like our current Medicare system, except everyone would be covered, regardless of age.
A joint letter signed by the top executives of the Big Three automakers (GM, Ford, and Daimler/ Chrysler) in Canada, said that in addition to providing “essential and affordable health services for all” single payer “significantly reduces total labor costs compared to the cost of equivalent private insurance services purchased by U.S. -based automakers,” and “has been an important ingredient in the success of Canada’s most important export industry (automobiles).”
Canadian national health insurance saved Canadian automakers $4 per hour per worker in 2003 (in U.S. dollars). “High health care costs have created a competitive gap that’s driving investment decisions away from the U.S.,” said the vice chairman at Ford.
Our economy is hurting. In 2003, General Motors spent $4.5 billion on health care, Ford spent $2.8 billion, and Daimler/Chrysler spent $1.4 billion. Every business, big or small, is hurting. Meanwhile, the number of workers insured by their employers is shrinking, and the remaining insured workers are being asked to contribute more to their health care costs, sharing premium costs and having higher deductibles and co-pays.
Employees are hurting. The employer-based private health insurance system in the United States is an unhealthy marriage between employers and private insurance companies. Our system was created after World War II, when wages were frozen, and health care benefits were provided instead of raising wages.
This system has lumbered along, getting more and more unwieldy and expensive, dragging down the competitiveness of our country in a global economy, while workers in every other industrialized nation have national health insurance administered by their governments.
Private health insurance companies are responsible for this unhealthy marriage in our country, which spends twice as much for health care as any country in the world, and yet has poorer health care outcomes than other industrialized countries. What has developed is a system in which our struggling businesses and towns subsidize the profits of insurance companies and drug companies.
In order to maintain their enormous profits, these companies raise the specter of “socialized medicine,” with visions of lines and inferior care. But single payer is not socialized medicine, because health care itself would be provided by privately-owned hospitals and doctors’ offices. The only change would be in the funding and administering of health care by a “single payer” (the government), rather than the current hundreds of insurance payers. The government already pays for more than 60 percent of health care, including Medicaid, Medicare, and the Veterans Administration health care system, as well as paying for public employees’ private health care coverage and giving tax subsidies to private insurance companies.
Government health care spending will increase with the boondoggle that is coming with the privatization of the prescription benefit for Medicare. Why not eliminate the middle men, and use the public funds that are now going through private insurers to actually fund public coverage? Massachusetts has everything to gain by embracing single payer health care.
If towns did not have to subsidize health insurance and drug company profits by paying for health care coverage for employees, they could focus on paying for education, which has suffered from cutbacks in funding because of rising health care costs. And how many business owners and employees matched the salary and benefits of the not-for-profit Massachusetts Blue Cross Blue Shield CEO in 2002, who made more than $3 million?
Automakers have moved manufacturing to Canada, where they take advantage of the single payer national health care system to increase their profits. If we were to have single payer health care in Massachusetts, our system would be an incentive for businesses to move to our state, where the costs of doing business would be lower. What would you save in your business if you did not have to pay for health care insurance premiums for your employees?
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Now is the time to legislate a new system that will divorce health insurance from employment. There are four bills addressing health care reform in the Massachusetts legislature. Only one bill, the single payer Massachusetts Health Care Trust, S. 755, would free businesses, workers and our economy from this tyrannical alliance of health care insurance and employment.
S. 755 is also the only universal and affordable bill. Now is the time to legislate a single payer health care system for our state.
Healthcare Is Migrating South of the Border
California employers are steering Latinos to Mexico, where care is less costly but uneven
By Richard Marosi, Times Staff Writer
Los Angeles Times
TIJUANA — Thousands of Latinos who live near the border are taking advantage of a benefit increasingly offered by their U.S. employers: cheaper healthcare in Mexico.
About 160,000 California workers — farm laborers as well as working–class Latinos employed at hotels, casinos, restaurants and local governments in San Diego and Imperial counties — are getting their annual checkkups and having surgeries through health networks south of the border, insurers say.
The arrangement is cheaper for both employers and employees. In Mexico, healthcare costs are about 40% to 50% lower than in California, freeing some employers to offer services that they couldn’t otherwise afford.
“It’s a win-win situation for me. I’m able to offer it to everybody, and my premiums went way down,” said Mark Holloway, part owner of a department store in Calexico, Calif., who said he couldn’t afford health insurance for his 50 employees until he enrolled them in a cross-border plan.
He said he can sign up several employees, each at about $100 monthly, for about the same price as one employee in a U.S. plan.
Employees enjoy lower premiums and co-payments, typically $5, and the comfort and convenience of describing their aches and pains in Spanish to doctors who, they say, tend to take more time with them.
“The rate is good, the service is good,” said David Ouzan, a city councilman in Calexico, where about a third of the city’s workers use dental and medical clinics in Mexicali, just across the border. “I myself have used dentists in Mexico.”
Still, the trend has generated some misgivings among doctors and consumer advocates north of the border.
Some worry about the quality of care in Mexico and limited regulatory control.
Others say the cross-border plans represent a sad commentary on the limited access that immigrants and the working poor have to treatment in California.
They represent a “positive turn of events for cross-border health coverage … but are another reminder about how sick our health system is in thhe U.S.,” said Dr. Robert K. Ross, president of the California Endowment, a healthcare philanthropy.
Mexico has long been a low-cost alternative for thousands of people — many of them uninsured — who price-hunt among clusters of storeffront clinics and small hospitals in Tijuana and Mexicali for treatment they can’t afford in the States.
And some cross-border health plans have operated since at least the 1950s, when Imperial Valley farmers started offering coverage to migrant workers.
But the emergence in the last five years of cross-border HMOs, which must be licensed by the state of California, signals the growing acceptance of Mexican doctor networks by mainstream employers and insurers in the United States.
HMOs Cover 36,000
So far, three HMOs, two in the U.S. and one in Mexico called SIMNSA, are providing coverage for employees of California companies, covering 36,000 workers and their dependents, according to statistics provided by the insurers. About two-thirds of those employees are covered by the U.S. insurers, Blue Shield of California and Health Net Inc. (Health Net enrollees can access clinics on either side of the border.)
Since 2000, the number of nonagricultural employers in California offering such health plans has jumped from 165 to about 700.
Employee enrollment in farming association-sponsored plans in Mexico is far greater, though, reaching about 124,000, according to the plans. Though these are not HMOs, they rely on networks of Mexican doctors and hospitals.
Enrollees are typically Mexican citizens legally employed at U.S. companies, either living in Mexico or in the U.S. Many earn only $5 to $7 an hour and could not afford U.S.-based plans. But others are Mexican Americans, some of them in executive-level positions.
“Employers are really surprised a bit by the quality, the cleanliness,” said Peter Duncan, a vice president at Blue Shield of California, whose cross-border program is called Access Baja. “Often they had visions of squalor. It isn’t Cedars-Sinai. But they find that the basic quality of care is really there.”
Mexican facilities that are part of HMO networks serving U.S. companies are audited by the HMOs themselves for sanitary conditions, infection control policies and staff training levels, as required by the California Department of Managed Health Care. They are not directly evaluated by state regulators. Physicians must be licensed in Mexico and maintain a good standing in the medical community.
Still, some medical experts are concerned about what they describe as a wide variation in quality south of the border.
Though comparing the two systems, with their differing standards and philosophies, is difficult, doctors on both sides of the border say the Mexican regulatory system is lax, and doctor training not as rigorous as in the U.S.
In Mexico, doctors typically need six years of schooling; in the U.S., a physician’s education can take eight to 11 years, including college, medical school and possibly a residency training program.
“High-quality [healthcare] does exist in many places,” said Dr. Michael Rodriguez, a UCLA professor familiar with the border region, but “sometimes there are places that you’d wonder whether you would want to take a dog for treatment, let alone a person…. My guess and my hope is that HMOs are veery [discriminating] who they work with.”
Some consumer advocates say the audits done by HMOs themselves potentially create a conflict of interest. And they note that when complaints surface, the state may not have the jurisdiction to thoroughly investigate them. Mexican doctors, for instance, are not subject to regulation by the Medical Board of California.
Medical care in Tijuana, however, has generally improved since 1991, when Mother Teresa fell ill there and had to be taken to San Diego for treatment, said Patricia Aubanel, a U.S.-trained cardiologist who has performed heart surgeries in both countries.
Disreputable clinics touting miracle cancer cures or cut-rate cosmetic surgery still draw thousands of Californians, but a cottage industry of modern clinics and hospitals has developed in recent years that treats ailments ranging from colds to heart disease.
Insurers, employers and many border medical experts insist that the Mexican plans offer an acceptable level of care to a population that prefers healthcare in Mexico, even when offered plans in California.
But for some Latinos along the border, any plan is an improvement.
They are more likely to lack heath insurance than any other demographic group, according to the National Hispanic Medical Assn., and one of the draws of these cross-border plans is that they are a bargain.
Monthly premiums average about $100 for individuals and $350 for families in Blue Shield of California’s Access Baja plan. By contrast, the average monthly premium for California HMO plans was $261 for singles and $721 for families, according to a 2004 survey of employers by the California Healthcare Foundation.
Cross-border programs “seem to be fulfilling an important need, providing quality … healthcare services for very specific populations,” said Evaa Moya, executive director of the U.S. section of the U.S.-Mexico Border Health Commission.
Most cross-border enterprises function like California healthcare plans. Enrollees choose a doctor in Mexico for routine care. In emergency or urgent-care situations they can go to the nearest hospital or clinic in California or Mexico.
Participating employers include San Diego County’s landmark Hotel del Coronado, several manufacturing companies and retailers, and local governments such as El Centro’s Central Union High School District.
In Mexico, some medical offices brim with state-of-the-art equipment. Hospital signs direct patients in English and Spanish. Physicians in those offices say many of their colleagues boast degrees and training from top universities in the U.S. and Mexico.
Tijuana’s rapid population growth has fueled a mini-boom in hospital construction, drawing well-trained doctors from Mexico City and the U.S., say experts in both countries.
Technology Compared
Many facilities’ technology is comparable to that in the U.S., said Dr. Jose Hernandez Fujigaki, a U.S.-trained cardiologist who has performed heart surgery in National City, near San Diego, and, for a fraction of the cost, at the hospital he owns in Tijuana, Centro Medico Excel.
“We’re catching up,” said Fujigaki, adding that the Tijuana hospital can handle almost any surgery except skin grafts and organ transplants.
At Excel’s classroom-size main operating room, a horse trainer was recently wheeled in for a hernia operation. Three nurses in crisply pressed hospital garb spent several minutes meticulously assembling the instrument tray.
The team of three doctors made a small incision, inserted a small scope connected to a special camera called a laparoscope and repaired the man’s abdominal wall. Several visitors watched the procedure on television monitors from the observation room overhead.
Dr. Ruben Flores Diaz said the surgery, along with open-heart and other complex procedures, have been performed hundreds of times at Excel.
“This afternoon, he will leave … and a week from now he’ll be back wwith his horses,” said Flores Diaz, a general surgeon.
Excel’s charges are a fraction of those at U.S. hospitals. The daily charge for room and care in Excel’s intensive care unit is about $1,200. At Scripps Clinic, a large hospital in San Diego, the cost is about $4,000.
Personal Touch
Part of what draws patients south of the border is the very different medical culture. In California, some Latino patients say, care takes longer to get and is not rendered with as personal a touch.
These enrollees, who have received healthcare in both countries, say the U.S. system is too bureaucratic and hurries them out the door.
“Over there [in San Diego], we wait for more than half an hour and they just give us a Tylenol,” said cross-border plan member Guadalupe Briseno, who accompanied her 15-year-old son, Jorge, to the Tijuana clinic of Dr. Teresa Figueroa Garcia.
Garcia, 52, a soft-spoken family practitioner, is one of about 73 doctors in Tijuana affiliated with Access Baja.
Garcia, who shares her suite of offices with her husband, an internist, consults with patients in her office before treating them in an adjoining examination room.
She said she sees about seven patients daily. American doctors, by comparison, may see several times that, according to doctors north of the border.
Rosalia Serratos of Brawley, Calif., couldn’t afford insurance before her husband was hired three years ago at an Imperial Valley farm.
In years past, the family would seek treatment only in emergency rooms.
Now, their Access Baja plan enables them to go to Mexicali doctors, and in emergencies, U.S. doctors. The family believes that it can take advantage of the best from both countries.
Earlier this year, Serratos’ 3-year-old son, Saul, almost drowned in a pool accident and had to be airlifted to San Diego.
U.S. doctors, she said, saved her son’s life.
But for routine care she prefers taking him and her 9-year-old daughter to Mexicali, 25 miles away, where she says the clinics have shorter waits and more attentive doctors.
“I like the way they treated my son in San Diego. They never left him alone,” said Serratos, referring to the near-drowning. But for regular care, she added, “I like going to Mexico.”
Jose Rangel, a San Diego construction worker, said finding a good doctor to treat his lower-back pain was a problem in both countries.
In California, he would wait weeks for an appointment that lasted just a few minutes, he said. The doctors, he said, prescribed an assortment of drugs that only temporarily eased the pain.
In Mexico, the first physician he saw took X-rays and recommended surgery, but Rangel didn’t trust him because he didn’t take time to explain why.
“In Mexico, there are bad doctors just like here,” said Rangel, whose wife and two children also visit Mexican physicians. “It’s like everything else. It’s all about getting a good recommendation.”
Rangel ended up seeing Dr. Felipe Tovar Vasquez, a slim, middle-age back specialist for the Access Baja plan who extracted Rangel’s herniated disc and fused two vertebral bones. The operation was so successful that Rangel recommended the same procedure and doctor to his brother.
“I ended up well, thank God. I was walking two days after the surgery,” said Rangel, who can now painlessly hoist cabinets at his current job.
Tovar, a graduate of Mexico City’s prestigious Universidad Nacional Autonoma de Mexico, said Rangel was one of hundreds of people he had helped. His training and skills, he said, are the equal of U.S. doctors’.
The only difference, he said, is “a lot of money.”
Registered Nurses’ Association of Ontario – Open letter to the Ontario Medical Association
TORONTO, Aug. 17 /CNW/ –
Dr. Gregory Flynn
President
Ontario Medical Association
Jonathan Guss
Chief Executive Officer
Ontario Medical Association
August 17, 2005
Dear physician colleagues,
Ontario nurses have been following the deliberations at the 138th annual meeting of the Canadian Medical Association with much concern. While we were heartened to hear that delegates showed strong support for access to medical care based on need, not ability to pay, we were dismayed that CMA members failed to reject a parallel, investor-driven, for-profit system. The CMA squandered an opportunity to show Canadians that it is committed to continue to put in the time and effort to rebuild and reform our universal, publicly funded and delivered health-care system. That would have shown as much common sense as courageous leadership, and the Registered Nurses’ Association of Ontario would have saluted it. Instead, we are saddened that two-thirds of the delegates rejected a motion calling on doctors to denounce a parallel health-care system as a way to deal with long waiting lists.
As registered nurses working alongside you on the front line of health-care delivery, we are well aware that our system has problems. Evidence and experience from other jurisdictions shows, however, that those problems will only deepen and grow if we increase the role of investor-driven, for-profit health insurance and health delivery in our system. Investor-driven insurance and businesses are already siphoning physicians, nurses, resources and support away from the public system, privileging those who can afford to pay for private health care.
There is little doubt there are those who will benefit by linking profits with illness and suffering. But the most vulnerable people in our community, those who have the least resources and are most likely to need health care, have the most to lose if we allow our single-tier, publicly funded system to be slowly but surely starved of resources and respect. We know that private insurers will “skim” the more profitable cases and burden the public system with chronic and catastrophic care. And anyone who is less than healthy and/or less than wealthy is at risk to receive compromised access to health-care services in a for-profit insurance market. The Canadian Medical Association’s own poll recently showed that 58 per cent of physicians felt that most of their patients will either not qualify or be unable to afford private insurance.
Organizations like the CMA are careful to shun American-style health care, and have turned instead to countries such as Sweden, Britain and Germany for guidance. But this advice ignores the realities of an increasingly integrated North American economy, as well as our formal commitments under NAFTA which may open the door to U.S. corporations if we expand for-profit health care in Canada.
At the same time, the CMA fails to learn from those very jurisdictions it cites. For example, British doctors, representing the National Health Service Consultants’ Association, sent an open letter to the incoming CMA president urging Canadian doctors to “learn from our country’s mistakes and reject private care and other market-style policies.” The letter warns that instead of “saving” public health care, privatization has undermined the National Health Service, raising costs and undermining quality.
Nurses are not interested in protecting the “status quo;” they are unified in their interest to protect the public by strengthening and expanding medicare for all Canadians. As extensive evidence from the Romanow Commission has shown us, the best solution is to “build on our values” by making the public system even more responsive, efficient and accountable to Canadians. Now is the time to accelerate the positive reforms that are taking root with support from a series of Health Accords. These reforms will strengthen public hospitals, community health, access to pharmaceutical drugs, and healthy living. That reform must pick up momentum — boosted by Canada and Ontario’s solid financial performance — but it must serve the needs of all Ontarians, not just those with deep pockets and good health.
Nurses call on their physician colleagues to avoid the mistakes of the past, such as the Saskatchewan MD strike of 1962 that tried to stop the implementation of Saskatchewan’s Medical Care Act — the precursor to medicare. It is unfortunate that four decades later, delegates at this annual meeting have decided not to take a strong stand against for-profit health care, ignoring the will of the vast majority of Canadians. While a parallel, investor-driven system might financially benefit some individual doctors, strengthening the for-profit motive in health care will fray our social fabric and jeopardize quality health care.
As the CMA conference wraps up today, we ask the Ontario Medical Association to show some leadership by taking a strong stand against that which would weaken our health-care system — private health insurance, two-tier, cheque-book medicine — and a strong stand for what will improve it: accelerated health-care reform that improves the quality and access of our health care while strengthening Canadians’ confidence in it.
Respectfully,
(signed)
Joan Lesmond, RN, BScN, MSN
President
(signed)
Doris Grinspun, RN, MSN, PhD (cand), O.Ont.
Executive Director
Cc:
Dr. Ruth Collins-Nakai, President of the Canadian Medical Association
Hon. Dalton McGuinty, Premier of Ontario
Rt. Hon. Paul Martin, Prime Minister of Canada
Hon. George Smitherman, Ontario Minister of Health and Long-Term Care
Hon. Ujjal Dosanjh, Minister of Health
Dr. Deborah Tamlyn, President of the Canadian Nurses Association
For further information: please contact: Sine MacKinnon, Director of Communications, Registered Nurses’ Association of Ontario, Phone: (416) 599-1925, 1-800-268-7199 ext. 209, Cell: (416) 829-6657, smackinnon@rnao.org
http://www.newswire.ca/en/releases/archive/August2005/17/c0949.html