PNHP

Cheapest Health Insurance Found Out West

Cheapest Health Insurance Found Out West

SmartMoney.com
December 7, 2004
Cheapest Health Insurance Found Out West
By Stacey L. Bradford

On Tuesday, eHealthInsurance.com, an online insurance broker, released its first national survey ranking the most affordable cities for health insurance. The results were striking.

According to eHealthInsurance, families in Kansas City can purchase comprehensive coverage for just $171.86 per month… Despite a general high cost of living, eight California cities ranked among the top 10 most affordable places for health insurance.

The most expensive health care is found on the East Coast. According to the survey, a family shopping for health insurance in Boston would pay $767.30 a month in premiums; in New York City, $712.77 a month.

Premiums are much higher in places like Massachusetts and New York since insurers must comply with a number of state mandates that raise the overall cost of providing health care. These mandates include what the industry calls “guaranteed issue” (a health plan can’t reject an applicant based on health status) and community rating (a health plan can’t arbitrarily raise an individual’s rates).

In conducting this survey, eHealthInsurance considered only those plans that offer comprehensive benefits, including annual preventative exams, lab and x-ray services, emergency-room treatments and hospitalization. Each plan also includes an annual deductible of no more than $2,000 in addition to a 20% coinsurance. The maximum out-of-pocket costs ranged between $4,000 and $10,000 per year.

http://www.smartmoney.com/bn/index.cfm?story=20041207014549

Comment: Although this would appear to be merely an interesting article on geographical variations in premium pricing, it is actually a loud alarm, warning of the catastrophe ahead once the health policies of the Bush administration are enacted.

A major component of Bush’s proposal for an ownership society is to place control of health care costs in the hands of the owners of the funds, who are the patient-consumers. Individually owned health savings accounts (HSAs) are a major part of that strategy. But it is recognized that such accounts would not cover major, catastrophic health care costs. The need for high deductible health insurance (HDHI) to cover catastrophic expenses is obvious.

A strategy of the ownership society is to establish policies that would encourage individual purchase of HDHI. The tax deductibility of employer-sponsored plans would be terminated, and premiums for individual HDHI would become deductible on individual tax returns. Thus policies would encourage a system in which routine expenses are paid out of individual accounts and catastrophic expenses are covered by the individual’s own HDHI.

Numerous previous messages have explained why HSAs are totally unsatisfactory for ensuring affordable access to care for individuals with significant health care needs, whether acute or chronic. But what about these HDHI plans that would cover 100% of the catastrophic costs after the deductible is met?

Supporters of HDHI claim that catastrophic coverage is very inexpensive, and they frequently cite the eHealthInsurance.com website as proof. After all, a family of four in Kansas City can purchase a comprehensive plan for only $171.86 per month. This sounds like a very good deal. What is being left unsaid?

One issue is that the depiction of these plans as covering 100% of the expenses after the deductible is dishonest. These plans are managed care PPO plans with restricted provider lists, significantly limiting choice in providers. Both the deductible and the maximum out-of-pocket expenses are misleading because many health care expenses are excluded as qualifying expenses. Individuals who obtain care outside of the restrictive provider lists are heavily penalized financially, and most of the penalties do not apply to the deductible nor to the out-of-pocket maximum. Further, 20% coinsurance is not the same as a co-payment. 20% of tens of thousands of dollars in charges is quite different from a $25 co-payment. For individuals with high health care costs, these HDHI plans leave individuals with much greater financial exposure that the deceptive depictions would suggest.

Another crucial issue is the shift from employer-sponsored plans to individual coverage. In many states, underwriting provisions allow the insurers to exclude from their plans individuals who have significant health care needs. By selling their plans exclusively to healthy individuals, premiums can be kept quite low because of low rates of utilization. Some states even allow insurers to raise premiums selectively for those individuals who do develop problems and increase their utilization.

To avoid this problem of denying coverage for those with needs, some states have improved equity by establishing guaranteed issue and community rating. Guaranteed issue assures that everyone would be covered regardless of
preexisting disorders, and community rating prevents insurers from charging different premiums based on varying health care needs. But once you establish equity, premium levels then reflect the true costs of pooling risk, as the rates in Boston and New York demonstrate. Cheap insurance that truly pools risk does not exist.

If HDHI is to become the national standard, as the Bush team would have it, then it must be recognized that those with significant needs must be included. 90% of the population uses only 28% of health care. We could cover them with very low premiums if we isolated them in a separate risk pool. But once you add the other 10% that utilizes 72% of health care, the premium per beneficiary skyrockets. Placing the 10% with needs in a separate insurance risk pool would require a premium of about $44,000 per beneficiary. But think of the pride that these individuals would have in owning their own high deductible PPO policy.

HDHI that covers those who don’t need it, and leaves out those who do, is not insurance. It’s fraud. It shouldn’t be our national policy.

Means-Testing In Medicare

Health Affairs
December 8, 2004
Means-Testing In Medicare
By Mark V. Pauly

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 introduces means-testing of premiums and benefits in two ways. It will means-test the Part B premium, setting higher premiums for better-off seniors. More importantly, it will offer much more generous drug benefits, at low or zero premiums, to lower-income beneficiaries. This paper argues that additional means-testing could improve Medicare’s financial picture. It proposes a strategy in which future Medicare beneficiaries with higher incomes will pay for cost-increasing but quality-improving new technology, possibly with prefunding that begins before retirement.

Medicare as we know it today cannot be sustained…

The upper middle class, to some extent, live off their wealth after they retire, instead of cutting consumption close to the poverty level. The primary type of wealth for retirees is housing wealth; more than half of elderly households have housing wealth in excess of $100,000; they own their own homes, often with a paid-up mortgage. In contrast, nonhousing financial wealth is low among the elderly and is highly correlated with income, with only about 10 percent having nonhousing wealth in six figures. The primary consumption-increasing aspect of the situation for many seniors is being able to live nearly tax-free in a mortgage-free house, so housing costs are low. It is this extra consumption “cushion” that could help pay for access to new technology.

…these actions may require that the majority of the population that is not poor accept the responsibility of explicitly paying for its access to new technology, through partial income conditioning. Far from being a threat to Medicare as we know it, means-testing may be one of the few ways to preserve the program’s generous funding and access, without across-the-board “brute rationing,” that we all want to be able to anticipate in retirement.

http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.546/DC1

And…

Health Affairs
December 8, 2004
Perspective: Medicare Means-Testing: A Skeptical View
By Marilyn Moon

In response to claims that Medicare is unsustainable over time, Mark Pauly has suggested a means-testing approach as a solution to its financing problems. To obtain enough resources in this way, however, it is necessary to ask middle-class beneficiaries to pay much more for their health care, by subjecting them to vouchers. The spending limits Pauly suggests are arbitrary and would likely place an untenable burden on beneficiaries with modest incomes. A better approach to financing would be to examine the ability of both taxpayers and beneficiaries to pay in the future-likely resulting in a different outcome.

Pauly’s premise depends on three sets of assumptions: (1) that it is feasible to limit insurance to cover only existing technology, (2) that there are enough wealthy older Americans to make this means-testing exercise worthwhile, and (3) that society is unwilling to help pay for an aging population. As argued above, the first two assumptions are highly questionable, since Pauly would have to ask modest-income seniors to pay very high costs over time based on an arbitrary formula whose meaning would be hard to fathom by those affected. But even more important, one can only hope that willingness to pay is based on something beyond the assertion of no more taxes.

http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.558/DC1

Comment: Medicare covers an average of only one-half of the health care expenses for the typical Medicare beneficiary. The out-of-pocket financial burden is already great for those with significant health care needs.
And
most of them have non-housing “wealth” of under $100,000, which is expected to last for the remainder of their lives.

Mark Pauly’s numbers on income levels that would be appropriate for means testing are confusing, but he suggests that he would include about 40 to 60 percent of retirees, which would include those over 300% of the poverty level ($28,000 for an individual or $37,000 for a couple). With his background in economics, you would think that Pauly might squirm a little bit if he faced the prospect of having to help fund his own high tech medical care with less than $100,000 in the bank and a pension of $28,000.

Mark Pauly is already famous for advocating for greater patient cost sharing in order to avoid the “moral hazard” of accessing more health care services merely because they are covered by insurance. Unfortunately, cost sharing is a blunt instrument that reduces access to beneficial services by making them unaffordable for many. Means testing of Medicare beneficiaries prior to funding access to high tech medical services would seem to have the same blunt impact that would make technologically advanced care unaffordable for many.

Allowing Mark Pauly to play a role in health care reform seems to me to be a much greater moral hazard than providing adequate insurance coverage for those with genuine health care needs.

————————————————————————————-
Message: 2
Date: Thu, 9 Dec 2004 08:14:56 -0800
From: “Don McCanne”
Subject: qotd: Pauly and Moon and the truth behind means-tested

kaisernetwork.org
HealthCast
12/8/2004
Means-Testing in Medicare
An interview of Mark Pauly and Marilyn Moon by Larry Levitt, editor-in-chief, kaisernetwork.org

Mark Pauly, Ph.D., professor, health care systems, Wharton School, University of Pennsylvania:

“The real problem with Medicare is not so much the future spending growth, but the fact that it is financed through the tax system.”

Marilyn Moon, Ph.D., vice president and director of the health program, American Institutes for Research:

“I think … that when we have to make tough choices, we should look at whether people should pay more. But I don’t think that the price of holding taxes exactly where they are should be borne solely by people who are really firmly middle and lower middle class seniors.”

“I think to call thirty-thousand-dollar-a-year households as being well off and able to bear a substantially higher burden that over time will lend them to be spending half or more of their income on health care is not the right approach. I think that this is another example of where people in their enthusiasm to avoid higher taxes can go overboard in the other direction.”

For the audio of this interview:
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1326

Comment: Yesterday’s message commented on the carefully written Health Affairs articles by these two authors. But it is interesting to see how a live interview can get down to the real issues that are otherwise buried in the rhetoric of erudite articles.

The Disparate Consensus on Health Care for All

By Steve Lohr
Published: December 6, 2004
The New York Times

N Washington, the phrase “universal coverage” is rarely mentioned as the way to provide health insurance for the 45 million uninsured Americans. It evokes memories of the Clinton administration’s sobering failure to forge a national health care plan. Yet among health care experts there is a surprising consensus that the United States must inevitably adopt some kind of universal coverage.

“Politically, it’s like the electrified third rail on the subway – no one wants to touch it,” said Margaret O’Kane, president of the National Committee on Quality Assurance, an independent group that seeks to improve the quality of health care.

But health care experts contend that the issue must be addressed. Their policy proposals vary widely, and the proponents of universal coverage are as different as Dr. William W. McGuire, chief executive of one of the nation’s largest health insurers, and Dr. David Himmelstein of the Harvard Medical School, who recommends eliminating big insurers like Dr. McGuire’s company, the UnitedHealth Group.

Whatever their differences, they do agree that moving toward universal coverage would surely save lives and maybe dollars as well. A report this year by the Institute of Medicine of the National Academy of Sciences found that the uninsured are sick more often than the insured and likely to die younger, resulting in an estimated 18,000 additional deaths a year.

The uninsured receive medical care, but often when it is most expensive – acute care at hospitals after emergencies instead of regular checkups and other preventive care. And the uninsured pay only 35 percent of their own medical bills, according to the Institute of Medicine report. Most of the rest is paid by taxpayers through subsidies to hospitals and clinics.

Any plan for universal coverage must answer at least three basic questions: Will the move to national coverage follow an incremental, step-by-step path or require drastic change? What role will the government play? What should be covered under a universal system?

Dr. Himmelstein, an associate professor at the Harvard Medical School, advocates a fairly sweeping overhaul of health care in America by moving to a single-payer system run by the government. The nation, he said, can no longer afford the costs of bureaucracy in the American system.

Dr. Himmelstein was a co-author of a study last year, published in The New England Journal of Medicine, that found that administrative costs represented 31 percent of total health care spending in the United States, about double the proportion in Canada, which has a single-payer system.

The culprits, in Dr. Himmelstein’s view, are all the middlemen – chiefly insurers – tussling with doctors, hospitals and nursing homes over bills and reimbursements. “Health care has become a spectator sport with this huge, costly bureaucracy watching over us,” he said.

About one million of the workers in the system, Dr. Himmelstein said, are doing unneeded administrative work that could be eliminated. The savings from moving to a single-payer system, he estimated, would be roughly $375 billion a year. “That allows you to cover everyone,” he said.

The single payer, Dr. Himmelstein suggested, would be a pumped-up Medicare with greater buying power to bargain hard with suppliers like pharmaceutical makers, to control drug costs.

Not surprisingly, Dr. McGuire of UnitedHealth opposes the single-payer formula. “The key issue is not who is paying, but what you are paying for,” he said. “I think we should have mandatory insurance. It should be based on the concept of an essential benefit. Guided by medical science, we should decide what is essential and provide it.”

The essential package, Dr. McGuire said, should cover hospital care. It should also promote healthy lifestyles and cover preventive care so that people with high blood pressure or high cholesterol, for example, would be less likely to develop heart disease, which is not only debilitating for the patient but also costly to treat.

Preventive care need not be expensive, Dr. McGuire said. For example, there are low-cost generic drugs that are equally effective in most cases – statins for lowering cholesterol and beta blockers for high blood pressure – that cost pennies per pill instead of the dollars charged for brand-name drugs still covered by patents.

If a person is employed, his or her employer would have to pay for the essential benefit, according to Dr. Maguire. Self-employed people, or others who are financially able, would pay for their own insurance, and for everyone else, the obligation would fall to the federal government or the states.

Business Roundtable CEOs cite health care costs

Business Roundtable
Press Release
December 1, 2004
Business Roundtable Releases December CEO Economic Outlook Survey

Business Roundtable is an association of chief executive officers of leading corporations with a combined workforce of more than 10 million employees in the United States and $4 trillion in annual revenues.

In the annual question about challenges to growth, CEOs cited health care costs as the greatest cost pressure to Corporate America…

“In 2005, Business Roundtable CEOs will work to alleviate the costs that keep our economy from reaching its potential and hurt the competitiveness of U.S. businesses,” said (Hank McKinnell, chairman of Business Roundtable and chairman and CEO of Pfizer Inc.). “In addition to a focus on deficit reduction and entitlement reform, a top priority will be seizing opportunities to improve the health care marketplace and mitigate soaring costs.”

http://www.businessroundtable.org/newsroom/Document.aspx?qs=5866BF807822B0F1AD7468422FB51711FCF50C8

Comment: Considering the source of this press release, questions inevitably arise:

Since the health care industry is a major sector of our economy, isn’t growth in the health care business sector a positive development for the economy?

If other sectors of the business community object to the costs of their employee health benefit programs, shouldn’t consideration be given to ending the link between employment and health care coverage?

If the nation decided that a more equitable system of funding health care should be established, what responsibility would business have to contribute to such an equitable system? (This question is crucial since business interests might be more supportive of an equitable, publicly funded, universal system if they were divorced from any obligation to fund it directly.)

And, finally, is Pfizer chairman and CEO Hank McKinnell, whose company has been a major contributor to excessive health care pricing, really the personality to lead the Business Roundtable in “seizing opportunities to improve the health care marketplace”?

The Nation Now Wants to Hear From Woolhandler and Himmelstein

Mixed solutions to problem of uninsured
American Medical Association
House of Delegates
Interim Meeting Highlights
Monday, December 6, 2004

About 300 delegates heard details on one of the AMA’s seven agenda items during Sunday’s Forum for Medical Affairs. One of five presenters, John Goodman of the National Center for Policy Analysis outlined HSA advantages, including: restoration of the patient-physician relationship; portability; and patient and physician incentives.

According to Physicians for a National Health Program spokesperson Steffie Woolhandler, MD, the use of tax credits to cover the uninsured, as proposed by the AMA, is “a bad idea. It’s been tried before and it’s failed.” While she doesn’t support the Canadian national system per se, she believes the U.S. system should become “Canada deluxe.”

After congratulating Dr. Woolhandler on her life’s work in researching the uninsured (which brought the crowd to its feet), and noting the obvious differences between hers and the AMA’s proposals, AMA President John C. Nelson, MD, MPH, emphasized the extreme importance of working together to create a comprehensive solution.

http://www.ama-assn.org/ama/pub/category/14367.html

And…

The Disparate Consensus on Health Care for All
By Steve Lohr
The New York Times – December 6, 2004

In Washington, the phrase “universal coverage” is rarely mentioned as the way to provide health insurance for the 45 million uninsured Americans. It evokes memories of the Clinton administration’s sobering failure to forge a national health care plan. Yet among health care experts there is a surprising consensus that the United States must inevitably adopt some kind of universal coverage.

…health care experts contend that the issue must be addressed. Their policy proposals vary widely, and the proponents of universal coverage are as different as Dr. William W. McGuire, chief executive of one of the nation’s largest health insurers, and Dr. David Himmelstein of the Harvard Medical School, who recommends eliminating big insurers like Dr. McGuire’s company, the UnitedHealth Group.

Whatever their differences, they do agree that moving toward universal coverage would surely save lives and maybe dollars as well. Any plan for universal coverage must answer at least three basic questions: Will the move to national coverage follow an incremental, step-by-step path or require drastic change? What role will the government play? What should be covered under a universal system?

Dr. Himmelstein, an associate professor at the Harvard Medical School, advocates a fairly sweeping overhaul of health care in America by moving to a single-payer system run by the government. The nation, he said, can no longer afford the costs of bureaucracy in the American system.

Dr. Himmelstein was a co-author of a study last year, published in The New England Journal of Medicine, that found that administrative costs represented 31 percent of total health care spending in the United States, about double the proportion in Canada, which has a single-payer system.

The culprits, in Dr. Himmelstein’s view, are all the middlemen – chiefly insurers – tussling with doctors, hospitals and nursing homes over bills and reimbursements. “Health care has become a spectator sport with this huge, costly bureaucracy watching over us,” he said.

About one million of the workers in the system, Dr. Himmelstein said, are doing unneeded administrative work that could be eliminated. The savings from moving to a single-payer system, he estimated, would be roughly $375 billion a year. “That allows you to cover everyone,” he said.

The single payer, Dr. Himmelstein suggested, would be a pumped-up Medicare with greater buying power to bargain hard with suppliers like pharmaceutical makers, to control drug costs.

Not surprisingly, Dr. McGuire of UnitedHealth opposes the single-payer formula. “The key issue is not who is paying, but what you are paying for,” he said. “I think we should have mandatory insurance. It should be based on the concept of an essential benefit. Guided by medical science, we should decide what is essential and provide it.”

If a person is employed, his or her employer would have to pay for the essential benefit, according to Dr. Maguire. Self-employed people, or others who are financially able, would pay for their own insurance, and for everyone else, the obligation would fall to the federal government or the states.

The thorny issue in an essential benefit program is what is covered and what is not. Shoulder surgery to ease the pain when swinging a golf club or impotence pills should not be considered essential, said Dr. Reed Tuckson, a senior vice president for medical care advancement at UnitedHealth.

It will take political will and some hard choices about what path to take, but the United States certainly has the means to provide health insurance to everyone, health experts say. Neelam Sekhri, a health policy and finance expert at the World Health Organization, illustrates it this way: American government spending on Medicare and Medicaid alone, which covers about 40 percent of the population, if spread across the nation’s entire population, would equal on a per capita basis total spending by most European countries.

From a strictly financial standpoint, Ms. Sekhri said, “Given the amount of money that the United States spends on health, there is no reason why it should not be able to provide a very good system of universal health coverage.”

http://www.nytimes.com/2004/12/06/business/businessspecial2/06universal.html?oref=login

Comment: Harvard professors Steffie Woolhandler and David Himmelstein were co-chairs of the writing committee that produced the 1989 New England Journal of Medicine article, “A National Health Program for the United States: A Physicians’ Proposal.” They were cofounders of Physicians for a National Health Program (PNHP). Since then they have continued in a leadership role in producing innumerable other reports, research data, articles, restatements of the physicians’ proposal, in addition to their other advocacy activities in support of single payer, national health insurance.

It has sometimes been a thankless task. With the defeat of the unfortunate Clinton attempt at reform, policymakers decided that reform could never be comprehensive but must be in incremental steps. Advocates of universal reform were essentially barred from participation in the forums on reform. Even the progressives, who were previously in support of a universal health program, became fragmented over factional disputes. To the public at large, the movement for a national health program appeared to have wilted and died.

But David and Steffie were not deterred. They led the writing team that produced the 2003 JAMA article, “Proposal of the Physicians’ Working Group for Single-Payer National health Insurance.” They provided irrefutable evidence of the profound administrative waste of our fragmented system of funding health care (2003 NEJM, “Cost of Health Care Administration in the United States and Canada”).

Their colleagues at PNHP became passionate advocates of the single payer model because we recognized the vast superiority over the current system and over other mediocre proposals for reform. We pounded on doors and inserted our foot when opened. We insisted on being part of the debate, even if our presence was not particularly welcome.

Current attempts at reform have failed miserably. Costs continue to escalate, greater numbers are without insurance, and we have a major epidemic of under-insurance with the resultant explosion of financial hardship due to non-covered medical expenses.

The failure of our current system is no longer in dispute. We now hear throughout the nation the resounding chorus calling out for a national solution. Since David and Steffie and the rest of us persevered, we were there when others decided that we need to broaden our perspective on reform. David and Steffie, with the help of colleagues, have shown that we can provide affordable, comprehensive health care coverage for everyone. The policy science is not in dispute. Others are now saying that maybe it is time to take a serious look at the single payer, Medicare for All, national health insurance model.

Today, the American Medical Association and The New York Times affirmed the credibility of David and Steffie and of the single payer model of reform. Although the process has only begun, single payer will now have its rightful place in the national dialogue on reform. In fact, the greater burden in the debate may well shift to the defenders of the status quo since the superiority of the single payer model will speak for itself.

Steffie and David can be very, very proud, as we are of them. I mean… like… Steffie brought members of the AMA House of Delegates to their feet!

How the Real HSA Stands Up

BCBSNC Announces New Group HSA Offering with Mellon Financial
BlueCross BlueShield of North Carolina – December 2, 2004

Blue Cross and Blue Shield of North Carolina (BCBSNC) announced today that it is launching a new group Health Savings Account (HSA) product with Mellon Financial Corporation’s Human Resources & Investor Solutions (HR&IS) business for North Carolina employers. The new offering, called HSA BlueSM, consists of a high-deductible health plan (HDHP) from BCBSNC and a health savings account (HSA) administered by Mellon.

Here’s how it works:

1. Consumers purchase a high deductible health plan that carries a lower premium than many other health plans.

2. Consumers and their employers can contribute to an HSA to cover their qualified medical expenses up to the amount of their deductible each year.

3. When members use health care services, their physician or hospital files a claim with BCBSNC.

4. BCBSNC processes the claim, taking into account the company’s negotiated fees and how much the member has paid toward his or her deductible. BCBSNC sends this information to the member and the physician/hospital, along with any payment due on the claim.

5. The physician/hospital bills the member for the amount he or she owes.

6. The member pays the bill with funds from his or her HSA, using a check from their HSA account or HSA debit card.

http://www.bcbsnc.com/news/press-releases/PR2004-1202.cfm

Comment: Proponents of HSAs (health savings accounts) with HDHI (high deductible health insurance) have touted the benefits of having complete control of your own personal funds for routine medical expenses, while having the security of 100% coverage after a reasonable deductible is met.

But there was a major flaw in this concept. The insurance industry does not want to cover 100% of anything, particularly the bills of those with major medical expenses. They are doing everything they can to reduce their exposure to risk. High deductible, full indemnity coverage is not in their plans.

The insurance industry’s primary product is administrative services. They did not want to lose control over the administration of the innumerable, small, routine expenses of the large majority of the population who remain relatively healthy. HSAs presented a great opportunity: lots of little accounts with small charges, and with no risk to the insurers because it’s not even their money. And, of course, the money managers who have learned to profit from IRAs have found the HSAs to be a great addition to their product line.

Physicians thought that they would have their full routine fees paid by the HSAs and the deductible, and then 100% coverage by the HDHI. In fact, the insurance industry has countered with managed care PPOs (preferred provider organizations) with restricted provider lists and contracted fees. More importantly, they have applied the same restrictions to the HSA component of the coverage. Patients who elect not to go to contracted providers will face very severe financial penalties. And those penalties will not apply to the deductible for the HDHI. The net result is that either physicians will continue to be trapped in PPO contracts, or the patient will have to accept much more risk resulting in very high out-of-pocket expenses. And many studies have confirmed that access to care would then be unaffordable for many.

As long as we leave private insurers in charge, we can expect more of the same: higher administrative waste, more financial risk for those with needs, worse health care outcomes, and unhappy providers who will continue to stew in their misery simply because they don’t want the government involved.

For those who protest that they can’t do this, the applicable IRS provision on HSAs is covered in Question 4 of the following document: http://www.irs.gov/pub/irs-drop/n-04-2.pdf

Democrats need to reframe the debate on Social Security

By
Jonathan Tasini
December 03, 2004

George Bush is beginning to frame his Social Security reform agenda as a way to help workers. That leaves Democrats the opportunity to reframe the debate about the best way to do so. Jonathan Tasini argues what will help workers-and American employers-is a single-payer health plan. But if Dems get stuck in a classic denial defense on Social Security, they may lose big.

So, the Bush administration wants to help workers, make business more competitive and ensure a nice, comfortable retirement. If that is true, why is the conversation about privatizing Social Security, instead of about single-payer health care? Why are we debating a crisis that doesn’t exist (the “insolvency” of Social Security) instead of a crisis that clearly exists: the scandalous nature of our health care system?

It’s easy to show that turning Social Security over to the stock market speculators is a dumb, ideologically driven idea whose true costs are being hidden (surprise!) by the administration (see the Center for Economic and Policy Research http://www.cepr.net/publications/facts_social_security.pdf What’s more fun is to argue, plausibly, that we can do a lot more for business, workers and retirees by enacting a national health plan.

Here’s how the math works. This country will spend $1.8 trillion on health care in 2004, one-seventh of the entire gross domestic product-tops in the world; some estimates see that figure hitting 2.75 trillion by 2010. I know most people like to think that we live in a private insurance world, but actually 60 percent of health insurance money is already a public expense,paid by tax payers in the form of Medicare and Medicaid.

But 20 percent of that mammoth number is paid by business, so that’s a nice round $360 billion. According to Physicians http://www.tompaine.com/articles/www.pnhp.org for a National Health program, a single-payer system could be financed by a 7 percent payroll tax and a 2 percent income tax (with the income tax part potentially progressive). With one bold stroke, a single-payer system would do more to help the bottom line of companies than any tax break or so-called “free trade” agreement.

An Obvious Win-Win

Take General Motors. It spends 15 percent of its revenue on health care costs: 4.8 billion in 2003 and roughly $5.1 billion in 2004. Its future obligations for employee and retiree health care is more than $60 billion. Want to translate that into competitiveness? A GM car costs $1,400 more just because of its health care costs. If you figure, very roughly, that, right now, health care costs are rising 7 percent a year, under a single-payer system, GM would cut its health care costs in half. Hello?

As for the much-praised small business community, it would benefit even more from single-payer health care. Small businesses often pay 20 to 25 percent of revenues to pay for health care plans-and, then, are often forced to drop the coverage because they claim it’s too expensive.

And how about single-payer being an instant effective pay raise for millions of Americans? Every union negotiating a collective bargaining agreement could potentially win well-deserved pay hikes for workers whose wages have been falling behind inflation
http://www.epinet.org/content.cfm/webfeatures_snapshots_10292004; right now, every union’s main battle is fighting just to keep health care coverage in place. And individuals who are not lucky enough to have employer-based health care and who have been shelling out thousands of dollars in premiums for a bare-bones health plan (which encourages people never to get sick),would pocket a sizable chunk of change with a single-payer plan. Finally, by saving money for them on prescription drugs, among other benefits, single-payer would also be a guaranteed help to retirees-not the riverboat gamble a privatized Social Security system would be. Oh, I forgot: seniors won’t need that money because they will be kicking back and drinking cocktails thanks to their “private investment accounts” just bulging from huge profits they will have made from their stock-market picks.

Now, it’s pretty obvious why the administration is making certain choices. The pharmaceutical industry has been the single most profitable industry in the past decade. And the financial services industry can barely restrain its orgasmic delight at the thought of the hundreds of billions of dollars that will wash into the market if Social Security is turned over to the Street. Both industries, along with the health care companies, have showered tens of millions of dollars in political campaign contributions on the Republicans (and, to be fair, have written quite a few checks to Democrats, too).

Ways Forward

So, though the positive aspects of single-payer are nothing new, two things strike me as worth pointing out today. First, this is a ripe area for a new, concerted effort at shareholder activism. The argument is simple: companies who don’t advocate for a single-payer system are endangering share-holder value, throwing money into a system that is dragging down profits and competitiveness. And, in particular, it’s the huge public employee pension funds, representing hundreds of thousands of current and retired workers, who have a significant financial interest in seeing the system changed; the California Public Employees Retirement System alone has $177 billion.

Second, progressives are falling into a familiar trap. We’re arguing on the wrong turf. As long as we keep arguing about the Social Security “crisis,” we’re losing. The Republicans, their allies and too many Democrats have framed the debate as “fixing” Social Security. When we argue that Social Security “isn’t broken,” we are playing inside their debate terms-and losing.

We have to shift the debate. We need to say that the real issue for Americans is that we want a society where everyone is in good health, a society where every person can have the opportunity to succeed and that that opportunity comes with the financial security and peace of mind that only a single-payer system can deliver. Wouldn’t it be better, we need to ask, if, instead of choosing the drug and insurances companies, we would stand for our families, for health security, for the wisest investment the government can make towards our collective well-being? And, finally, wouldn’t it be better to stand for the stability and competitiveness of American business, from big companies all the way to the small businesses everywhere who would like to have healthy, productive workers?

Jonathan Tasini
President
Economic Future Group
Jonathan Tasini is president of the Economic Future Group and writes his “Working In America” columns for TomPaine.com on an occasional basis.

Tracking Health Care Costs: Spending Growth Slowdown Stalls in 1st Half of 2004

By Bradley C. Strunk and Paul B. Ginsburg
Employee Benefit Research Institute and Center for Studying Health System Change – December 2004

The recent slowdown in health care spending growth stalled in the first half of 2004 as health care costs per privately insured American increased 7.5 percent-virtually the same rate of increase as in 2003.

Implications

Early 2004 health care cost data suggest the decline in spending growth has stalled and may be ending long before reaching the lower trend for overall economic growth, let alone the very low rates of health cost growth seen in the mid-1990s. Moreover, given the sluggish recovery of the U.S. economy in recent months, it is unlikely workers’ incomes will grow as rapidly in the second half of 2004 as they did in the first half, meaning the gap between income and health care cost growth may again be large.

Once again, this makes it more likely that the number of uninsured Americans- who receive fewer health care services and are in poorer health than those with health insurance-will continue to grow. Growth in health insurance premiums will likely slow somewhat in the coming years as a result of the recent slowdown in cost trends and an expected turn in the health insurance underwriting cycle, the insurance industry’s interdependent pattern of profitability and pricing. However, the premium trend is unlikely to fall much below the underlying cost trend in the short run and is determined almost entirely by the cost trend in the long run. Clearly, there is a continuing strong need for a candid public discussion about how to control underlying health care cost growth-not just how to make health insurance more affordable.

At the moment, the main tool to control costs remains greater financial responsibility for patients, whether in the form of higher cost sharing in health maintenance organizations (HMOs) and preferred provider organizations (PPOs) or through so-called consumer-directed health plans, which typically include a high deductible and an account to draw on to pay medical bills. These tools could encourage consumers to use health care services more judiciously, particularly over time. However, the most common patient financial incentives, such as deductibles, copayments and coinsurance, are often too crude to allow distinctions between needed and more discretionary care, how efficient health care providers are and how much of a financial burden some patients can afford. The result is a high potential of barriers to care for people with low incomes or high medical needs. This will limit the extent to which these tools can be used without sacrificing to an unacceptable degree the basic reasons for health insurance-access to needed care and financial protection.

Meanwhile, little attention is being paid to the most important long-term driver of health care costs-new medical technology and its enthusiastic acceptance into mainstream medical practice. Measures that can be taken to control this relentless force, such as greater adherence to evidence- based medicine, increased research on medical effectiveness and greater use of technology assessments, generally have received short shrift from policy makers. When the limitations in the extent to which patient financial incentives can be used become more apparent, policy makers may increase their interest in these and other measures designed to improve efficiency in the health care system.

Report available at either website:
http://www.ebri.org/EBRI_Notes_12-2004.pdf
http://www.hschange.org/CONTENT/721/?#ib6

Comment: A beneficent, public, monopsonistic purchaser of health care services could certainly improve efficiency in the health care system. Are there really any other practical options? If so, let’s look at them now. Waiting to observe the limitations in the extent to which patient financial incentives can be used will only result in more unnecessary disability and death.

Another Union for Single Payer Health Care!

Another Union for Single Payer Health Care!
Kay Tillow

Kentuckians for Single Payer Health Care
Nurses Professional Organization
1169 Eastern Parkway #2218
Louisville, KY 40217
502 459 3393
http://gciu.org/whatsnew/04j-a/convres04ja.shtml

General Board of the Graphics Communications International Union (AFL-CIO) Endorses National Universal Single Payer Health Care

GCIU General Board members meet to discuss and adopt resolutions for convention delegates to consider. From left are: Chattanooga 197M Pres. Robert Kelly, Detroit 2-289M Pres. David R. Jacobs, Vice Pres. Duncan K. Brown, Secy.-Treas. Gerald H. Deneau, Martin R. Ganzglass, GCIU legal counsel; Pres. George Tedeschi; Richard J. Whitworth, executive assistant to the GCIU president; vice presidents David A. Grabhorn and Robert L. Lacey; and Chicago 458-3M Pres. Charles R. Timmel.

“Regarding universal health care, the board in Resolution G-7 noted that “today 43 million Americans have no health care at all and millions more are under-insured, and this is a national disgrace when the Bush administration is spending over $200 billion on the war in Iraq.”

The board resolution added that “as more and more Americans are caught in the squeeze of increased costs, less accessibility, and declining quality, the Bush administration has done nothing to alleviate this crisis for working Americans except protect the profits of insurance companies and the pharmaceutical industry.” The resolution endorses a “just and fair health care single-payer, national and universal program for all Americans, allowing individuals to select their own health care providers and where premiums would be based on ability to pay and be subsidized by employers and the government.”

The resolution would also direct the International union to educate GCIU members on the advantages of a single-payer, universal health care program and to fight for the adoption of such legislation in the United States and to protect the existing Canadian system and to work with the AFL-CIO, CLC, and any coalitions to accomplish these goals.”

Making Tough Choices: Adults with Disabilities Prioritize their Medi-Cal Options

By Marjorie Ginsburg and Kathy Glasmire
California HealthCare Foundation – December 2004

In January, 2004, Governor Arnold Schwarzenegger proposed a major overhaul of Medi-Cal to contain costs… …the state requested assistance from the California HealthCare Foundation and The California Endowment to solicit, receive, and organize public input…

…Sacramento Healthcare Decisions… developed a simulation project to ask adult disabled Medi-Cal beneficiaries to design their own health benefits package when there were more options than dollars.

The project used CHAT (Choosing Healthplans All Together), a computer-based program developed by the University of Michigan and the National Institutes of Health. CHAT is a tool that engages individuals in the challenges of choosing health care benefits when choices exceed available resources.

The basic CHAT board is a pie chart consisting of up to 16 categories (with two or three tiers in each category). Each category tier costs a specific number of markers based on the proportional cost of that service… Altogether there were a total of 123 marker spaces on the CHAT board. Choosing all services at the current (Medi-Cal) level required 114 markers, but participants had only 100 markers to use in picking their benefits.

>From the findings:

* Given the nature of their health status, adult disabled Medi-Cal beneficiaries are often highly dependent on medical and supportive services. The CHAT decisions they make are heavily influenced by this basic fact.

* Maintaining a full range of Medi-Cal services is the most important consideration when CHAT participants design coverage that affects all disabled Medi-Cal beneficiaries.

* Having sufficient choice and availability of providers is essential for beneficiaries to feel secure about their health care services and confident that quality care is attainable.

Comparing CHAT responses between Medi-Cal beneficiaries and the privately insured:

* While health care plays a major role in the lives of disabled Medi-Cal beneficiaries, it is usually not central to the lives of most privately insured employees.

* Compromising on a benefits package was easier for privately insured employees than it was for those on Medi-Cal.

* Moderate cost sharing was more acceptable to privately insured employees than it was to those on Medi-Cal.

* Both groups felt that having a full range of health care services was the most important criterion for their coverage.

* Both groups consider choice to be the cornerstone of a quality health care system.

>From the Conclusion:
Agreeing to make trade-offs during the CHAT process is not the same as accepting those cutbacks in real life.

>From the perspective of the participants, there is no low-hanging fruit in Medi-Cal. Every service category has its advocate; every higher level tier has its promoter. While many acknowledged that Medi-Cal may have to change in response to California’s budget problems, participants were concerned that the state will make life considerably harder for them than it is now.

http://www.chcf.org/documents/policy/MediCalCHAT.pdf

Comment: Today, more attention is being given to health care costs than to other concerns such as the growing numbers of uninsured. The CHAT tool was developed to assist in providing consumer input into the debate over the perceived need to reduce health care spending.

The problem with CHAT is that it begins with the presumption that health care spending must be reduced, and it can be done so only by decreasing benefits and increasing individual cost sharing. The obvious risk of this approach is that policymakers will use it to further reduce the financial protection afforded by health care coverage.

California ranks at the bottom of funding in it’s Medicaid (Medi-Cal) program, yet Gov. Schwarzenegger wants to use the CHAT process to slash Medi-Cal spending even more. But when there is no place to cut, distributing 100 markers for 123 spaces cannot ever result in rational health policy decisions.

It is very instructive to look at the CHAT game board in the original article (link above). Nowhere on the board can you find rational choices for cost containment. Reducing administrative waste, enhancing a higher quality and lower cost primary care base, reducing supply side technological excesses that fail to provide benefit, and establishing an integrated information technology system are only a few of the measures that would tackle health care costs while actually improving benefits and coverage.

When we approach the patient-consumer for input on addressing health care costs, shouldn’t we provide them with information on beneficial options, or should we merely continue to expose them to the CHAT game and use the results as an excuse to slash and burn what we do have?

A National Health Insurance Program for the U.S.

A National Health Insurance Program for the United States – The country must abandon its fragmented system
By Don R. McCanne
PLoS Medicine – November 2004

The continuing deterioration of affordability, coverage, and quality in health care makes it imperative that United States policymakers broaden their reform efforts beyond the ineffectual tinkering of incrementalism. A universal, single-payer, publicly funded and publicly administered program of social insurance would ensure access to affordable, comprehensive, high-quality health care for all. It should be the standard by which any other proposals are judged. If a better proposal can be crafted, now is the time to do it. People are dying while we delay.

http://medicine.plosjournals.org/archive/1549-1676/1/2/pdf/10.1371_journal.pmed.0010039-S.pdf

Comment: This article discusses the characteristics of the U.S. health care system that result in mediocrity in spite of our very high spending. And then it discusses options for reform.

As an open access journal, readers are encouraged to download articles and use them for their own purposes. Some may find this article to be useful in educating the public on the rationale of national health insurance.

This is the second issue of PLoS Medicine, a peer reviewed, open access, international, multidisciplinary journal of medicine from the Public Library of Science, founded by Nobel Laureate Harold Varmus and his colleagues. Their goal is to have PLoS Medicine become recognized as a premier journal of medicine, but with an important difference. All published material will be immediately available online without cost to anyone. This ensures that the very latest information and research in medicine is always available, without financial barriers, even to poor third world countries.

For more information, including free online subscribing:
http://medicine.plosjournals.org/perlserv/?request=index-html

Uwe Reinhardt on what makes America great

Uwe Reinhardt, Ph.D., Professor of Economics and Public Affairs, Princeton
University (personal communication):

Don: Attached is a portrait of what makes America great. Instead of using the coercive power of government to make you and me pay for her dental
care, this lady uses a pair of pliers to pull her own tooth. One just has to admire it. It keeps our tax rate (as % of GDP) the lowest in the OECD and our economy strong.

Best,

Uwe

(Rather than being included as an attachment to this message, the photograph can be viewed at this link to The New York Times:
http://www.nytimes.com/2004/12/28/business/28dental.html)

Comment: It is astounding that, in the world’s wealthiest nation, aversion to taxes is a more important driver of policy than is the health of its people. This is particularly troublesome as we witness the debate over the “stinginess” of our response to the unfathomable tragedy of the Tsunami.

In his Christmas message to the nation, President Bush said, “By volunteering our time and talents where they are needed most, we help heal the sick, comfort those who suffer, and bring hope to those who despair, one heart and one soul at a time.”

And today the president said, “In this case, I think it’s very important for Americans who want to give to provide cash to organizations that will be able to focus resources and assets to meet specific needs,” and, “There are many NGOs now involved that understand what is specifically needed to meet the needs of these countries.”

Volunteers and nongovermental organizations (NGO) do play an important role
in society and are to be praised for their very noble efforts. But they can never replace the duty of the government to make every effort to adequately address these very vital issues. The impact of charity and volunteerism remains miniscule when compared to the capability of a wealthy nation and its government resources.

We can bring hope to one heart and one soul at a time by volunteering to lend our pliers when the need is great. Or we can adopt national policies that would bring hope to all hearts and all souls. With tax rates in line with other OECD nations, we would still have the greatest personal wealth, but would also have the capability to do much more to ensure the health of all of our citizens and of the citizens of the world.

Addendum: On a positive note, the article, “U.S. Health Care Spending In An
International Context” by Uwe E. Reinhardt, Peter S. Hussey and Gerard F.
Anderson, tops the list as the most frequently viewed article on the Health
Affairs website. At least the health policy community is interested in learning why we spend so much and receive such mediocrity in health care. The article can be accessed at: http://content.healthaffairs.org/cgi/content/abstract/23/3/10

There is hope.