PNHP

Alain Enthoven states that single payer may be inevitiable

Alain Enthoven states that single payer may be inevitiable

Health Affairs
Web Exclusive
August 11, 2003

Excerpt from a letter from Stephen M. Davidson, Professor, Health Care Management, Boston University school of Management, responding to Alain Enthoven’s previous article on multiple-employer exchanges:

Alain Enthoven believes that the employment-based system has failed to control health care costs because so many employers offer their employees coverage from only a single source instead of from multiple sources that would compete for the employees’ business. His solution is to create multiple-employer exchanges,” which would offer members’ employees choices among plans.

I am not commenting on his diagnosis. However, the success of his prescription depends on the probability that it will actually reduce the cost of care. Since I believe the chances of that are slim for several reasons, in my view, Enthoven’s solutions will not work…

Managed care plans can contain costs for a time by paying lower salaries or fees, buying supplies in bulk, or reducing administrative staff. But the key to keeping them down is improving the system’s efficiency by changing the processes of care. As noted above, that is a complicated, costly undertaking that health insurance plans are unlikely to attempt unless the incentives are a lot stronger and more reliable than those that would result from Enthoven’s exchanges.

Excerpt from Alain Enthoven’s response to Davidson’s letter:

Davidson leaves me wondering what alternative he would suggest to motivate process improvement. Would he suggest a single payer? A single payer could offer important advantages, such as universal coverage and government monopsony power to counterbalance provider monopolies, but it seems unlikely that it could motivate process improvement. Yet if U.S. employers don’t make a radical change toward managed competition pretty soon, a single payer will become inevitable, if it isn’t already.

http://www.healthaffairs.org/WebExclusives/Web_Exclusive_Letters_Davidson_081103.htm#Davidson

Public employee health programs no longer guarantee

The Plain Dealer
09/07/03
Free health care disappearing for retired public employees
By Stephen Ohlemacher

Free health care, once an expectation for many of Ohio’s retired public employees, will soon be a memory for most.Even affordable health care is in jeopardy for a lot of retirees on fixed incomes.

All five of Ohio’s public employee pension funds are following national trends by increasing health care costs for retirees next year, some significantly.

The Ohio retirement systems have special funds to subsidize health insurance
for retirees. Officials at all the funds are adamant that pension benefits are secure. But without the price increases, officials at most of the systems said they would run out of money to help pay for health insurance in just a few years.

“The bottom line is, public employees still have great benefits,” said Laurel Johnson, spokes woman for the School Employees Retirement System.
“They just have to pay for it.”

http://www.cleveland.com/news/plaindealer/index.ssf?/base/news/1062946537109460.xml

Comment: When our most reliable programs of health care coverage no longer
guarantee permanent health security, isn’t it time to consider reform that
will?

Lifetime, affordable, comprehensive coverage for everyone is achievable now.
What are we waiting for?

Costs of Health Care Administration: U.S. vs. Canada

Proponents of a Canadian-style, single-payer health care system for the U.S. argue that excessive administrative costs represent a serious problem in multi-payer systems. In this analysis, Harvard researchers compared administrative costs in the U.S. and Canadian health care systems. In August 2003, these same authors co-authored a proposal for single-payer national health care insurance in the U.S. (JAMA 2003; 290:798).

Using a variety of sources, the researchers calculated the fiscal-year 1999 administrative costs of health care insurers, employers’ health care benefit programs, hospitals, office practices, nursing homes, and home health care agencies in both countries. The estimated per capita cost of health care administration was US$1059 in the U.S. and US$307 in Canada. These costs accounted for 31% and 17% of health care spending in the U.S. and Canada, respectively. The average overhead cost for U.S. private insurers was 11.7%; in contrast, this figure was 3.6% for U.S. Medicare and 1.3% for Canadian provincial insurance plans.

Comment: Although these researchers acknowledge limitations in their data,
their analysis suggests strongly that a single-payer system would yield Substantial savings in administrative costs. Elsewhere, the authors and others have argued that such savings essentially could fund health care for the uninsured segment of the U.S. population. In an accompanying editorial, an economist from the Brookings Institution contends that the authors have exaggerated the difference in administrative costs in the U.S. and Canada;
he also questions whether these comparisons provide useful guidance to policy makers, given the differing political histories and institutions in the 2 countries.

— Allan S. Brett, MD
Published in Journal Watch September 2, 2003

Source

Woolhandler S et al. Costs of health care administration in the United
States and Canada. N Engl J Med 2003 Aug 21; 349:768-75.

Aaron HJ. The costs of health care administration in the United States and
Canada — Questionable answers to a questionable question. N Engl J Med
2003 Aug 21; 349:801-3.

A report on health care reform from the ADA's President, Congressman Jim

For Immediate Release, August 4, 2003, Issue #1

Welcome back to the American Health Security News.  From 1993 to 1995, when
the national health reform debate was among our top national priorities, I published this same newsletter.   My intent is to give readers an update on universal coverage news, to discuss national health care and other health reform proposals, and to identify information resources for news media and Congressional offices following the health care reform debate.   I sincerely believe health care reform is becoming an unavoidable issue once again –
there is recognition that our system is broken and we are quickly running
out of options.

In this first issue, you will see a summary of the health reform proposals
of Democratic Presidential candidates, including Governor Howard Dean,
Senator John Edwards, Representative Richard Gephardt, Senator John Kerry,
and Representative Dennis Kucinich (other candidates have not issued
detailed plans).  The intent of these analyses is to provide an overview of
the approach each candidate has taken, with sufficient detail to provide an
understanding of each approach.  These analyses are based on press reports,
articles and documents provided by their campaign offices.  As such, these
analyses are not comprehensive and reflect my interpretation.

**********************
To view the full newsletter click on this link
www.adaction.org/ADAHealthSecurityNews.pdf or reply to this email to receive
the full newsletter as an attachment.

A report on health care reform from the ADA’s President, Congressman Jim

For Immediate Release, August 4, 2003, Issue #1

Welcome back to the American Health Security News.  From 1993 to 1995, when
the national health reform debate was among our top national priorities, I published this same newsletter.   My intent is to give readers an update on universal coverage news, to discuss national health care and other health reform proposals, and to identify information resources for news media and Congressional offices following the health care reform debate.   I sincerely believe health care reform is becoming an unavoidable issue once again –
there is recognition that our system is broken and we are quickly running
out of options.

In this first issue, you will see a summary of the health reform proposals
of Democratic Presidential candidates, including Governor Howard Dean,
Senator John Edwards, Representative Richard Gephardt, Senator John Kerry,
and Representative Dennis Kucinich (other candidates have not issued
detailed plans).  The intent of these analyses is to provide an overview of
the approach each candidate has taken, with sufficient detail to provide an
understanding of each approach.  These analyses are based on press reports,
articles and documents provided by their campaign offices.  As such, these
analyses are not comprehensive and reflect my interpretation.

**********************
To view the full newsletter click on this link
www.adaction.org/ADAHealthSecurityNews.pdf or reply to this email to receive
the full newsletter as an attachment.

Fraudulent and abusive calculations of fraud and abuse

Center on Budget and Policy Priorities
September 2, 2003
Reducing “Waste, Fraud, and Abuse”: One Percent Of What? Double-Counting and Other Budget Committee Mistakes Will Require Some Committees to Cut Entitlement Programs More than One Percent
By Richard Kogan

Today (September 2, 2003), House and Senate Committees are scheduled to
submit recommendations on how to reduce “waste, fraud, and abuse” in federal
“mandatory,” or entitlement, programs. In May, the House and Senate Budget
Committees directed 12 Senate committees and 15 House committees to find
ways to reduce entitlement programs; the Budget Committees issued dollar
targets for each of these committees, supposedly equal to one percent of the
total entitlement spending in each committee’s jurisdiction. The Budget
Committees’ calculations were flawed, however, in major and minor ways.
As a result, most committees are required to find savings that represent
substantially more than one percent of the entitlement spending under their
jurisdiction, and a few are required to find savings of less than one percent.

The Budget Committees’ largest error was to double-count the cost of certain
“trust fund” programs. Double-counting makes these programs look costlier
than they really are, and so makes the savings targets for committees with
jurisdiction over these programs higher than one percent. The Budget Committees double-counted the cost of all programs that have trust funds
into which the U.S. Treasury transfers money, with the trust fund then using
the transferred funds to make payments to (or on behalf of) program beneficiaries. Programs with such a funding structure include the military
retirement program, the civil service retirement program, and Part B of
Medicare (the Supplemental Medical Insurance program, which pays for
visits to physicians, rather than hospital bills).

This is double-counting, and is scrupulously avoided by CBO and OMB.In total, double-counting of this nature by the Budget Committees produces ten-year savings targets that are $24 billion too high.

The Budget Committees also erred with regard to programs where the federal
government acts as an agent in “passing through” to other entities certain
funds that it collects for specified purposes… When a budget account is not really a government “spending program” but essentially is a pass-through for other transactions, there is no possibility of reducing the costs by one percent.

http://www.cbpp.org/9-2-03bud.htm

Comment: A major problem with programs of social insurance is that conservatives, when in control, continue to reduce funding (though usually simply by failing to provide adequate inflationary increases). They then plead that the programs are ineffective and should be replaced with private
alternatives.

Using dishonest calculations cloaked as reductions in “waste, fraud,and abuse” is in itself fraudulent and abusive. We need to demand that our legislators protect our public programs such as Part B of Medicare.
Failing that, we should replace them with legislators who will.

Date: Thu, 4 Sep 2003 10:26:29 -0700
Subject: qotd: Relaxing EMTALA rules will result in lethal outcomes

Department of Health and Human Services
Centers for Medicare & Medicaid Services
42 CFR Parts 413, 482, and 489
[CMS-1063-F] RIN 0938-AM34

Medicare Program; Clarifying Policies Related to the Responsibilities of Medicare-Participating Hospitals in Treating Individuals with Emergency Medical Conditions

ACTION: Final rule.
SUMMARY: This final rule clarifies policies relating to the responsibilities of Medicare-participating hospitals in treating individuals with emergency medical conditions who present to a hospital under the provisions of the
Emergency Medical Treatment and Labor Act (EMTALA).

Excerpt:
(2) Exception: Application to inpatients.

(i) If a hospital has screened an individual under paragraph (a) of this section and found the individual to have an emergency medical condition, and admits that individual as an inpatient in good faith in order to stabilize the emergency medical condition, the hospital has satisfied its special responsibilities under this section with respect to that individual.

http://cms.hhs.gov/providers/emtala/cms-1063-f.pdf

And…

Institute of Medicine
Care Without Coverage: Too Little, Too Late

Hospital-based Care

The poorer health status of uninsured adults at the time of hospitalization is compounded by experiences as inpatients. They receive fewer needed services, worse quality care, and have a greater risk of dying in the hospital or shortly after discharge.

Traumatic injuries: Surprisingly, provider response to traumatic injury can be influenced by insurance status. Uninsured trauma victims are less likely to be admitted to a hospital, receive fewer services when admitted, and are more likely to die than are insured trauma victims.

http://www.iom.edu/includes/DBFile.asp?id=4160

Comment: The way in which a problem is framed greatly influences the approaches to solving the problem.

The administration has elected to define the continued application of EMTALA
standards to an emergency patient, once that patient is admitted, as a burdensome and unnecessary regulatory requirement. Their solution is to waive EMTALA rules for emergency inpatients once admitted. Relaxing this requirement can only compound the negative outcomes described in the Institute of Medicine report.

Others would define the problem as impaired outcomes and even death resulting from lack of insurance coverage for many emergency patients. Most of us would agree that the solution for the problem framed in this manner should be to ensure that everyone has adequate health insurance coverage.

Should our administration begin supporting policies that improve health care
outcomes, or should it continue to place a higher priority on policies that reduce government oversight of serious deficiencies that adversely affect the health of our citizens?

(Although this message addresses the waiving of EMTALA rules for emergency
patients who are admitted, an even more consequential change is in the relaxation of the rules for specialist on-call backup of emergency services.

More preventable deaths are inevitable. Although adequate specialist coverage will always remain a problem, the immediate solution is not to merely diminish the obligation of specialists to provide coverage, but rather to ensure that they will be compensated when their services are required. Again, ensuring that everyone has adequate health care insurance is the first step toward solving these problems. Removing the issue of compensation allows for a less heated dialogue on the other important on-call disputes.)

California's employer mandate is a step forward,but not enough

San Francisco Chronicle
September 1, 2003
Health Insurance for All
SB2 an important step in solving the problems of the uninsured By John whitelaw, M.D., the immediate past president of the California Medical Association, and Art Pulaski, the executive treasurer of the California Labor Federation, AFL-CIO.

Nearly 7 million people in California lack health-care insurance. Most uninsured Californians work and pay taxes, but do not receive health-care coverage from their employers. In fact, 8 out of 10 uninsured Californians work or are the dependents of working, uninsured Californians.

A special committee in the California Legislature is reviewing historic legislation called “Health Care for Working Families.”

This legislation — SB2 — would significantly expand access to health care
by building on the national system of employer-based health coverage.
Employers would pay a user fee into a state health insurance purchasing pool. Employers who provide a basic level of coverage would get a credit against the fee. Beginning in 2005, companies with more than 200 employees would be required to provide health insurance for their employees and dependents. In 2006, companies with more than 20 employees would be required to provide coverage for their employees, but not their dependents.

Smaller companies will be exempt from this measure.By providing coverage to millions of uninsured Californians, SB2 would save lives, safeguard medical services and stabilize skyrocketing premiums.This historic legislation (authored by Senate President Pro Tem John Burton,D-San Francisco) is sponsored by the California Medical Association,the California Labor Federation, AFL-CIO and thousands of other community and health advocate groups.

click here to read the article

Comment: California’s SB2 is a prime example of why the dialogue on reform
should not be “either incremental or universal,” but rather should be “incremental and universal.”

Our goal is comprehensive and affordable care for absolutely everyone which
can be achieved only by enacting a universal system of social insurance. But
because many barriers exist to achieving that goal in the immediate future,
we need to support interim measures that improve access and coverage without introducing detrimental policies that might negatively impact our goals.

It is estimated that SB2 will provide coverage to about 1.1 million of the
4.5 million Californians who are uninsured at any given point in time.
(At least 6.2 million Californians are uninsured at some point within a year.)
Expanding coverage to over a million residents is a very worthy goal,and
should be supported by all of us.

But SB2 still leaves several million without coverage. SB2 is the most expensive model of reform, and will increase California’s global healthcare costs significantly. It leaves in place the highly flawed and fragmented system of funding health care with its egregious administrative waste,catering to the private health insurance industry. It perpetuates many of the inequities in both the funding of health care and in the allocation of our health care resources. It clearly is not a measure that we can pass and then walk away from, as if the job were done.

SB921, the single payer bill of Sen. Sheila Kuehl, has not been included in
the conference committee deliberations, but it is still very much an active
bill. As a two year bill, it is scheduled for further consideration in January, 2004. It does have an almost insurmountable hurdle. Any tax increase in California must have a two-thirds vote in both the Senate and Assembly. The single payer model shifts private spending into the public sector. A variation of the model has not been created that would avoid a tax increase (even though offset by a reduction in private spending). The conservatives, though a minority, have been able to block any legislation involving a tax increase.

Although SB921 cannot pass in its present form, SB2 was crafted to avoid any
tax increase. Though SB2 falls far short of our goals, it can pass.Because
it is an improvement, it should be vigorously supported.

That said, we must not allow dissemination of the misperception that SB2
will have solved our health care problems. We must continue the fight for
coverage of the millions left uninsured, for eliminating the inequities in
our system, and for ensuring that comprehensive health care will be affordable for everyone.

We need to pass SB2. But then, instead of relaxing our efforts, we need to
become even more diligent in educating the public on the benefits of a single payer system of social insurance. California advocates need to send a loud and clear message on Sen. Kuehl’s SB921, the single payer bill.

Message: 2
From: “Don McCanne”
To:
Date: Tue, 2 Sep 2003 13:36:33 -0700
Subject: qotd: Understanding consumer-directed health care

California HealthCare Foundation
8/26/03
Understanding Consumer-directed Health Care in California
By Jon Gabel and Thomas Rice

Despite a shared interest among insurers and employers in exploring the potential of consumer-directed health plans, such coverage remains a rarity
in California-a state that typically leads the nation in innovative health
care models.

The report,Understanding Consumer-directed Health Care in California,examines consumer-directed health plans, which link consumers’ health coverage choices to the financial consequences of those choices. If,for example, consumers choose a health plan that results in greater overall expenditures, they will have to pay more in premiums. This report explains how the products work, identifies the industry players behind them, and discusses the factors likely to influence their growth.

The report focuses on three types of consumer-directed plans including:
* Health reimbursement arrangements (HRAs), whereby an employer establishes an individual health reimbursement arrangement for a specified dollar amount for each enrolled employee, generally in conjunction with a high deductible insurance product.

* Customized plans, whereby employers make a fixed contribution toward the
employee’s premium, and the employee then chooses among an array of products
with different prices that reflect a wide-range of benefit designs and provider networks.

* “Design your own” products, so far non-existent in California, let employees choose their own set of providers and benefit features-essentially designing their own provider network and specifying the services covered-with the employee’s premium contribution dependent on the choices made.

http://www.chcf.org/topics/view.cfm?itemid=21485

For the full report:
http://www.chcf.org/documents/insurance/ConsumerDirectedHealthCare.pdf

Comment: Since consumer-directed health care is being touted by some as the
next major trend in innovative reform efforts, activists should become informed on these proposals and their potential impact. The report by Gabel and Rice provides an excellent, straightforward explanation, along with a description of their initial impact in California.

Although purists in the health policy academic community might suggest that
we wait to observe the full impact of these innovations before we pass judgment on them, a few comments can be made in advance.

“Health reimbursement arrangements” (HRAs) are the insurance industry’s answer to medical savings accounts (MSAs). The accounts are funded by the employer. The accounts require administrative services since they can be used only for medical expenses, and they are not portable from employer to employer. They are combined with high deductible plans, usually PPOs.

Adverse selection is a problem if the employer offers any other options,resulting in excessive costs for plans that concentrate individuals with greater health care needs. Of concern is that the individual is exposed to 100% of the costs between the amount in the account and the deductible of the catastrophic coverage. Negative outcomes inevitably will result from failure to obtain timely care because of financial disincentives once the HRA account is depleted.

“Customized packages” are defined contribution programs in which the individual must pay more to obtain more comprehensive coverage of benefits and/or a greater selection of providers. Many healthy individuals will select lower cost coverage which may well prove to be inadequate if significant health care needs later develop. This defeats the purpose of insurance.

“Design-your-own” products do not exist in California. It is unlikely that they will ever be a significant player because of the difficulty of selecting and pricing almost unlimited variations in coverage.

Consumer-directed programs are designed to reduce health care costs for employers by shifting costs to employees. The health policy literature confirms that this can only result in reduced access to health care because of lack of affordability. Reduced access in turn results in impaired health outcomes. Consumer-directed programs are bad health policy. Why do we keep avoiding the inevitable conclusion that we need a comprehensive,universal program of social insurance?

(Thomas Rice discusses the issue of consumer choice in his chapter,”Should
Consumer Choice Be Encouraged in Health Care,” from the book, “The Social
Economics of Health Care,” edited by John B. Davis. It is well worth reading. http://www.semcoop.com/detail/0415251621)

A column on Health Care Reform

The goal of a National Health Care program is to provide the best care for all at an affordable cost. Unfortunately, to institute such a system, the pressure of the corporate health groups has been for many years and continues to be, formidable.
Eleven years ago, prior to the 1992 elections, opinion polls indicated that 90 percent of Americans believed that the health care system needed “fundamental change’ or “a complete rebuilding”.

This called forth a full court press by the corporations which had a vested interest in their profit-making endeavors. Among them were the American Medical Association , the Blue Cross/Blue Shield and other health insurance companies, as well as the drug and medical equipment companies. With their millions and millions of dollars they were able to prevent any meaningful reforms. In the years since the 1992 election the amounts of money and propaganda have increased exponentially. The only force which can prevail against this kind of pressure is the common sense of the voters, and it can do so only if the people get out and vote against legislators who are in bed with the corporations ,and vote for people who have the interest of the public at heart.

Over the past two decades discussion about health care reform has intensified. In this process a number of statements and claims by those who oppose a single payer system have assumed a prominent place; enough so in fact, that they have acquired the status of myths and we must be prepared to refute them.

Most often heard is the claim that National Health Insurance is socialized medicine. In a real socialized system the government owns and operates it – it hires and pays the doctors and other personnel, it owns and operates the hospitals and clinics.

All other arguments can be answered by referencing the health statistics which show that the health of the American people is not rated as high as that of the other industrialized countries Life expectancy, infant mortality, maternal mortality, hospital admissions, physicians’ visits, surgical procedures etc. are all better in Canada, for example, than are those in the U.S.
Conversion of our present non-system to a national health insurance, despite what pessimists say, is possible if a knowledgeable electorate get out and vote for those who will support one.

©#651, Goodrich , June 1, 2003

California’s employer mandate is a step forward,but not enough

San Francisco Chronicle
September 1, 2003
Health Insurance for All
SB2 an important step in solving the problems of the uninsured By John whitelaw, M.D., the immediate past president of the California Medical Association, and Art Pulaski, the executive treasurer of the California Labor Federation, AFL-CIO.

Nearly 7 million people in California lack health-care insurance. Most uninsured Californians work and pay taxes, but do not receive health-care coverage from their employers. In fact, 8 out of 10 uninsured Californians work or are the dependents of working, uninsured Californians.

A special committee in the California Legislature is reviewing historic legislation called “Health Care for Working Families.”

This legislation — SB2 — would significantly expand access to health care
by building on the national system of employer-based health coverage.
Employers would pay a user fee into a state health insurance purchasing pool. Employers who provide a basic level of coverage would get a credit against the fee. Beginning in 2005, companies with more than 200 employees would be required to provide health insurance for their employees and dependents. In 2006, companies with more than 20 employees would be required to provide coverage for their employees, but not their dependents.

Smaller companies will be exempt from this measure.By providing coverage to millions of uninsured Californians, SB2 would save lives, safeguard medical services and stabilize skyrocketing premiums.This historic legislation (authored by Senate President Pro Tem John Burton,D-San Francisco) is sponsored by the California Medical Association,the California Labor Federation, AFL-CIO and thousands of other community and health advocate groups.

click here to read the article

Comment: California’s SB2 is a prime example of why the dialogue on reform
should not be “either incremental or universal,” but rather should be “incremental and universal.”

Our goal is comprehensive and affordable care for absolutely everyone which
can be achieved only by enacting a universal system of social insurance. But
because many barriers exist to achieving that goal in the immediate future,
we need to support interim measures that improve access and coverage without introducing detrimental policies that might negatively impact our goals.

It is estimated that SB2 will provide coverage to about 1.1 million of the
4.5 million Californians who are uninsured at any given point in time.
(At least 6.2 million Californians are uninsured at some point within a year.)
Expanding coverage to over a million residents is a very worthy goal,and
should be supported by all of us.

But SB2 still leaves several million without coverage. SB2 is the most expensive model of reform, and will increase California’s global healthcare costs significantly. It leaves in place the highly flawed and fragmented system of funding health care with its egregious administrative waste,catering to the private health insurance industry. It perpetuates many of the inequities in both the funding of health care and in the allocation of our health care resources. It clearly is not a measure that we can pass and then walk away from, as if the job were done.

SB921, the single payer bill of Sen. Sheila Kuehl, has not been included in
the conference committee deliberations, but it is still very much an active
bill. As a two year bill, it is scheduled for further consideration in January, 2004. It does have an almost insurmountable hurdle. Any tax increase in California must have a two-thirds vote in both the Senate and Assembly. The single payer model shifts private spending into the public sector. A variation of the model has not been created that would avoid a tax increase (even though offset by a reduction in private spending). The conservatives, though a minority, have been able to block any legislation involving a tax increase.

Although SB921 cannot pass in its present form, SB2 was crafted to avoid any
tax increase. Though SB2 falls far short of our goals, it can pass.Because
it is an improvement, it should be vigorously supported.

That said, we must not allow dissemination of the misperception that SB2
will have solved our health care problems. We must continue the fight for
coverage of the millions left uninsured, for eliminating the inequities in
our system, and for ensuring that comprehensive health care will be affordable for everyone.

We need to pass SB2. But then, instead of relaxing our efforts, we need to
become even more diligent in educating the public on the benefits of a single payer system of social insurance. California advocates need to send a loud and clear message on Sen. Kuehl’s SB921, the single payer bill.

Message: 2
From: “Don McCanne”
To:
Date: Tue, 2 Sep 2003 13:36:33 -0700
Subject: qotd: Understanding consumer-directed health care

California HealthCare Foundation
8/26/03
Understanding Consumer-directed Health Care in California
By Jon Gabel and Thomas Rice

Despite a shared interest among insurers and employers in exploring the potential of consumer-directed health plans, such coverage remains a rarity
in California-a state that typically leads the nation in innovative health
care models.

The report,Understanding Consumer-directed Health Care in California,examines consumer-directed health plans, which link consumers’ health coverage choices to the financial consequences of those choices. If,for example, consumers choose a health plan that results in greater overall expenditures, they will have to pay more in premiums. This report explains how the products work, identifies the industry players behind them, and discusses the factors likely to influence their growth.

The report focuses on three types of consumer-directed plans including:
* Health reimbursement arrangements (HRAs), whereby an employer establishes an individual health reimbursement arrangement for a specified dollar amount for each enrolled employee, generally in conjunction with a high deductible insurance product.

* Customized plans, whereby employers make a fixed contribution toward the
employee’s premium, and the employee then chooses among an array of products
with different prices that reflect a wide-range of benefit designs and provider networks.

* “Design your own” products, so far non-existent in California, let employees choose their own set of providers and benefit features-essentially designing their own provider network and specifying the services covered-with the employee’s premium contribution dependent on the choices made.

http://www.chcf.org/topics/view.cfm?itemid=21485

For the full report:
http://www.chcf.org/documents/insurance/ConsumerDirectedHealthCare.pdf

Comment: Since consumer-directed health care is being touted by some as the
next major trend in innovative reform efforts, activists should become informed on these proposals and their potential impact. The report by Gabel and Rice provides an excellent, straightforward explanation, along with a description of their initial impact in California.

Although purists in the health policy academic community might suggest that
we wait to observe the full impact of these innovations before we pass judgment on them, a few comments can be made in advance.

“Health reimbursement arrangements” (HRAs) are the insurance industry’s answer to medical savings accounts (MSAs). The accounts are funded by the employer. The accounts require administrative services since they can be used only for medical expenses, and they are not portable from employer to employer. They are combined with high deductible plans, usually PPOs.

Adverse selection is a problem if the employer offers any other options,resulting in excessive costs for plans that concentrate individuals with greater health care needs. Of concern is that the individual is exposed to 100% of the costs between the amount in the account and the deductible of the catastrophic coverage. Negative outcomes inevitably will result from failure to obtain timely care because of financial disincentives once the HRA account is depleted.

“Customized packages” are defined contribution programs in which the individual must pay more to obtain more comprehensive coverage of benefits and/or a greater selection of providers. Many healthy individuals will select lower cost coverage which may well prove to be inadequate if significant health care needs later develop. This defeats the purpose of insurance.

“Design-your-own” products do not exist in California. It is unlikely that they will ever be a significant player because of the difficulty of selecting and pricing almost unlimited variations in coverage.

Consumer-directed programs are designed to reduce health care costs for employers by shifting costs to employees. The health policy literature confirms that this can only result in reduced access to health care because of lack of affordability. Reduced access in turn results in impaired health outcomes. Consumer-directed programs are bad health policy. Why do we keep avoiding the inevitable conclusion that we need a comprehensive,universal program of social insurance?

(Thomas Rice discusses the issue of consumer choice in his chapter,”Should
Consumer Choice Be Encouraged in Health Care,” from the book, “The Social
Economics of Health Care,” edited by John B. Davis. It is well worth reading. http://www.semcoop.com/detail/0415251621)

Al-Jazeerah reports results of Pew survey

The Pew Research Center
Survey
July 24, 2003

Scrap Tax Cuts for Health Insurance

Fully 72% of Americans agree that the government should provide universal
health care, even if it means repealing most tax cuts passed since Bush took
office. Democrats overwhelmingly favor this proposal (86%-11%) and independents largely agree (78%-19%). Even a narrow majority of Republicans
(51%) favor providing health insurance for all even if it means canceling the tax cuts, while 44% disagree.

A big majority of those who support this proposal,ú 61%,ú think of it as a moral as well as a political issue, while most opponents tend to see this in strictly political terms (58%).

http://people-press.org/reports/display.php3?PageID=725
And…

Al-Jazeerah
8/31/03
Opinion
Majority of Americans Call for Universal Health Care
By Sam Adams

The United States of America is the only 1st-tier country that does not provide a comprehensive national health care system for all of its citizens. It is an appalling scandal that the richest country in the world ignores the needs of nearly 45 million people who lack health care insurance. The majority of Americans call for Universal Health Care, according to a PEW
Research Center Survey…

http://www.aljazeerah.info/Opinion%20editorials/2003%20Opinion%20Editorials/August/31%20o/Majority%20of%20Americans%20Call%20for%20Universal%20Health%20Care%20Sam%20Adams.htm

Comment: Our administration is attempting to bring American values to Iraq.
Shouldn’t we be uncomfortable with this report distributed by Al-Jazeerah?
More importantly, should we continue to neglect our problems here at home?

72% of us believe that our government should provide universal health care,
even if that means repealing most of the tax cuts. Does our example show other nations that democracy works? We have much more work to do to prove that it can.

Support for "hybrid" proposal?

Support for “hybrid” proposal?

Health Affairs
Web Exclusive
August 27, 2003

Americans’ Views Of The Uninsured: An Era For Hybrid Proposals Most agree that something should be done to help the uninsured, but they don’t want to pay higher taxes to do it.
by Robert J. Blendon, John M. Benson, and Catherine M. DesRoches

From the Discussion:
Although there is no public consensus on any single approach to helping the
uninsured get coverage, a hybrid plan-one that leaves workplace insurance in
place and includes elements of several different proposals to cover more of
the uninsured-offers the possibility of gaining public support.

Continuing reliance on workplace insurance will reassure those who already have such insurance that their coverage will not be at risk. The possibility of a compromise hybrid plan arises from the fact the large majorities of both.Democrats and Republicans are amenable to three different approaches to
covering the uninsured: some form of requirement that employers offer health
insurance to their employees, tax credits to buy private health insurance,
and expanding state government programs for low-income people to provide
coverage. With a hybrid plan, nearly everyone would get some element of
their preferred way to deal with the problem of the uninsured.

http://www.healthaffairs.org/WebExclusives/Blendon_Web_Excl_082703.htm

Comment: A hybrid proposal reminiscent of the Clinton plan, promising
something for everyone, brings back unpleasant memories of the disintegration of the legislative process when all special interests descended on Washington.
Words of optimism for reform escape me now.