USA Today
September 26, 2002
Bridge temporary insurance gaps
By Steven Findlay

Monday, the Census Bureau will release its annual tally of health-insurance
coverage in the USA. Once again we will be reminded of a shameful statistic:
In 2001, some 40 million or so Americans — one in seven — had no health
insurance during the entire year. That includes about 8 million children.

But the new Census numbers aren’t a complete picture of the problem. Many
more Americans have gaps in coverage than this annual report indicates.
That’s because the survey measures (or purports to measure) health-insurance
status during an entire year. But tens of millions of Americans lose their
coverage for some part of the year, sometimes for just a few weeks or
months, a dilemma not reflected in the statistics.

That’s why it’s time to stop using the Census Bureau’s annual report of the
full-year uninsured as the only benchmark of this problem. Instead, the
focus should shift to measures of the number of Americans each year who have
any gap in their coverage.

From 1996 to 1999, between 59 million and 62 million Americans were
uninsured at some point each year, according to a large-scale survey
conducted by the federal Agency for Healthcare Research and Quality. That’s
one in four people under the age of 65 (the age at which Medicare provides
universal coverage). Another Census Bureau analysis, done in 1998, found
that during a three-year period 30% of the population under age 65 can
expect to experience a gap in health insurance.

The change in measuring the uninsured is needed for both symbolic and
concrete reasons. Symbolically, the much larger number may garner more
political attention, as it should. The switch also would send a strong
message that any gap in health-insurance coverage, even of a few weeks, is
dangerous and unacceptable.

Bridging the gaps that millions of Americans have in their coverage would
underscore the fact that health insurance is a necessity, not a luxury. That
would be a good start down the road to universal coverage.

http://www.usatoday.com/usatonline/20020926/4483190s.htm

Comment: Better yet, let’s skip the start and go straight to universal
coverage.

The Oregonian
September 25, 2002
Kaiser backs out of Oregon Health Plan
By Joe Rojas-Burke

Kaiser Permanente, Oregon’s largest health maintenance organization, plans
to withdraw from the Oregon Health Plan, a state and federally funded
program for people who are poor or disabled.

The withdrawal effectively ends the state’s attempt to use commercial HMOs
to provide health care to the low-income population. The four largest
commercial plans have dropped tens of thousands of Oregon Health Plan
enrollees during the past two years, saying state reimbursements don’t cover
rising expenses.

Those dropped by Kaiser will remain covered by the Oregon Health Plan. But
they may struggle to find doctors willing to accept the state’s low rate of
payment.

http://www.oregonlive.com/business/oregonian/index.ssf?/xml/story.ssf/html_s
tandard.xsl?/base/business/1032954933321613.xml

Comment: The Oregon Health Plan is an admirable attempt to provide coverage
for low-income individuals, for high-risk individuals, and for those without
employer-based coverage. It has met some of its goals but has fallen short
on others. Overall it has improved the allocation of the very limited health
care funds available for these sectors of the patient population. But one
tradeoff is that services with high cost or low potential of preserving life
are not covered.

Besides rationing, a greater problem persists. These individuals do not have
enough of a political voice to assure that adequate funding of this coverage
would be provided. Commercial HMOs have been losing money in this program,
and direct-to-provider payments are so low that providers may no longer be
willing or even able to participate. Coverage means very little if
participating providers are not readily available.

There are excesses in health care, especially in administration. Reducing
that waste by eliminating the middleman health plans, and redirecting those
funds to health care could assure adequate funding for comprehensive health
care for everyone. Placing everyone in the same risk pool would eliminate
the tendency to under-fund care for low-income or high-risk individuals. And
everyone else would be assured that they would have coverage for benefits
and expenses that are not now covered by their current plans.

Measure 23, the Oregon Comprehensive Health Care Finance Act of 2002, would
do just that. The voters of Oregon will have the opportunity to vote on this
initiative in the November election.

Reuters Health
September 23, 2002
Millionaires Lining Up to Buy Personal Gene Maps
By Richard Woodman

A service to map a person’s entire genetic code is being offered by
America’s genome entrepreneur Craig Venter, according to the Sunday Times.

The newspaper said that for 400,000 (US$621,500), a person would get details
of their entire genetic code within 1 week.

Venter is said to have already signed up several millionaires, though he has
declined to name them.

According to the report, 25 million ($38.9 million) will be spent on the new
facility, which will offer the service starting later this year.

But other researchers, already upset by Venter’s commercial approach to the
Human Genome Project, are skeptical.

Dr. Tim Hubbard, head of human genome analysis at the Sanger Institute in
Cambridge, one of the laboratories involved in the Human Genome Project,
said knowing someone’s genome was not the same as understanding it.

“We know very little about the link between differences in genes and ill
health. Until we do, mapping individual genomes will be like the Russians
sending tourists into space. It is fun for those who can afford it, but it
is just a good gimmick.”

http://abcnews.go.com/wire/Living/reuters20020923_392.html

Comment: A frequent criticism of universal health care programs is that
they stifle technological innovations. Research and development costs, under
a publicly funded system, would be recovered, along with a fair profit, only
if the technological advances and new pharmaceutical products provided value
for the health care dollar.

But many innovations today such as spiral CT scans used as “virtual physical
examinations” or the development of high-priced copy-cat drugs are not
providing value considering their costs. In fact, the impact of these new
innovations may be detrimental and even more costly, producing a negative
value. Craig Venter’s abuse of the Human Genome Project, partly funded
directly and indirectly with public dollars, is a terrible waste of
resources that could be put to much better use.

More investment in research on the human genome is needed. But the mission
of that research must be for the public good rather than primarily as a
means to divert large amounts of health care dollars to passive investors.

At our current health care spending of over $1.5 trillion, more than enough
funds would be available to support a robust research program. But let’s do
it through the National Institutes of Health. And then let’s demand that our
public investment is used for the public good. Private firms can prosper by
producing technological and pharmaceutical products, but they should prosper
only when they provide adequate health care value.

Roll Call
September 19, 2002
Kennedy, Breaux To Open Big New Health Care Debate
By Morton M. Kondracke

Edward Kennedy (D-Mass.) and John Breaux (D-La.) are pushing for a new look
at comprehensive health care reform.

Kennedy, the old lion liberal, has given up on his dream of a
Canadian-style, government-run health insurance system and shortly will
introduce legislation mandating that every employer except the smallest
provide a basic insurance plan for its workers.

Breaux, who defines himself as a “radical centrist,” is working on perhaps
his most radical health reform yet – replacing the nation’s current
employer-based insurance system with an individual mandate.

The two Democrats are moving in opposite directions from a policy
standpoint, but they are acting on the same assumption – that rocketing
costs and collapsing coverage are putting the health care system into
crisis.

While Kennedy’s plan has the advantage of building on the employer system
that’s dominated health care since World War II, Breaux’s would end that
system. He’s even thinking about collapsing Medicare, Medicaid, veterans
health and other government programs into a single national insurance plan.

Kennedy’s plan:

Kennedy’s staff estimates that his plan would cover 80 percent of the
uninsured – 32 million workers and their families. Employers would bear most
of the cost, with the government subsidizing struggling small firms. No cost
figure has been worked up for the plan, but Kennedy notes that savings can
be achieved by reducing administrative and paperwork inefficiencies in the
health system, which account for $400 million of $1.4 trillion total annual
outlays.

Breaux’s plan:

People would be required to have a basic health plan much as they do auto
insurance, with better coverage optional and subsidies for the poor.

http://www.rollcall.com/pages/columns/kondracke/00/2002/kond0919.html

Comment: It is gratifying to see that our political leaders are grappling
with the problem of the uninsured. But it is disappointing to see that our
political leaders are being political. Since a single, universal program of
health insurance is still perceived as politically unachievable, attention
has been directed to the alternative approaches of employer mandates or
individual mandates.

In attempting to achieve this political “compromise,” very important health
policy principles are being abandoned. Both approaches would fall short on
universal coverage. Both would fail to achieve the administrative savings of
a universal, publicly administered program. Both would result in
multi-tiered access to care because of varying benefit and cost sharing
features in the menu of plans available. Both would fail to provide
integration of health care services that would enable more effective
application of quality improvements to our system. And both would
significantly increase the combined public and private costs of health care
for the nation.

The third option, a single, universal health insurance program, seems to be
the third rail of health care reform. But why? It would assure coverage of
comprehensive benefits for absolutely everyone, while controlling costs and
improving quality by improving allocation of our resources.

Let’s push the flawed policies over to the third rail and move on down the
main track towards an equitable, affordable health care system for all.

Los Angeles Times
September 20, 2002
Editorial

Backlash on Health Costs

The United States is the only major industrialized country in the world that
lacks universal health care.

Here’s what’s increasingly clear to all: The growth in health-care premiums
and in the numbers of people without insurance represents an economic drag
that business cannot long endure and a level of unnecessary suffering a
civilized nation cannot in good conscience allow.

… Americans should demand that national candidates seeking their votes in
the November election spell out what they plan to do to rein in medical
costs and help the 40 million Americans who go without medical coverage.

LA Times Article

Comment: The message is now mainstream. Next… action!

Kaiser Daily Health Policy Report
September 18, 2002

Mental Health Parity Opponents Raise Concerns About Legislation During
Center for Policy Analysis Forum

From a National Center for Policy Analysis forum on insurance mandates for
mental health parity:

Rep. Jim DeMint (R-S.C.):

“To add mandates to the current third-party system is just going to cause it
to collapse. So anyone who’s arguing for mandates at this point is really
arguing for single-payer health care.”

http://www.kaisernetwork.org/daily_reports/print_report.cfm?DR_ID=13525&r_cat=3

Comment: We need more mandates!

The Washington Post
September 17, 2002
Federal Employees’ Health Premiums to Increase
By Stephen Barr

Health insurance premiums for federal employees and retirees will rise an
average of 11.1 percent next year, the Bush administration said this
afternoon. The increase marks the third consecutive year that premiums have
jumped by more than 10 percent.

The officials said OPM held down the average increase through negotiations
with insurance companies and by allowing health maintenance organizations to
raise the co-payments or add co-payments for their enrollees.

The federal program also will see the introduction of a new
“consumer-directed option” sponsored by the American Postal Workers Union,
the officials said.

In the APWU plan, enrollees will receive a health-spending account worth
$1,000 for individuals and $2,000 for families. Employees will be able to
draw from the account to pay for doctor visits, lab tests and prescription
drugs. They may also use the account to pay for dental and eye care.

Unspent account dollars are rolled over to the next year. If an employee
spends all of the money, they must cover all their medical expenses out of
their pockets, ranging up to $600 for individuals and $1,200 for families,
before traditional health plan coverage kicks in.

The National Association of Retired Federal Employees said it would oppose
the new APWU option and called on OPM to withdraw the plan before the start
of the year.

NARFE president Frank G. Atwater said his group feared the new plan would
divide healthy and sick persons into different coverage options and drive up
premiums in FEHBP’s more comprehensive plans.

http://www.washingtonpost.com/wp-dyn/articles/A29075-2002Sep17.html

And from a press release from the Office of Personnel Management:

Kay Coles James, Director of the OPM:

“Because our program is designed to let employees and retirees compare
benefits, costs and other features important to them in a health plan, they
can select one plan from among many and get the most bang for their
health-care dollars. At the same time, having a choice of plans promotes
healthy competition among carriers for subscribers and helps contain costs.”

“I met with the FEHB plans and asked for their best ideas to help hold down
premiums and promote quality. And I encouraged them to explore all
reasonable options to constrain premium increases, while maintaining a
benefits program that is highly valued by our employees and retirees, as
well as attractive to prospective federal employees. One result is an
innovative consumer-driven option under the APWU health plan.”

http://www.opm.gov/pressrel/2002/MO-FEHB.asp

Comment: The FEHBP is the largest employer-sponsored health insurance
program in the nation. Changes in the FEHBP will reflect changes in our
entire system of funding health care. We need to be concerned about premium
increases and about the new consumer-directed accounts.

The OPM takes pride in that fact that by offering a choice of competing
health plans, the market is controlling health care costs. Three years of
double digit premium increases hardly represents success in cost
containment! And that doesn’t even factor in the increases in co-payments
inflicted on the beneficiaries. Since this is the very best the market has
to offer it is clear that costs will never be controlled until they can be
contained within a single global budget.

And now the OPM has opened the FEHBP to an initial, modest version of the
“consumer-driven option” of “health-spending accounts.” These individually
delegated accounts, designed along the medical savings account model, appeal
to healthy individuals who anticipate that they will not spend down their
accounts and never have to face the large deductibles of the “catastrophic”
backup managed care plan. It is anticipated that these plans will be popular
for the majority who are healthy because they really are a good deal for
those that will never face major medical expenses.

But what happens to the traditional insurance programs? Those who do have
chronic medical conditions or who are aging and recognize their
vulnerability will remain in the traditional programs. Because this is a
much more expensive population, costs per individual for this sector will
skyrocket, resulting in the so-called “death spiral” of ever higher
premiums, causing these plans to shut down because they are no longer
affordable. All that will be left for this sector will be plans that are
stripped of benefits and that have unaffordable cost-sharing arrangements,
further impairing access.

Market competition of health plans and the newer consumer-driven trends are
making health care unaffordable for the average resident of the United
States. Yet we have the resources to provide comprehensive care for
everyone. What we lack is an effective method controlling the allocation of
health care funds. A fragmented system of multiple health plans and shifting
of risk to those with medical needs will continue to impair access.
Switching to a single, publicly-administered risk pool with a generous
global budget would assure access to affordable care for everyone. Why do we
keep avoiding the inevitable moral imperative when so many are suffering
because of our inaction?

The Washington Post
September 17, 2002
Federal Employees’ Health Premiums to Increase
By Stephen Barr

Health insurance premiums for federal employees and retirees will rise an
average of 11.1 percent next year, the Bush administration said this
afternoon. The increase marks the third consecutive year that premiums have
jumped by more than 10 percent.

The officials said OPM held down the average increase through negotiations
with insurance companies and by allowing health maintenance organizations to
raise the co-payments or add co-payments for their enrollees.

The federal program also will see the introduction of a new
“consumer-directed option” sponsored by the American Postal Workers Union,
the officials said.

In the APWU plan, enrollees will receive a health-spending account worth
$1,000 for individuals and $2,000 for families. Employees will be able to
draw from the account to pay for doctor visits, lab tests and prescription
drugs. They may also use the account to pay for dental and eye care.

Unspent account dollars are rolled over to the next year. If an employee
spends all of the money, they must cover all their medical expenses out of
their pockets, ranging up to $600 for individuals and $1,200 for families,
before traditional health plan coverage kicks in.

The National Association of Retired Federal Employees said it would oppose
the new APWU option and called on OPM to withdraw the plan before the start
of the year.

NARFE president Frank G. Atwater said his group feared the new plan would
divide healthy and sick persons into different coverage options and drive up
premiums in FEHBP’s more comprehensive plans.

http://www.washingtonpost.com/wp-dyn/articles/A29075-2002Sep17.html

And from a press release from the Office of Personnel Management:

Kay Coles James, Director of the OPM:

“Because our program is designed to let employees and retirees compare
benefits, costs and other features important to them in a health plan, they
can select one plan from among many and get the most bang for their
health-care dollars. At the same time, having a choice of plans promotes
healthy competition among carriers for subscribers and helps contain costs.”

“I met with the FEHB plans and asked for their best ideas to help hold down
premiums and promote quality. And I encouraged them to explore all
reasonable options to constrain premium increases, while maintaining a
benefits program that is highly valued by our employees and retirees, as
well as attractive to prospective federal employees. One result is an
innovative consumer-driven option under the APWU health plan.”

http://www.opm.gov/pressrel/2002/MO-FEHB.asp

Comment: The FEHBP is the largest employer-sponsored health insurance
program in the nation. Changes in the FEHBP will reflect changes in our
entire system of funding health care. We need to be concerned about premium
increases and about the new consumer-directed accounts.

The OPM takes pride in that fact that by offering a choice of competing
health plans, the market is controlling health care costs. Three years of
double digit premium increases hardly represents success in cost
containment! And that doesn’t even factor in the increases in co-payments
inflicted on the beneficiaries. Since this is the very best the market has
to offer it is clear that costs will never be controlled until they can be
contained within a single global budget.

And now the OPM has opened the FEHBP to an initial, modest version of the
“consumer-driven option” of “health-spending accounts.” These individually
delegated accounts, designed along the medical savings account model, appeal
to healthy individuals who anticipate that they will not spend down their
accounts and never have to face the large deductibles of the “catastrophic”
backup managed care plan. It is anticipated that these plans will be popular
for the majority who are healthy because they really are a good deal for
those that will never face major medical expenses.

But what happens to the traditional insurance programs? Those who do have
chronic medical conditions or who are aging and recognize their
vulnerability will remain in the traditional programs. Because this is a
much more expensive population, costs per individual for this sector will
skyrocket, resulting in the so-called “death spiral” of ever higher
premiums, causing these plans to shut down because they are no longer
affordable. All that will be left for this sector will be plans that are
stripped of benefits and that have unaffordable cost-sharing arrangements,
further impairing access.

Market competition of health plans and the newer consumer-driven trends are
making health care unaffordable for the average resident of the United
States. Yet we have the resources to provide comprehensive care for
everyone. What we lack is an effective method controlling the allocation of
health care funds. A fragmented system of multiple health plans and shifting
of risk to those with medical needs will continue to impair access.
Switching to a single, publicly-administered risk pool with a generous
global budget would assure access to affordable care for everyone. Why do we
keep avoiding the inevitable moral imperative when so many are suffering
because of our inaction?

Prof. Donald W. Light responds to Prof. Kevin Grumbach’s comments on cost
sharing:

Further Thoughts on “Cost Sharing”

American employers and policy makers are unique in their conviction that
cost sharing (by which I mean co-payments) will or do hold down rising
health care costs. As European experts note, the United States has had by
far the greatest amount of cost sharing for decades and by far the most
costly health care system with the poorest controls over its escalating
costs. For a realistic, evidence-based overview of the comparative
literature, I recommend Chapter 3 of European Health Care Reform: Analysis
of Current Strategies from WHO-Europe, Copenhagen 1997.

One basic reason co-pays have little effect, as Berk and Monheit have noted
in Health Affairs, is that patient-based decisions largely consist of
initial decisions to see a doctor or not and other similar decisions that
affect only a few percent of total costs. If one has a co-pay on more
serious and costly decisions, like hospitalization, it’s a punishment, not a
deterrent.

When Congress decided that senior citizens should pay for the first day of
hospitalization, what did they have in mind? -That patients whose doctors
think their problem is serious enough to be hospitalized should be
encouraged to refuse because of the cost? Or go hospital shopping? Or
generate income for Medicare? No other advanced system considers co-pays as
a serious tool for cost containment or income, and most consider them
clinically perverse as well as unethical. Several have used them and then
dropped them because of their administrative costs, nuisance and perverse
effects on patients and staff. No evidence exists that co-pays lower the
rate of increasing costs – they just make the sick pay some of them.

The European overview addresses a number of other forms of cost sharing,
such as benefit limits, and in a recent Health Affairs article (Web
2002:W229), Lee and Tollen address both, but with a very different tone.
Lee and Tollen write about excluding drug benefits, or prevention services,
or high-cost cases with the same neutrality that they might write about how
employers could save on company cars by not having air conditioning or
remote access systems or anti-lock brakes. You can cover the prescription
drugs that board-certified physicians think sick patients need for their
illness or not. It’s treated as morally neutral as deciding whether you
want to pay for AC or remote access on a car or not.

The myth of co-pays as an effective tool is perpetuated by econometric
models like the Hay model used by Lee and Tollen, that builds in assumed
savings; so that it “proves” by definition that any co-pay policy saves
money. “Cost-sharing” is also a highly political and moral term, with its
share-the-burden connotation. Who can be against sharing, or choice or
empowerment? These American policy themes make in nearly impossible for
policy makers to be realistic about the bad choices, disempowerment and
impoverishment that many “cost-sharing” policies impose, such as limiting
coverage for needed services and imposing high co-pays. Have they read in
Tom Rice’s seminal book about the realities of consumer choice in health
economics?

Suppose we call co-pays, Making the Sick Pay? Then it is clearer what is
going on, that the policy goal is to provide disincentives to patients to
not follow what their doctor recommends. I.e. we spend great sums training
doctors well and acknowledge that they are masters of diagnosis and
treatment with licenses to do both, but then punish patients financially for
following doctor’s orders.

At the end of their article, Lee and Tollen mention that just as much can be
saved by having a group-model HMO in which health care teams can hold costs
down by providing evidence-based integrated care within a system that
minimizes duplications, waste and overhead; so there’s a third choice beside
not covering needed services or making the sick pay for being treated.

In the rest of the world, this third option stands for the main event.
Costs are contained effectively and over time through supply-side measures
and through organizing the delivery system well. You can’t do this without
some form of universal health care, however. Costs cannot be contained
without getting your arms around the whole system. Otherwise you get what
European experts observe has been happening in America for years, one
partial initiative after another that leads to providers shifting costs to
some other part of the system. Cost-sharing in patchwork system, together
with consumer “choice” and “empowerment” will lead to new cost shifting and
poorer care for those who need it most.

Donald W. Light, Ph.D., Professor of Comparative Health Care Systems, UMDNJ
and Fellow, Center for Bioethics at Penn