PNHP

Hsiao: Single-payer savings are conservative

Hsiao: Single-payer savings are conservative

By Anne Galloway
Vtdigger.com, Feb. 19, 2011

Harvard economist William Hsiao told lawmakers a month ago that if they adopted a single payer style health care plan, Vermonters could save $500 million in the first year of implementation (2015).

Since then, questions have been raised about that target figure. Fletcher Allen Health Care, in comments to Hsiao, said the professor overestimated the savings that could materialize from a single-payer system.

In a 15-page rebuttal to the Hsiao plan, hospital administrators took issue with Hsiao’s assertions that Vermont residents could save that much money through a system that would be designed to curtail administrative costs, waste, duplicative services, fraud and abuse. Officials pointed to statewide statistics regarding Vermont’s hospitalization and diagnostic testing rates, which they said are lower than those of neighboring states.

“Getting these numbers right is not about resting on our laurels or pretending that we cannot further reduce unnecessary services,” officials wrote. “It does speak directly, though, to what kind of savings can be further squeezed out of an already high-performing system.”

Hsiao’s report estimates that Vermont medical providers could reduce administrative costs by 6.5 percent under a streamlined billing system. Under that scenario, Fletcher Allen would be expected to save $29 million — a figure officials say is out of the question. They said it would be possible to save $5.3 million in estimated administrative costs. The hospital spends $35 million on billing and insurance related expenses per year, according to the written comments. (Fletcher Allen’s total revenues in 2009 were $875 million.)

Hsiao didn’t waver, however, in his assessment of the potential savings a single payer system could generate. The Harvard professor’s team ran the numbers again for his final report, which was submitted to the Legislature on Friday, and the projected 2015 savings came in at $580 million.

Hsiao said he received as many comments about an overestimation of the savings as he did complaints about underestimating the totals. In all, 170 Vermonters commented on the draft report, which was submitted to the Legislature in January.

“We didn’t do such a bad job,” Hsiao said. “We came out in the middle.”

If anything, Hsiao said, the totals his team calculated are conservative.

“We don’t want to mislead the Legislature and the governor to do something highly risky,” Hsiao said. “We erred on the side of conservatism. We overstated the cost so if things don’t work out you have a margin (of error). The worst thing we can do is be too optimistic so you’re left in a deficit position. It’s not my intention to put you in that position.”

Dr. Jonathon Gruber, a health care economist from MIT, supported Hsiao’s conclusions in a presentation to the House Health Care Committee Friday afternoon.

“Bill’s been conservative, but appropriately so,” Gruber said. “It’s better to get it right than overreach and see it collapse.”

Hsiao said his team included in its estimate labor savings based on an all-claims payment system in which doctors and nurses would no longer need to satisfy billing requirements for insurers.

In the final report, Hsiao said he fleshed out a few details, but his broadest conclusion didn’t change: In order for the state to save money and provide better health care outcomes for all Vermonters, it needs to adopt a universal health care system with a uniform payment mechanism.

“The system is broken,” Hsiao said. “It’s broken in a systemic way. Different parts don’t come together in a synchronization. It will only get worse, not better.”

Hsiao recommends investing $350 million of the $580 million in estimated savings into programs to support primary care doctors and an extension of “essential” medical benefits to uninsured or underinsured Vermonters.

In 2016, the single payer system is projected to save $770 million. By 2019, Hsiao estimates it will reduce health care spending by $1.1 billion.

The Department of Banking, Insurance, Securities and Health Care Administration says the state will spend $5.9 billion on health care in fiscal year 2012. By 2015, that number is expected to climb an additional $1.6 billion.

Employers would reap substantial savings, according to the Hsiao report, if the essential benefit package is offered by the state. (A comprehensive package, which would include nursing home care, would result in substantial increases in overall medical expenditures.)

Per employee spending on health care would drop by $200 in 2015 and $550 in 2019, according to the report. The total estimated savings for 2015 would be $80 million for businesses; in 2019, companies would save about $220 million on health care costs, according to Hsiao’s report.

Instead of paying premiums for workers, employers would contribute to the cost of health care through a payroll tax, under the Hsiao plan. The tax would be 12.5 percent in 2015 and 11.6 percent in 2019, including a 3 percent contribution from employees. If the system doesn’t change, employers and workers will pay out the equivalent of a 13.4 percent payroll tax in 2015 and 13.7 percent in 2019 via premiums.

The estimates, Hsiao said, depend on how effectively and quickly the system changes. “We cannot predict the future,” Hsiao said. “There is always some uncertainty.”

One of those uncertainties is whether the courts will overturn, or the Congress will repeal the Affordable Care Act which was enacted last year. The report says that when the law is fully implemented, Vermont will be eligible to receive $400 million. Both Gruber and Hsiao said this federal funding would pay for coverage of half of the state’s 47,500 uninsured residents. If the federal money doesn’t come through, it will be harder for the state to implement single payer because the payroll tax would have to be several percentage points higher, Gruber said.

Hsiao and Gruber both cautioned that the independent board that manages the payment system for providers must consist solely of members from the two sets of stakeholders that are naturally at “loggerheads” – businesses and providers.

“The United States has relied on politicians to make these decisions and they have not been able to control costs because powerful interests can influence politicians,” Hsiao said.

Other countries, he said, have established direct negotiating processes between the parties that pay and the parties that are compensated. “That brings about a better balance,” Hsiao said. “And it allows the system to maintain stability. That’s our motive and reasoning for recommending an independent board.”

If the single payer system is financed through a payroll tax, Hsiao said the Legislature should control the rate.

Rep. Mark Larson, chair of the House Health Care Committee, asked Hsiao if the health care delivery system can be reformed without addressing the payment system for providers.

Hsiao let the word “no” hang in the air before he elaborated. “That’s pie in the sky thinking,” Hsiao said.

“I would ask the people who propose this, what leverage will you use to change the health care delivery system?” Hsiao said. “You have to assume the current health care delivery system is in some kind of equilibrium. How will you be able to disturb it other than just arbitrarily say I’m going to pass a law, I’m going to force you to do it. You won’t be able to do that. Not in the United States, not even in China, an autocratic country which is trying to do that and failing miserably by now.

“The question is what leverage do you use?” Hsiao said. “The leverage you use is the payment syst
em. You change the incentive structure, then the delivery system will move. The payment system is like a magnet. The delivery system is like many iron particles when you change that magnet to a different position the iron particles will move. But to do that — to change the payment system — you have to change the financing. To be effective in changing delivery system you have to remove the current situation where providers can play games with the insurance such as cost shifting.”

http://vtdigger.org/2011/02/19/hsiao-single-payer-savings-are-conservative/

Health care consultant sticks with single-payer

By Nancy Remsen
The Burlington Free Press, Feb. 19, 2011
 
MONTPELIER, Vt. – The consultants who urged Vermont to move to a single-payer health-care system received 170 comments — complimenting, questioning and criticizing their draft report — but nothing persuaded the researchers to revise their basic recommendation, they told lawmakers Friday.
 
“It kept us busy and sleepless for a couple of weeks, but we really benefited from these comments,” William Hsiao, a Harvard University professor of economics and lead author of the report analyzing three health reform designs, told the House Health Care Committee. His team had double-checked its calculations and models, Hsiao said. “Our conclusion and recommendation didn’t change.”
 
Hsiao and three other principal authors came to the Statehouse to deliver their final report and field questions from two panels of lawmakers charged with writing a bill that would move the state toward ensuring all Vermonters had medical coverage, simplify the current claims chaos and curb mushrooming medical costs.
 
Gov. Peter Shumlin presented the Legislature with his plan to achieve a single-payer health system last week. It was based on the preliminary recommendations from Hsiao and his team.
 
The consultants haven’t been the only ones peppered with questions and comments in the month since Hsiao outlined the single-payer plan. Lawmakers have received plenty of feedback, and they had dozens of questions for the panel.
 
One of the top issues: How reliable is the estimate of $580 million savings from making the switch to a single-payer claims system? About $400 million of the savings would cover the cost of extending standard medical coverage to all Vermonters plus pay for investments in primary care and update some community hospitals.
 
Hsiao joked his team felt they were being “punched on both cheeks” on the question of the accuracy of the savings. Some people complained the researchers underestimated the savings, while others said they overestimated.
 
He cited, for example, Fletcher Allen Health Care, which submitted its own analysis of the savings it might experience as a result of processing fewer medical claims. Fletcher Allen argued Hsiao overestimated the medical center’s savings.
 
Hsiao countered, “They used a much narrower analysis of how a single-payer system would affect them.” He said the state’s largest medical center underestimated its savings by assuming Medicare and Medicaid claims wouldn’t be processed through a new, single claims pipeline — but they would. And Fletcher Allen calculated only clerical savings, he said, not savings for doctors and nurses who would spend less time on insurance paperwork.
 
Jonathan Gruber, economic professor at Massachusetts Institute of Technology and a co-author of the report, suggested Hsiao was almost too conservative in his assumptions about savings.
 
Hsiao explained, “Our approach was to try to underestimate the savings and overestimate the cost. We didn’t want to mislead the Legislature and governor into doing something risky.”
 
Deb Richter, a Vermont primary-care physician and long-time advocate for a single-payer system, is one of those who believe the state would save more. Still, she said after the presentation that she agreed with Hsiao: “It is better to underestimate than overestimate.”
 
Sen. Kevin Mullin, R-Rutland, asked the researchers whether creating a single-payer system that guaranteed coverage to all residents would make Vermont a magnet. “We keep hearing it isn’t an issue, but not to my satisfaction,” he said.
 
Gruber noted that under the federal Affordable Care Act, other states would have universal coverage, too. He added that studies of the impact of generous welfare benefits on migration have shown “it doesn’t seem to matter.”
 
Nicolas Rockler, an economist with Vermont-based Kavet, Rockler and Associates and another researcher, added, “The unemployed aren’t very mobile.”
 
Mullin also asked about the impact of the reform on medical professionals. He said some doctors told him if the state moved to a single-payer system, they would leave. He noted the state already has shortages among some medical professionals, especially in rural areas.
 
Hsiao said he received a telephone call from someone identifying herself as a doctor who said she knew a dozen physicians who would move to Vermont if it made the switch. He added that the plan called for using about $50 million of the $580 million in savings to recruit and retain primary-care physicians.
 
Rep. George Till, D-Jericho, asked Hsiao to address the concerns of employers who self-insure.
 
The House Health Care Committee had received a letter recently from John O’Kane, government programs manager at IBM Corp., arguing it should be allowed to continue to offer its own insurance plan.
 
Hsiao told lawmakers that self-insured plans could continue to operate but noted, “It would be up to employers and workers whether they wanted double insurance.” Vermont’s IBM employees and their families all would be eligible for the state’s standard coverage and would be paying for it, Hsiao said.
 
O’Kane, in a telephone interview, said IBM would object to paying for coverage the company didn’t want.
 
Speaking after his presentation, Hsiao said he was surprised at IBM’s opposition, given that the company faces similar circumstances for its employees in many countries. “They can still offer a uniform package,” he said, by providing supplementary coverage to Vermont’s standard plan.
 
“I understand rising health-care costs have been straining IBM,” Hsiao said, noting he met with their representatives in Vermont. “I’m surprised IBM wouldn’t consider this, because this would lower their costs for workers and their families.”
 
Armed with more information in the 200-page final report from the Hsiao team and with the Shumlin administration’s 80-page bill, House Health Care Committee Chairman Mark Larson, D-Burlington, said his committee would proceed with its review of the state’s next steps.
 
“The first question,” Larson said, “is whether there is enough evidence to believe a reformed system would be better.” He posed that question to the panel.
 
Gruber responded, “We aren’t in such a great place now. With no change, we know where we are headed — which is not sustainable.”
 
http://www.burlingtonfreepress.com/article/20110219/NEWS03/110218018/Health-care-consultant-sticks-with-single-payer

Legislative committees approve copays for Medi-Cal

Calif. Assembly, Senate Budget Committees Pass Spending Plans

California Healthline
February 22, 2011

On Friday, California’s Assembly Committee on Budget and Senate Budget and Fiscal Review Committee passed nearly identical state budget plans.

Changes to Medi-Cal

Both budget committees approved a plan to establish mandatory copayments for Medi-Cal beneficiaries, which would reduce state spending by about $584 million, according to a Senate analysis.

The plan calls for copays of:
$3 and $5 for some prescription drugs;
$5 for physician and dentist visits;
$50 for emergency department visits; and
A maximum of $200 for hospital stays.

The plan also calls for the state to reduce Medi-Cal payments to health care providers by the amount of the copays.

Health care providers have expressed concern that they will face higher costs if Medi-Cal beneficiaries are unable to afford the higher copays.

http://www.sacbee.com/2011/02/20/3416369/browns-countdown-day-42-medi-cal.html

Although California has been at the bottom of the states in Medicaid payment rates, the state legislative committees recently passed another 10 percent cut in those rates. Now they have also approved legislation to reduce rates further by the amount of these copayments, amounts that will surely be absorbed by the providers since the Medicaid population lives in poverty or near-poverty and will not be able to pay these copayments. That’s understandable when you consider that the federal poverty level for 2011 is an annual income of $10,890 for an individual.

Yet the Patient Protection and Affordable Care Act will greatly expand the Medicaid population. The losses faced in the Medi-Cal program cannot be made up by an increase in volume. The additional load displaces privately insured patients, and the losses to the providers increase. The physicians who refuse to see Medi-Cal patients thrive, whereas those overloaded with Medi-Cal patients are threatened with insolvency. Let me emphasize that, based on my own personal experience, this is no exaggeration.

As a welfare program representing a population without an adequate political voice, Medicaid will always be underfunded. Simple common decency dictates that we should eliminate this program and replace it and the rest of the dysfunctional financing system with an improved Medicare for all program that serves everyone well.

Krauthammer backs into single payer

Krauthammer on health care, trains, Mideast

By Susan Taylor Martin
St. Petersburg Times
February 20, 2011

Susan Martin: Besides being a commentator, you are a medical doctor who criticized health care reform as a “2,000-page bill that will generate tens of thousands of pages of regulations.” Isn’t that a great argument for the simplicity of Canadian-style universal health care?

Charles Krauthammer: It is. But it seems to me there are two choices. We have the best medical care in world but it is the most expensive and we waste a lot. What you need to do is reduce the complexity and inefficiency. If we can’t get it right, we’re eventually going to a single-payer system. At least it doesn’t have this incredible, absurd complexity of ObamaCare. It’s the worst of the worst. It has the complexity of our (present) system and doesn’t give the universal coverage of single payer.

http://www.tampabay.com/news/perspective/article1152425.ece

Comment: 

By Don McCanne, MD

Charles Krauthammer may be a conservative columnist, but he is very bright, having been awarded a Pulitzer Prize, and, as a Harvard-trained physician, he can speak knowledgeably about our health care system. His conclusions? Our health care system is the most expensive and wastes a lot due to its complexity and inefficiency, while Obamacare has brought us this incredible, absurd, worst-of-the-worst complexity which would not only be reduced by single payer, but single payer would also provide us with universal coverage.

We hear it over and over again from informed individuals: Since costs are out of control and too many individuals will remain uninsured or under-insured, a single payer system may be inevitable. But there has been a shift. We used to hear this from informed liberals, but now we hear it primarily from informed conservatives (with a few notable exceptions such as Bernie Sanders).

It’s not that we don’t understand the efficiency and effectiveness of single payer; we clearly do. The opposition has been primarily from those who, on an ideological basis, oppose any role of government in health care, other than as a safety net for the indigent. But even their icon of liberty, Friedrich Hayek, stated in his classic, The Road to Serfdom, “Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”

The logic for single payer is there, and there is no longer any reason to perpetuate the ideological divide. The conservatives need to revisit Friedrich Hayek, and the liberals need to review again the tenets of social justice, perhaps beginning with Article 25 of The Universal Declaration of Human Rights. Once we get our respective camps in order, we should find that we have a common meeting ground.

“The Road to Serfdom” by F.A. Hayek:
http://www.press.uchicago.edu/ucp/books/book/chicago/R/bo4138549.html

“The Universal Declaration of Human Rights”
http://www.un.org/en/documents/udhr/index.shtml

Krauthammer backs into single payer

Krauthammer on health care, trains, Mideast

By Susan Taylor Martin
St. Petersburg Times
February 20, 2011

Susan Martin: Besides being a commentator, you are a medical doctor who criticized health care reform as a “2,000-page bill that will generate tens of thousands of pages of regulations.” Isn’t that a great argument for the simplicity of Canadian-style universal health care?

Charles Krauthammer: It is. But it seems to me there are two choices. We have the best medical care in world but it is the most expensive and we waste a lot. What you need to do is reduce the complexity and inefficiency. If we can’t get it right, we’re eventually going to a single-payer system. At least it doesn’t have this incredible, absurd complexity of ObamaCare. It’s the worst of the worst. It has the complexity of our (present) system and doesn’t give the universal coverage of single payer.

http://www.tampabay.com/news/perspective/article1152425.ece

Charles Krauthammer may be a conservative columnist, but he is very bright, having been awarded a Pulitzer Prize, and, as a Harvard-trained physician, he can speak knowledgeably about our health care system. His conclusions? Our health care system is the most expensive and wastes a lot due to its complexity and inefficiency, while Obamacare has brought us this incredible, absurd, worst-of-the-worst complexity which would not only be reduced by single payer, but single payer would also provide us with universal coverage.

We hear it over and over again from informed individuals: Since costs are out of control and too many individuals will remain uninsured or under-insured, a single payer system may be inevitable. But there has been a shift. We used to hear this from informed liberals, but now we hear it primarily from informed conservatives (with a few notable exceptions such as Bernie Sanders).

It’s not that we don’t understand the efficiency and effectiveness of single payer; we clearly do. The opposition has been primarily from those who, on an ideological basis, oppose any role of government in health care, other than as a safety net for the indigent. But even their icon of liberty, Friedrich Hayek, stated in his classic, The Road to Serfdom, “Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”

The logic for single payer is there, and there is no longer any reason to perpetuate the ideological divide. The conservatives need to revisit Friedrich Hayek, and the liberals need to review again the tenets of social justice, perhaps beginning with Article 25 of The Universal Declaration of Human Rights. Once we get our respective camps in order, we should find that we have a common meeting ground.

“The Road to Serfdom” by F.A. Hayek:
http://www.press.uchicago.edu/ucp/books/book/chicago/R/bo4138549.html

“The Universal Declaration of Human Rights”
http://www.un.org/en/documents/udhr/index.shtml

Health Mandate Unconstitutional, Single Payer Constitutional

Legality of Health Mandate

Letter to the Editor
The New York Times,  February 17, 2011

To the Editor:

Your Feb. 10 editorial “A Debate Bigger Than Reform” criticized my testimony before the Senate Judiciary Committee on the unconstitutionality of the individual insurance mandate.

My testimony exclusively concerned why the individual mandate was outside existing Supreme Court doctrine, which limits Congress’s power under the commerce clause and the necessary and proper clause to regulating or prohibiting economic activity.

Current doctrine has never recognized a power to compel the citizenry at large to engage in economic activity, a power Congress has never before claimed. Therefore, nothing in my testimony would “fundamentally weaken” or “severely limit” the current powers of Congress.

Congress has many constitutional ways to address the market distortions that are inflating the costs of both health care and health insurance. And, although I would oppose such a program, existing doctrine would allow Congress to impose a “single payer” tax-and-spending scheme like Medicare on everyone.

Randy E. Barnett
Washington, Feb. 12, 2011
The writer is a professor of legal theory at Georgetown Law School.

http://www.nytimes.com/2011/02/18/opinion/l18mandate.html

Medicaid peril

Letters to the editor
Huntsville Times, Thursday Feb. 17, 2011

Thank you for Monday’s editorial on Medicaid by Mike Hollis. As he mentions, Medicaid pays for more than half of Alabama births and 40 percent of child healthcare. But that funding affects every single one of us, no matter what insurance we have. If an obstetrician lost funding for half her deliveries, would she stay here? If she left, her non-Medicaid pregnant patients would also lose their obstetrician.

This is exactly what happened recently to some North Alabama hospital maternity wards. Obstetricians couldn’t afford to maintain privileges at those hospitals, because they had to deliver too many babies for uninsured women. Without doctors, the maternity wards closed, so all women in those communities now have to drive elsewhere to have their babies.

Reducing Medicaid funding would put every pregnant woman and newborn in our state at risk. It doesn’t matter how much money you can pay your doctor if that doctor is not around. The same thing could happen to children now able to get care from excellent pediatric subspecialists. Pediatric surgeons, cardiologists, cancer specialists and others rely on 40 percent or more of their income being paid by Medicaid. Without that money, they may not be able to continue caring for children with private insurance either.

So let’s talk “personal responsibility.” The only way to preserve our own access to quality healthcare is to provide adequate health insurance to everyone else. Those who can’t support that concept out of compassion can do it out of pure self-interest.

Pippa C. Abston, MD, PhD
Huntsville, Al.

http://blog.al.com/times-views/2011/02/letters_to_the_editor_huntsvil_346.html

Medical malpractice insurance loss ratios

Calif. insurance commissioner seeks lower medical malpractice rates

By Kathy Robertson
Sacramento Business Journal
February 17, 2011

California Insurance Commissioner Dave Jones, already at loggerheads with health plans over high rates and excessive rate increases, is turning his attention to medical malpractice companies.

Jones expressed concerns about high medical malpractice rates Thursday and said he’s asked companies that do business in California to reduce them.

The Doctors Company, the largest medical malpractice insurer in California, had a 10.1 percent loss ration for 2009, according to department figures posted on its website.

That means for every $1 of premiums collected, 10-cents was paid out in claims.

Norcal Mutual Insurance Co, the second-largest medical malpractice insurer in California, had a loss ratio of 29.72 percent in 2009, and the Medical Insurance Exchange of California, No. 3 in the state, had a loss ratio of 25.34 percent.The nonprofit Consumer Watchdog applauded Jones’ call for rate reductions.

The group pointed to data from the National Association of Insurance Commissioners that shows for every $1,000 in premiums paid in 2009 in California, $222 went to pay claims of injured patients, $243 to pay insurance company adjusters and defense lawyers and more than $280 to profit, not including additional investment income earned or taxes paid.

http://www.bizjournals.com/sacramento/news/2011/02/17/jones-seeks-lower-malpractice-rates.html

National Association of Insurance Commissioners – Countrywide Summary of Medical Malpractice Insurance (37 pages):
http://www.naic.org/documents/research_stats_medical_malpractice.pdf

And…

Medical-liability bill approved by House committee

By Jessica Zigmond
ModernHealthcare.com
February 17, 2011

Members of the House Judiciary Committee on Wednesday voted 18-15 to approve the medical liability reform bill that physician Phil Gingrey (R-Ga.) introduced late last month.

Ultimately, the law would limit non-economic damages to $250,000 and makes each party liable only for the amount of damages that is directly proportional to that party’s percentage of responsibility.

http://www.modernhealthcare.com/article/20110217/NEWS/302179959/

Comment: 

By Don McCanne, MD

California has a combined medical malpractice loss ratio of 22 percent. That is, of the very expensive malpractice insurance premiums being paid, 78 percent does not end up compensating those experiencing medical injuries but is diverted to the insurers and defense lawyers. This is yet one more of a multitude of reasons why our tort system is serving these injured individuals so poorly.

Reforming the system has continued to be an elusive goal. The Republicans have now cleared a malpractice reform bill through the House Judiciary Committee. The legislation is similar to that passed many years ago in California, yet obviously the California approach is not working well.

We do need malpractice reform, but not because it will save money; it won’t. We need to replace the system with a non-adversarial dispute resolution process designed to provide compensation for medical injury. Since most individuals suffering medical injury currently do not sue, the probability is that expanding compensation for which patients are entitled will cost more than any savings recovered by a reduction in defensive medicine.

There is some question as to how much defensive medicine could be eliminated anyway since, presumably, tests to prevent lawsuits are tests that could identify an important problem that would otherwise be missed. Just because a test has a low yield doesn’t mean that it shouldn’t be done.

We need to strengthen the relationships between patients and their health care professionals. They need to work together as a team, even when inevitable cases of medical injury occur. That is why we need malpractice reform that, above all, places the interests of patients first.

Medical malpractice insurance loss ratios

Calif. insurance commissioner seeks lower medical malpractice rates

By Kathy Robertson
Sacramento Business Journal
February 17, 2011

California Insurance Commissioner Dave Jones, already at loggerheads with health plans over high rates and excessive rate increases, is turning his attention to medical malpractice companies.

Jones expressed concerns about high medical malpractice rates Thursday and said he’s asked companies that do business in California to reduce them.

The Doctors Company, the largest medical malpractice insurer in California, had a 10.1 percent loss ration for 2009, according to department figures posted on its website.

That means for every $1 of premiums collected, 10-cents was paid out in claims.

Norcal Mutual Insurance Co, the second-largest medical malpractice insurer in California, had a loss ratio of 29.72 percent in 2009, and the Medical Insurance Exchange of California, No. 3 in the state, had a loss ratio of 25.34 percent.The nonprofit Consumer Watchdog applauded Jones’ call for rate reductions.

The group pointed to data from the National Association of Insurance Commissioners that shows for every $1,000 in premiums paid in 2009 in California, $222 went to pay claims of injured patients, $243 to pay insurance company adjusters and defense lawyers and more than $280 to profit, not including additional investment income earned or taxes paid.

http://www.bizjournals.com/sacramento/news/2011/02/17/jones-seeks-lower-malpractice-rates.html

National Association of Insurance Commissioners – Countrywide Summary of Medical Malpractice Insurance (37 pages):
http://www.naic.org/documents/research_stats_medical_malpractice.pdf

And…

Medical-liability bill approved by House committee

By Jessica Zigmond
ModernHealthcare.com
February 17, 2011

Members of the House Judiciary Committee on Wednesday voted 18-15 to approve the medical liability reform bill that physician Phil Gingrey (R-Ga.) introduced late last month.

Ultimately, the law would limit non-economic damages to $250,000 and makes each party liable only for the amount of damages that is directly proportional to that party’s percentage of responsibility.

http://www.modernhealthcare.com/article/20110217/NEWS/302179959/

California has a combined medical malpractice loss ratio of 22 percent. That is, of the very expensive malpractice insurance premiums being paid, 78 percent does not end up compensating those experiencing medical injuries but is diverted to the insurers and defense lawyers. This is yet one more of a multitude of reasons why our tort system is serving these injured individuals so poorly.

Reforming the system has continued to be an elusive goal. The Republicans have now cleared a malpractice reform bill through the House Judiciary Committee. The legislation is similar to that passed many years ago in California, yet obviously the California approach is not working well.

We do need malpractice reform, but not because it will save money; it won’t. We need to replace the system with a non-adversarial dispute resolution process designed to provide compensation for medical injury. Since most individuals suffering medical injury currently do not sue, the probability is that expanding compensation for which patients are entitled will cost more than any savings recovered by a reduction in defensive medicine.

There is some question as to how much defensive medicine could be eliminated anyway since, presumably, tests to prevent lawsuits are tests that could identify an important problem that would otherwise be missed. Just because a test has a low yield doesn’t mean that it shouldn’t be done.

We need to strengthen the relationships between patients and their health care professionals. They need to work together as a team, even when inevitable cases of medical injury occur. That is why we need malpractice reform that, above all, places the interests of patients first.

Stop the presses! A Republican favors single-payer

By James Clark
Health News Florida, Feb. 16, 2011

As a former state director of social services (South Carolina), health policy chief in Florida’s Agency for Health Care Administration, and assistant Secretary for programs in the Department of Children and Families, I find the current debate on health care reform has failed to fully inform the general public. The discussions have mentioned the “elephant in the room”: the cost of the current delivery system, and then have gone downhill.

Heated rhetoric about the special interests that benefit from the quagmire of competing interests, including the insurance industry, pharmaceutical companies, hospitals, over-specialized physicians and nursing homes, only have confused the public trying to understand the debate. Invective and rhetoric regarding “socialized medicine, big government and insensitive Republicans who want to abandon the poor and deny care to persons with previous health care issues or who have too little money to buy insurance” have increased the tension.

Medicaid started out fifty years ago as a small effort to help those who couldn’t afford health insurance, and grew into the biggest item in the state budget, and in the recently enacted health care reform package will grow even larger. Medicare expenditures have grown to such a level that they cannot be sustained without significant tax increases.

Employers have not been able to afford to provide health care as a benefit and insurance and provider costs have continued to rise. With expanded Medicaid coverage some employers will find it preferable to deny lower wage employees health
insurance in favor of the promised expanded Medicaid system.

Most states are broke and won’t be able to afford the expansion even with federal matching funds. A few state legislatures have attempted to deal with the issue. California passed a single payer law that was vetoed by their governor. Vermont has a governor and legislature willing to try it out and recently met with the federal officials to obtain waivers to try a new single payer approach. Massachusetts implemented Governor Romney’s expanded health care initiative and is now considering a single payer system.

Florida recently elected a governor with a background in health care delivery and a self-paid campaign that frees him from obligations to the insurance companies or medical provider interests. He wants to cut spending and reduce bureaucratic regulation and it may be time for Florida to take a second look at single payer coverage.

It might also be time to expect the able-bodied Medicaid recipients to repay the taxpayers with hours of public service equal to the value of their free medical care. Mayor Giuliani required public assistance recipients to clean the streets and parks up to the value of their financial grant. When I interviewed these folks I found that they had no problem in repaying the city for the benefits they received.

The largest cost in the health care budget is that of administrative costs. Administrative expenses are greater in America than any other country.

In Medicaid and Medicare there are over 7000 different billing codes, and multiple levels of eligibility. Some Medicaid recipients are also elderly and we operate two overlapping systems to provide service to them. In addition, the amount of funds paid to providers differs from state to state and what is covered differs from state to state. The “non-system” would make a great “Saturday Night Live” skit if it were not so tragic.

Doctors are plagued by complex rules and procedures to be reimbursed and the degree of fraud in the system is fueled by the complexity. A single payer system would address this issue.

There is a “window of opportunity” with the budget restraints now faced by the states. We can reduce the bureaucracy, take care of the issue of tort reform for medical liability, provide universal health care, address pre-existing conditions, eliminate the excessive profits associated with rising insurance premiums and most importantly of all accomplish it without raising taxes.

There would no longer be a profit motive or insurance premiums and American families could keep the $12,000 a year now spent on insurance premiums. Hospitals and doctors would no longer be dunning folks for dollars they don’t have and then spreading out the costs associated with the non-insured among the insured.

William Hsiao, an economist who analyzed the Vermont proposal, said it would reduce expenditures in Vermont by 25 percent! Doctors and other providers might have to earn a bit less but levels of remuneration would still be greater than all others with advanced degrees currently earn.

This is a difficult issue; however, our legislators and our governor have a unique opportunity to reduce the bureaucracy of health care, reduce the cost of health care and return some savings to the taxpayers. Let’s “get to work” and show the folks in Vermont how to do it.

http://www.healthnewsflorida.org/analysis_opinion/hnf_entry/single_payer_health_insurance_is_it_time_for_a_second_look

Sanders' State Leadership in Healthcare Act, S. 73

FACT SHEET

“State Leadership in Healthcare Act”

From the Office of Sen. Bernie Sanders (I-Vt.)

Section 1332 of the Patient Protection and Affordable Care Act – the “Waiver for State Innovation” – allows states to waiver out of some of the requirement of federal health reform if they meet certain standards. The provision in the new law was authored by Sens. Bernie Sanders (I-Vt.) and strongly supported by Sen. Patrick Leahy (D-Vt.) and Rep. Peter Welch (D-Vt.).

The Sanders-Leahy-Welch “State Leadership in Healthcare Act” moves the availability of state waivers from 2017 to 2014. This would allow a state to avoid the expense of setting up an exchange – which is otherwise required in every state in 2014 – only to dismantle it later.

The federal waiver would allow a state to:

a) Collect all the federal funding and use for financing coverage for individuals through a plan designed by and for that state.
b) Coordinates this waiver process with Medicare, Medicaid and CHIP waiver processes that may be required depending on the design of the system.

The federal waiver would not allow a state to:

a) Offer lower quality or less affordable care to their residents than would be available in the exchange.
b) Obtain waivers from the health insurance market reforms implemented under the law such as those benefiting ending the use of pre-existing conditions to exclude individuals from coverage or those allowing young adults to stay on their parents’ plans longer.

How does the waiver provision of the law work?

Step 1: The state passes a law to provide health insurance to its citizens.

Step 2: The Secretary of Health and Human Services and Secretary of the Treasury review the state law and determine that the plan is:

a) At least as comprehensive as its residents would receive in the exchange;
b) At least as affordable;
c) Deficit neutral to the federal government; and,
d) Covers at least as many people.

Step 3: If the federal government finds that the alternative state system meets these requirements without certain federal rules, states can get a waiver. The state plan could receive waivers from:

a) The section requiring establishment of the exchange
b) The designs for how federal subsidies would have to reduce premiums and co-pays.
c) The employer penalty for providing coverage
d) The individual mandate.