PNHP

Will reform bill help my patients? I’m skeptical

Will reform bill help my patients? I’m skeptical

Big money wasted on insurer subsidies

By ROB KIEFNER
Concord (N.H.) Monitor, Dec. 4, 2009

Amid chaos, misinformation and misunderstanding, the health care reform bill was nudged through the House of Representatives by the narrowest of margins. By not letting the facts get in the way of their blustering arguments, wacky lawmakers from both sides of the aisle offered lots of hype and heft, at times bench pressing the actual 2,100-page document to underscore the strength of their positions.

I thought, for a time, that outcome would be decided by virtue of which representative’s head exploded first in a display of feigned indignation about one aspect or another of the bill.

As a family physician, I rely upon my patients’ stories for insight into health care reform. Lost in the mind-numbing mumbo-jumbo from Capitol Hill are the stories of real patients who can’t afford insurance and small business owners who can’t offer it. The House legislation might make insurance available to my patient who is a struggling small business owner, but at an impossible cost. To add insult to injury, he’ll be fined if he doesn’t purchase insurance.

And for those patients who have “decent” insurance, there are always the struggles, which we share as their doctors, to obtain the diagnostic testing and therapeutic treatments to which they are entitled. By keeping the for-profit insurance companies happy, the legislation will continue to effect de facto rationing of health services by employing the hassle factor.

Good faith?

The costs associated with this bill are not at all clear. If projections are tied in to the “good faith” cuts promised by the pharmaceutical and insurance industries last summer, we are indeed in trouble.

We spend twice as much on health care, per capita, as any other industrialized nation. Yet by several measures of our collective health and wellness, we rank a piddling 37th in the world.

The House bill, with mega subsidies to the health insurance industry, seems to assure our place as No. 1 in the world – for health care spending that is. Within that 2,000-page tome is a mandate for universal coverage with all sorts of befuddling caveats. While health insurers will have to take on patients with preexisting conditions, they’ll do just fine with the increase in volume of patients and the ability to increase premiums. Those insurance execs are kicking back, popping another magnum of Dom Perignon, and reveling in their ability to influence people in high places. Money well spent.

Now I’m not a rocket surgeon, but I think that we can achieve close to universal coverage by developing a publicly financed, privately delivered system in which the 30 cents of each health care dollar currently wasted on insurance companies is channeled into actual health care. In the context of a single-payer plan, or “Medicare for All,” nobody dies for lack of insurance or goes bankrupt on account of medical bills.

Primary care is key

Health care financing is but one leg of the table of reform. An equally important support is primary care. By enhancing the financing of primary care training programs and assuring that reimbursements are commensurate with the costs of providing services, we’ll close in on the quality gap with countries such as France, Germany and Switzerland. Time and again, studies have shown that regions of the country well served by primary care and preventive medicine experience decreased costs across the board, with fewer expenditures due to excessive testing and hospitalizations.

The final two pillars holding up the table of reform are the general acceptance of evidence-based medicine and malpractice reform. We should not be paying for expensive and ineffective diagnostic procedures and treatments, though I do believe that guidelines, and not mandates, are reasonable to allow physicians some leeway in the management of challenging clinical scenarios.

By definition, evidence-based recommendations are a work in progress. The use of screening mammograms among women under 50 has saved countless lives, and this practice should not be abandoned or even modified until much longer-term studies are available. As with any procedure in medicine, patients need to be fully apprised of the risks versus benefits of cancer screening tests.

By practicing in accordance with good science and not speculation, we should be able to diminish the onerous burden of defensive medicine costs.

This brings me to the fourth leg supporting the table: tort reform, conspicuously absent from the House bill. Honest oversight, or a function of the millions of dollars thrown at Democratic congressional campaigns by trial lawyers? Now that’s a tough one.

Focus on doctors

As our elected officials preen and posture for the next part of reform’s journey through the Senate, it is important to remember that governments and insurance companies don’t deliver health care.

It is health care providers and hospitals, working with patients who are fortified with a sense of personal responsibility, that will ultimately control costs and improve care.

Though I do hope that some form of reform ultimately passes, I am concerned that this bill, like “Hillary Care” so many years ago, is destined to collapse from its own incomprehensible mass.

(Rob Kiefner is a family physician in Concord.)

http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20091204/OPINION/912040357

It’s time for business community to take stand on health reform

By Hirsh Cohen
Business Courier of Cincinnati
Friday, December 4, 2009

The latest numbers are staggering. A new Harvard study in the American Journal of Public Health reports that nearly 45,000 deaths occur each year in the U.S. because of the lack of health insurance. That’s a death every 12 minutes.

Half of middle-class workers say they or a family member postponed, cut back or skipped needed care because of its cost, according to a June 2009 survey.

In my many years in public health, I am personally aware of dozens of people whose health suffered because they lacked insurance coverage. They put off care until their condition was critical, sometimes with catastrophic results.

Beyond the human toll, our fragmented and dysfunctional health system hurts us financially. Health care costs and insurance premiums are skyrocketing, unsustainably straining businesses and workers.

Sixty-two percent of personal bankruptcies are now linked to medical bills and illness, and more than three-quarters of those bankrupted had insurance when they got sick. Premiums for employer-sponsored coverage have more than doubled over the past decade.
Something’s terribly wrong

Regrettably, the bills emerging in Congress would do little to reverse these trends. They simply don’t go far enough.

The business community should be alarmed that we are getting so little return for our health care dollar. Our insurance premiums go up, but coverage deteriorates. We face more co-pays and deductibles, claim denials and hassles. In addition, the costs of providing care to the uninsured and underinsured are borne by a smaller pool of insured workers. It is estimated that almost 25 percent of our premiums fund Medicare, Medicaid and uninsured shortfalls.

The U.S. spends twice as much per capita on health care as any other Western nation but has much less to show for it in medical outcomes. We are No. 1 in dollars spent but 37th in performance out of the 191 countries tracked by the World Health Organization, placing us below Colombia, Saudi Arabia and Portugal.

Why? A big part of the answer is that we rely on a private insurance model. For all its net value, the system saddles us with enormous bureaucracy. (Approximately 31 percent of every dollar is spent on administration and profits instead of going toward care.)

In addition, we are focused on a medical services model and not a health care model; incentives exist to treat on a fee-for-service basis with little or no incentives for prevention and primary care.

The proposed legislative initiatives will help improve some access and possibly some costs, but the execution will be difficult and time-consuming. An expanded and improved version of Medicare would be more cost-effective and equitable. Some lawmakers say such an approach is unrealistic, but 44 years ago the same was said about Medicare.

My years of work in Canada convinced me that a single-payer model is workable and effective. It’s true that system is stressed and needs significant improvement, but the funding is more logical and no one in Canada declares bankruptcy because of medical costs. An American single-payer system would have its own features and enjoy better funding.

It is time that the business community take a strong stand to ensure that our nation joins the rest of the industrialized world and guarantee seamless health care coverage to every man, woman and child in America. That means a publicly financed, but privately delivered program of single-payer Medicare for All.

Let’s get serious, Cincinnati business community.
A Better Way

The benefits to businesses and the work force under a single-payer program:

• Both employees and employers would get more health care and less bureaucracy for every dollar spent.

• Medical bankruptcies would become a thing of the past.

• Employers would have a stronger incentive to move part-time workers to full time.

• With increased access to preventive care and wellness programs, employees would be healthier and miss less time from work.

• Employers would see a drop in liability insurance and workers’ compensation costs, an end to contentious negotiations with insurers, a reduction in retiree benefit costs and an end to complaints by employees over rising premiums and expenses.

• Finally, an improved Medicare for All would allow costs to be controlled and predictable, eliminating a major source of business uncertainty and a barrier to planning.

Cohen holds a master’s degree in health administration and is a fellow of the American College of Healthcare Executives. He was the assistant health commissioner for Cincinnati and has held health care executive positions in both the U.S. and Canada.

http://cincinnati.bizjournals.com/cincinnati/stories/2009/12/07/editorial3.html

Lessons from Massachusetts Health Care Reform Health

By Sylvia Thompson and Iyah Romm
The Huffington Post, December 4, 2009

As Massachusetts physicians-in-training, we’ve had a sneak preview of the future of health care in the United States. Across the country health policy-makers are looking to our state as a model. As in Massachusetts, the U.S. Senate and House bills preserve the role of private health insurers, while subsidizing coverage for the poor and near-poor, and imposes an individual mandate requiring everyone else to purchase insurance or pay a fine. Coverage has increased in Massachusetts, with five percent or less of residents now uninsured. The Connector, an Expedia-like marketplace of insurance plans, has offered residents a choice of coverage and is the archetype of a national exchange. When national reform proposals have been criticized for not bending-the-cost curve, proponents have pointed to the cover-now, pay-later strategy in Massachusetts, which is now considering a global-payment cost control proposal to curb unprecedented spending.

If Massachusetts is going to be a model for reform, however, we must consider both the successes and failures of the past three years. It has become painfully obvious both in our studies and clinical practice that coverage does not equal care. Despite boasting the strongest primary care workforce in the country, the newly-insured in Massachusetts report waiting months for appointments. Meanwhile, the Connector has added 4.5 percent overhead to the already crushing administrative costs of our private insurance companies. Premiums have increased drastically since 2006: care in Massachusetts now costs more than anywhere else in the history of the world. Since the Commonwealth has committed to subsidizing low-income residents, premium increases have often come directly from the state’s coffers.

Instead of enacting structural reform to rein in costs, the Governor and legislature have chosen to restrict access to care. In May, the legislature eliminated $130 million of health insurance subsidies for 28,000 legal immigrants (mostly green-care holders) who have been here for less than five years. Under pressure from national Democratic Party leaders to highlight Massachusetts’ ‘successes’, the legislature reinstated $40 million to cover this population as a bridge to the next fiscal year. Given the impossibility of ensuring care for this population on a shoestring budget, the state sold these Massachusetts residents’ healthcare to an out-of-state, for-profit HMO, CeltiCare. This single-source, anticompetitive contract was signed without the knowledge or consent of these patients.

So far, CeltiCare has restricted access by offering an unprecedented and dangerously limited provider network. CeltiCare has signed up enrollees and then contracted with too few physicians to care for them as a means of suppressing health care utilization and cost. The CeltiCare network excludes most of the safety-net health centers, hospitals, and primary care doctors that previously cared for these patients. CeltiCare has also dramatically increased copayments, amounting to a tax on some of the most vulnerable legal residents of the state.

In our work, we witness the medical consequences of this short-sighted and unjust policy. We see young women in emergency departments for possible ectopic pregnancies – a life threatening diagnosis requiring close monitoring – but now our colleagues cannot provide critical follow-up care in their clinics. So women are sent home and told to look elsewhere for care. Or, when a patient calls in excruciating pain, the only way we can do our jobs is to spend hours searching for barely-permissible loopholes in policy.

To add insult to injury, the Commonwealth has only guaranteed coverage for this cohort of legal residents until June 30, 2010, thus making CeltiCare a bridge to nowhere. What’s more, last week the Commonwealth announced that more than one million Medicaid recipients will soon be required to pay higher co-pays and obtain prior approval for critical medications in order to close the state’s $307 million Medicaid budget shortfall. As cutting care becomes a proxy for genuine cost-containment, we’re left wondering who will next be pushed down this slippery slope.

Health care for all is the moral issue of our generation. We have come of age in a globalizing world. Denying care to foreign-born patients who have played by the rules — who came here legally to work and pay taxes – is economically, medically, and morally senseless. If universal coverage is our goal, we must recognize that subsidies and individual mandates that exclude many people or leave them with prohibitively high co-payments can never truly be universal.

Architects of reform must not replicate the splintering Massachusetts system, but rather look to the innovative and excellent health systems across Europe and Asia. We must create a federally-funded, privately delivered single payer system, Medicare-for-All as proposed by Sen. Bernie Sanders (I-VT) this week. A single payer system could save $400 billion every year on administration, eliminating the need to “cover-now, pay-later” or place arbitrary restrictions on providers. Having all physicians under one network would eliminate fragmentation of care while empowering patients to have real choices – not just which insurance product to buy, but which doctor to visit.

Looking to a future that breaks the mold built by Massachusetts, we see the possibility of a single payer system that makes our fragmented care whole, that defines a new standard of inclusion, and provides comprehensive, secure, and inalienable rights to all. This is the system in which we, the next generation of America’s doctors, aspire to serve our patients.

Iyah Romm and Sylvia Thompson, M.D. are physicians-in-training in Boston, and national policy leaders in the American Medical Student Association (AMSA).

http://www.huffingtonpost.com/iyah-romm/lessons-from-massachusett_b_380718.html

250,000 FEHBP-eligible federal employees uninsured

How health care bills compare to lawmakers’ plan

By Ricardo Alonso-Zaldivar
The Washington Post
December 6, 2009
You should get the same health insurance deal that members of Congress get. That was the gist of President Barack Obama’s message as he tried to drum up enthusiasm for his health care overhaul.
Government workers and members of Congress belong to the nation’s largest employer-sponsored health plan, covering 8 million employees, dependents and retirees.
“We estimate there are about 250,000 federal employees who are uninsured. They’re eligible, but they can’t afford the premiums,” said Jacqueline Simon, policy director for the American Federation of Government Employees.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/06/AR2009120601136.html

And…

New Government-Run Health Proposal Eyed

Democrats, in Search of Compromise, Explore Federal Employee Plan as a Model

By Greg Hitt And Janet Adamy
The Wall Street Journal
December 7, 2009
Democrats on both sides of the issue who were assigned by Sen. Reid to find a compromise were nearing agreement on an alternative that would empower the government’s Office of Personnel Management to run a new national health plan, congressional aides said. The office already oversees the federal employee health plan, and administration officials have pointed to it as an example of how the government can successfully run a health-insurance program.
Under the proposal, the office would negotiate terms of the plan with private insurers, and contract with nonprofit entities set up by the private sector to run the program, aides said.
http://online.wsj.com/article/SB126004745673278523.html

And…

Federal Employees Health Benefits Program (FEHBP)

AmericanFederation of Government Employees
February 9, 2009
FEHBP has both structural and political flaws.
Those who must rely upon FEHBP for health insurance know its flaws well, and consider it anything but a model.
An estimated quarter of a million federal workers and their families are uninsured because FEHBP premiums are unaffordable to them on their modest federal salaries. The continued cost-shifting only increases the ranks of uninsured and underinsured Americans.
http://www.afge.org/index.cfm?page=2009ConferenceIssuePapers&Fuse=Content&ContentID=1742

Why shouldn’t we all have the same insurance that members of Congress have? They and all other federal employees are covered by the Federal Employees Health Benefits Program (FEHBP), an exchange of private health plans from which they can choose their coverage.
The FEHBP plans share many of the problems found in private health plans marketed to non-government employers. Simply the fact that a quarter million federal workers and their families remain uninsured, though eligible for FEHBP, demonstrates that it is a flawed program that should be rejected as a model for reform.
For those who say that subsidies would make the difference, these federal employees have already been offered subsidies in the form of the federal employer contribution to their premiums, yet they still can’t afford their share of the premium. Besides, because insurance is available through their employment, they would not be eligible for the subsidized exchange plans anyway.
So what is Congress doing? Because of the political impasse over a public plan to be offered as an option to private plans within the insurance exchange, senators are currently advocating for the compromise of a separate exchange of private plans modeled on FEHBP. This model allegedly would satisfy the moderates opposed to the public option because it would be limited to private, non-profit insurers, and allegedly would satisfy the progressives because they could claim that it’s like the government insurance that members of Congress have. Of course there’s nothing government about it.
What is more ridiculous is the structure of this phony public option. It would establish an exchange of private insurance plans within an exchange of private insurance plans with a market of private insurance plans outside of the exchanges. What insurer is going to compete against its successful plans on the open market by offering competing plans in the insurance exchange and then competing with its plans in the exchange by offering plans in the exchange within the exchange?
Besides, how many truly dominant insurers are there? They constitute an oligopoly. Just as they play by their own market rules now, they will continue to do so even if modified by guaranteed issue or whatever.
Ask those 250,000 uninsured federal workers who were promised the coverage that members of Congress have what they think about FEHBP. Then ask them if they would like to have Medicare paid for by equitable taxes they can afford rather than by premiums they can’t afford. Then ask them to march on Congress!

History in a Number: Senate Amendment 2837

By Donna Smith
CommonDreams.org, Dec. 3, 2009

The idea of a Medicare-for-All-type, single-payer health care system will be heard on the Senate floor. Late last evening, Senator Bernie Sanders of Vermont filed Senate Amendment No. 2837, and there are two additional original co-sponsors of this amendment, Senator Roland Burris of Illinois and Senator Sherrod Brown of Ohio.

The idea that health care is a basic human right that could and should be delivered to each and every person in this nation is not a new one. Our President knows that; our Congress knows that. But this struggle to reform the broken, profit-driven system has carried us a very long way from the spot that would allow us to finally extend that basic human right to all.

We’ve drifted off to talking about excise taxes and insurance exchanges and bending the cost curves. Amendment 2837 brings us back to the basics.

What’s in a number? 45,000 people die every year in this nation without access to health care.

Medicare has its flaws, but overall it has provided seniors and the disabled with the best access to care that this nation could offer since the 1960s. But the rest of us have not been so lucky with our access to health care. Among those not covered by Medicare or the VA, the numbers of unnecessary deaths have soared; personal bankruptcies due to medical crisis have soared.

What is a number? Poverty among seniors has dropped more than 60 percent since the adoption of Medicare.

The health care reform effort has largely ignored the single-payer solution. Public financing and private delivery of health care through a Medicare-for-All-type system would be an elegant, cost effective and proven way to fix much of what is broken while retaining that sense of personal choice over health care decisions that Americans value so highly. Yet, the discussion has been muted by the powerful profit-based insurance and health industry interests that stand to gain so very much by expanding and entrenching their hold over the U.S. health care system through this reform process.

What’s in a number? Millions of Americans file for personal bankruptcy – one every 90 seconds – because medical crisis hit them too hard. And of those bankrupt folks, two-thirds had health insurance.

We will not get to the point of granting health care to all during this legislative cycle. We just won’t. Our elected officials were less powerful than the profit-takers this time around. And we did not make our demands loud enough and clear enough. But we will find out in the Senate who stands for all of us and who stands for those who would profit from our continued suffering. And we will find that out by watching and listening as Senate Amendment 2837 is considered and debated – and voted upon.

The time draws short to weigh in clearly with your senators. We know they will not get to the point of passing a single-payer system this time around. But we also know they can begin setting the benchmarks for what we should do going forward. And with a yes vote on this amendment, senators send us the message that they heard us, that they will keep fighting with us until the day when this nation no longer leaves the weak, the sick and the poor behind in the delivery of its most basic human rights.

Call your senators. Tell them you want them to vote for Senators Sanders, Burris and Brown’s amendment number 2837. Call today. Call now. Insist on a vote for moral and fiscal sanity.

What’s in a number? Everything. Senate Amendment No. 2837.

Everyone in, nobody out.

Donna Smith is community organizer and legislative advocate for the California Nurses Association / National Nurses Organizing Committee.

Do the insurance industry reports totally lack all credibility?

Good News on Premiums

Editorial
The New York Times
December 3, 2009

The health insurance industry frightened Americans — and gave Republicans a shrill talking point — when it declared in October that proposed reform legislation would drive up insurance costs for virtually everyone by as much as thousands of dollars a year. The nonpartisan Congressional Budget Office persuasively contradicted that claim this week.

Undaunted, the industry issued a rebuttal report, claiming again that premiums would soar. We find this second industry report no more persuasive than the first.

The insurance industry is not giving up. On Thursday, the Blue Cross and Blue Shield Association issued a report contending that the C.B.O. underestimated the expected medical costs of people who will be buying policies on the individual (nongroup) market.

(CBO notes that) the legal mandate to obtain coverage, the penalties for noncompliance, and the generous subsidies for low- and middle-income people would encourage most people to enroll without waiting to become sick.

http://www.nytimes.com/2009/12/04/opinion/04fri1.html?_r=1&ref=opinion

And…

Coming Attractions: Insurance Industry Funded Study is Wrong on the Facts… Again…

Posted by Dan Pfeiffer, White House Communications Director
The White House
The White House Blog
December 3, 2009

Later today, the insurance industry releases their latest in a string of flawed analyses designed to confuse the debate around health reform.

In addition to ignoring Congress’s independent budget experts, the new report reaches its conclusions by cherry-picking which policies to analyze – a tactic we’ve seen the industry use repeatedly. Most egregiously, its alarmist headline conclusions leave out the impact that new tax credits will have on the cost of health insurance for families. That makes no sense.  In reality, the report itself acknowledges that: “[s]ubsidies will entirely or partially offset these premium increases for some individuals.”

http://www.whitehouse.gov/blog/2009/12/03/coming-attractions-insurance-industry-funded-study-wrong-facts-again

And…

Impact of the Patient Protection and Affordable Care Act on Costs in the Individual and Small-Employer Health Insurance Markets

By Jason Grau and Kurt Giesa
BlueCross BlueShield Association
Oliver Wyman
December 3, 2009

Impact of Subsidies

Subsidies would play an important role in reducing out-of-pocket costs for certain individuals, especially those below 200% of FPL, who are likely to purchase insurance under the proposed reforms. Subsidies will cover more than 90% of premium costs for individuals in this income range, significantly reducing financial barriers to purchasing coverage.

By contrast, our analysis of the Senate bill projects that 8.7 million will not be eligible for the subsidies. Another 3.3 million people who purchase coverage will have incomes of 300-400% FPL and will be eligible for average subsidies of 45% of their premiums (which would not fully offset the cost increases we predict). Finally, 13.3 million lower-income individuals who purchase coverage will have incomes of 100-300% FPL. They will have access to subsidies of 70-90% of their premiums, which will offset much if not all of the increased premiums they will face.

Our modeling predicts that those who are eligible for subsidies will be more likely to purchase insurance than those who are not. However, subsidies will not ensure that young and healthy people participate. Short of achieving 100% coverage, adverse selection will always exist, and the young and healthy will be the most difficult to bring into the market.

Impact of Weak Individual Mandates

The Senate bill requires individuals to purchase insurance coverage or face financial penalties. An amendment accepted during mark-up of the Chairman’s Mark in the Finance Committee, and largely retained in the Senate leadership bill, substantially weakened the bill’s individual mandate. The individual mandate penalty in PPACA is set at just $95 in the first year insurance reforms become effective (2014). This penalty rises gradually, reaching a maximum of $750 per adult in 2016. This maximum penalty is likely to be only about 16 percent of an average premium in 2016, assuming current rates of medical cost inflation.

The amendment also exempts individuals whose premiums exceed 8% of their adjusted gross income (AGI). In 33 states, the average cost of health insurance exceeds eight percent of median state income. In fact, in the first year of reform 25% of the exchange-eligible population will face insurance costs in excess of the 8% AGI threshold and qualify for mandate exemption. Premium increases over a ten-year period will result in nearly half of the population qualifying for mandate exemption status.

Conclusion (excerpt)

The provision of subsidies alone will not offset the impact of insurance reforms on average premiums in the market. A balanced, sustainable insurance pool, that ensures everyone is covered, is critical to making healthcare affordable for all.

http://www.bcbs.com/issues/uninsured/background/patient-protection-affordable-care-act.html

Full report:
http://www.bcbs.com/issues/uninsured/background/Impact-of-the-Patient-Protection-and-Affordable-Care-Act-on-Costs.pdf

Comment:

By Don McCanne, MD

Recent reports from the insurance industry, including this report from the BlueCross BlueShield Association, have been targeted by proponents of the current leading reform model as biased reports without credibility – witness the comments by The White House and The New York Times (both also biased). But the fundamental message from the insurance industry is very valid: the reform proposal before Congress does not do nearly enough to control health care costs, and the mandates, subsidies and penalties are inadequate to ensure that all risks are adequately pooled.

This report confirms once again that the subsidies are inadequate, particularly for middle-income families, and likely will result in adverse selection as the healthier take their chances on remaining uninsured. It confirms that the penalty for being uninsured is too small to ensure compliance with the insurance requirement. It also confirms that a very large and rapidly growing number of individuals will be exempt from the mandate to purchase insurance simply because their incomes are inadequate to be able to afford the plans.

There is one statement in this report that the proponents of the proposal before Congress should take careful note of, and it is remarkable that it is coming from the insurance industry: “A balanced, sustainable insurance pool, that ensures everyone is covered, is critical to making health care affordable for all.”

The dysfunctional, fragmented model of health care financing that Congress is moving forward with can never create a balanced, sustainable risk pool, nor can it ensure that everyone is covered, nor can it make health care affordable for all.

We really do need a balanced, sustainable pool that includes everyone and is equitably financed: an improved Medicare for all.

The Price of Prescription Drugs Around the World

By D. Brad Wright
Doctoral candidate in the department of health policy and management at the University of North Carolina
Huffington Post
December 4, 2009

We’ve come to the end of the health care costs world tour and conclude today with a look at the price of three prescription drugs: Plavix, Nexium, and Lipitor. Please note that the $0 for the U.S. Medicare figures are outdated–I guess that Part D didn’t report to this group or something. But the rest of the numbers are interesting.

Really, what can I say about these figures? It all has to do with patent law and direct-to-consumer marketing (the U.S. is the only country on the chart that still permits this practice). If you’ve ever wondered what all the fuss over “drug reimportation” was about, now you know. Prices in Canada are one-half to one-fourth the prices in the United States. Show me one American (who doesn’t work for a pharmaceutical company) who would be opposed to getting their drugs at 50% to 75% off. I think you’ll be hard pressed to do so. And this says nothing of the high-end U.S. prices. They’re simply asinine.

Subscribe to Wright on Health to see what else I have to say during the week. You can also contact me here.

http://www.huffingtonpost.com/d-brad-wright/the-price-of-prescription_b_379918.html

Do the insurance industry reports totally lack all credibility?

Good News on Premiums

Editorial
The New York Times
December 3, 2009
The health insurance industry frightened Americans — and gave Republicans a shrill talking point — when it declared in October that proposed reform legislation would drive up insurance costs for virtually everyone by as much as thousands of dollars a year. The nonpartisan Congressional Budget Office persuasively contradicted that claim this week.
Undaunted, the industry issued a rebuttal report, claiming again that premiums would soar. We find this second industry report no more persuasive than the first.
The insurance industry is not giving up. On Thursday, the Blue Cross and Blue Shield Association issued a report contending that the C.B.O. underestimated the expected medical costs of people who will be buying policies on the individual (nongroup) market.
(CBO notes that) the legal mandate to obtain coverage, the penalties for noncompliance, and the generous subsidies for low- and middle-income people would encourage most people to enroll without waiting to become sick.
http://www.nytimes.com/2009/12/04/opinion/04fri1.html?_r=1&ref=opinion

And…

Coming Attractions: Insurance Industry Funded Study is Wrong on the Facts… Again…

Posted by Dan Pfeiffer, White House Communications Director
The White House
The White House Blog
December 3, 2009
Later today, the insurance industry releases their latest in a string of flawed analyses designed to confuse the debate around health reform.
In addition to ignoring Congress’s independent budget experts, the new report reaches its conclusions by cherry-picking which policies to analyze – a tactic we’ve seen the industry use repeatedly. Most egregiously, its alarmist headline conclusions leave out the impact that new tax credits will have on the cost of health insurance for families. That makes no sense. In reality, the report itself acknowledges that: “[s]ubsidies will entirely or partially offset these premium increases for some individuals.”
http://www.whitehouse.gov/blog/2009/12/03/coming-attractions-insurance-industry-funded-study-wrong-facts-again

And…

Impact of the Patient Protection and Affordable Care Act on Costs in the Individual and Small-Employer Health Insurance Markets

By Jason Grau and Kurt Giesa
BlueCross BlueShield Association
Oliver Wyman
December 3, 2009
Impact of Subsidies
Subsidies would play an important role in reducing out-of-pocket costs for certain individuals, especially those below 200% of FPL, who are likely to purchase insurance under the proposed reforms. Subsidies will cover more than 90% of premium costs for individuals in this income range, significantly reducing financial barriers to purchasing coverage.
By contrast, our analysis of the Senate bill projects that 8.7 million will not be eligible for the subsidies. Another 3.3 million people who purchase coverage will have incomes of 300-400% FPL and will be eligible for average subsidies of 45% of their premiums (which would not fully offset the cost increases we predict). Finally, 13.3 million lower-income individuals who purchase coverage will have incomes of 100-300% FPL. They will have access to subsidies of 70-90% of their premiums, which will offset much if not all of the increased premiums they will face.
Our modeling predicts that those who are eligible for subsidies will be more likely to purchase insurance than those who are not. However, subsidies will not ensure that young and healthy people participate. Short of achieving 100% coverage, adverse selection will always exist, and the young and healthy will be the most difficult to bring into the market.
Impact of Weak Individual Mandates
The Senate bill requires individuals to purchase insurance coverage or face financial penalties. An amendment accepted during mark-up of the Chairman’s Mark in the Finance Committee, and largely retained in the Senate leadership bill, substantially weakened the bill’s individual mandate. The individual mandate penalty in PPACA is set at just $95 in the first year insurance reforms become effective (2014). This penalty rises gradually, reaching a maximum of $750 per adult in 2016. This maximum penalty is likely to be only about 16 percent of an average premium in 2016, assuming current rates of medical cost inflation.
The amendment also exempts individuals whose premiums exceed 8% of their adjusted gross income (AGI). In 33 states, the average cost of health insurance exceeds eight percent of median state income. In fact, in the first year of reform 25% of the exchange-eligible population will face insurance costs in excess of the 8% AGI threshold and qualify for mandate exemption. Premium increases over a ten-year period will result in nearly half of the population qualifying for mandate exemption status.
Conclusion (excerpt)
The provision of subsidies alone will not offset the impact of insurance reforms on average premiums in the market. A balanced, sustainable insurance pool, that ensures everyone is covered, is critical to making healthcare affordable for all.
http://www.bcbs.com/issues/uninsured/background/patient-protection-affordable-care-act.html
Full report:
http://www.bcbs.com/issues/uninsured/background/Impact-of-the-Patient-Protection-and-Affordable-Care-Act-on-Costs.pdf

Recent reports from the insurance industry, including this report from the BlueCross BlueShield Association, have been targeted by proponents of the current leading reform model as biased reports without credibility – witness the comments by The White House and The New York Times (both also biased). But the fundamental message from the insurance industry is very valid: the reform proposal before Congress does not do nearly enough to control health care costs, and the mandates, subsidies and penalties are inadequate to ensure that all risks are adequately pooled.
This report confirms once again that the subsidies are inadequate, particularly for middle-income families, and likely will result in adverse selection as the healthier take their chances on remaining uninsured. It confirms that the penalty for being uninsured is too small to ensure compliance with the insurance requirement. It also confirms that a very large and rapidly growing number of individuals will be exempt from the mandate to purchase insurance simply because their incomes are inadequate to be able to afford the plans.
There is one statement in this report that the proponents of the proposal before Congress should take careful note of, and it is remarkable that it is coming from the insurance industry: “A balanced, sustainable insurance pool, that ensures everyone is covered, is critical to making health care affordable for all.”
The dysfunctional, fragmented model of health care financing that Congress is moving forward with can never create a balanced, sustainable risk pool, nor can it ensure that everyone is covered, nor can it make health care affordable for all.
We really do need a balanced, sustainable pool that includes everyone and is equitably financed: an improved Medicare for all.

Sanders offers Medicare-for-All amendment in Senate

FOR IMMEDIATE RELEASE
Dec. 3, 2009

Contact:
Quentin Young, M.D., (312) 782-6006
Margaret Flowers, M.D., PNHP Congressional Fellow
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

Challenging head-on the powerful private insurance and pharmaceutical industries, Sen. Bernie Sanders introduced an amendment to the Senate health reform bill Wednesday that would replace the bulk of the Senate bill’s language with provisions establishing a single-payer, Medicare-for-All program.

Joining with Sanders, I-Vt., in co-sponsoring the measure, known as Senate Amendment 2837, were Senators Sherrod Brown, D-Ohio, and Roland Burris, D-Ill. Other senators, including Tom Harkin, D-Iowa, chair of the Senate Health, Education, Labor and Pensions Committee, have previously declared their support for single-payer health reform. The vote on the measure could take place in the next few days.

“This amendment starts from the premise that health care is a human right, and that every citizen, rich or poor, should have access to health care, just as every citizen has access to the fire department, the police or public schools,” a statement from Sanders’ office said.

The single-payer approach embodied in Sanders’ amendment stands in sharp contrast to the reform models being offered by the Senate and House leadership and the White House. Those bills would enhance the central role of private health insurers.

Sanders’ amendment, on the other hand, would replace the present crazy-quilt array of for-profit insurers with a single nonprofit, public financing agency, thereby slashing administrative waste in the system and redirecting the savings to clinical care.

Dr. Quentin Young, national coordinator of Physicians for a National Health Program, said, “This historic move by Sen. Sanders and his colleagues – it’s the first time single payer will be voted upon on the floor of the Senate – is yet another sign of the strong and growing support for an improved Medicare for All among the public and the medical profession.

“In contrast, the Senate leadership’s deeply flawed bill doesn’t expand coverage until 2014, would still leave 24 million uninsured, and would place no effective constraints on exploding costs,” he said. “Sanders’ amendment would cover everyone from the start and allow for effective cost-containment.

“Physicians and patients alike stand to gain enormously from the adoption of this measure,” Young said. “No effort should be spared to ask every senator to vote yes on Senate Amendment 2837.”

Sanders’ measure, which is largely patterned after a bill he introduced last March, the American Health Security Act (S. 703), would cover all of the 46 million Americans who currently lack coverage and improve benefits for all Americans by eliminating co-pays and deductibles and restoring free choice of physician.

Highlights of the amendment include the following:

* Patients go to any doctor or hospital of their choice.

* Comprehensive benefits, including coverage for dental, mental health, and prescription drugs.

* By eliminating the high overhead and profits of the private, investor-owned insurance industry, along with the burdensome paperwork imposed on physicians, hospitals and other providers, the plan saves at least $400 billion annually – enough money to provide comprehensive, quality care to all.

* Community health centers are fully funded, giving the 60 million Americans now living in rural and underserved areas access to care.

* To address the critical shortage of primary care physicians and dentists, the bill provides resources for the National Health Service Corps to train an additional 24,000 health professionals.

* The program is paid for by combining current sources of government health spending into a single fund with modest new payroll and income taxes amounting to less than what most businesses and people now pay for insurance premiums and out-of-pocket expenses.

* While federally funded, the program is to be administered by the states.

Sanders, who serves on the Senate Committee on Health, Education, Labor, and Pensions, is a longtime advocate of fundamental health care reform.

*****

Physicians for a National Health Program (www.pnhp.org) is an organization of 17,000 doctors who advocate for single-payer national health insurance. To contact a physician-spokesperson near you, visit www.pnhp.org/stateactions or call (312) 782-6006.

Sanders Amendment to Create a Universal, Single Payer Health Insurance System

From the office of Sen. Bernie Sanders

Summary: This amendment would establish a single payer health insurance system that would cover every person legally residing in the United States.  The single payer system would be regulated and funded by the federal government through a payroll tax and an income tax, but it would be administered by the states.  It would replace the coverage and revenue titles of the current bill, but it would leave in place most of the provisions in the quality, prevention, and workforce titles of the bill.  This amendment starts from the premise that health care is a human right, and that every citizen, rich or poor, should have access to health care, just as every citizen has access to the fire department, the police, or public schools.

Why is this Important?

  • The United States spends $7,129 per person on health care, which is almost double the amount spent by nearly any other industrialized country.  Despite this fact, we still do not insure all of our citizens.
  • There are currently 46 million Americans without health insurance, 100 million Americans who cannot access dental care, and 60 million Americans who do not have access to primary care.
  • The United States ranks among the lowest of developed countries are far as health outcomes, according to both life expectancy and disease metrics.
  • One reason we spend our money so ineffectively is that there is tremendous waste in our system.  Healthcare providers spend $210 billion on administrative costs, mostly to deal with insurance paperwork, and the ranks of administrative personnel have grown by 25 times the number of physicians in the past 30 years.
  • This waste and the high costs of insurance associated with it place a tremendous burden on American employers and makes it difficult for them to compete internationally.

Why Support the Sanders Single Payer Amendment?            

  • Single payer systems have consistently shown lower administrative costs and higher quality health outcomes.  For example, as compared to the United States’ per capita health spending of $7,129, Canada spends $3,895 and Austria spends $3,763 on health care costs.  Both of these countries have higher quality health care outcomes than the United States.
  • By creating a single payer, Medicare-for-all type system, this amendment would provide every United States citizen with comprehensive health care and dental coverage in a cost-effective manner. It would save our country money, improve our health outcomes, and, at the same time, fulfill the administration’s promise of universal coverage.

Cost: This amendment pays for itself through progressive payroll and income taxes.

CRS on the health insurance market

The Market Structure of the Health Insurance Industry

By D. Andrew Austin and Thomas L. Hungerford
Congressional Research Service
November 17, 2009

Evidence suggests that health insurance markets are highly concentrated in many local areas. Many large firms that offer health insurance benefits to their employees have self-insured, which may put some competitive pressure on insurers, although this is unlikely to improve market conditions for other consumers. The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output — high premiums and limited access to health insurance — combined with high profits. Many other characteristics of the health insurance markets, however, also contribute to rising costs and limited access to affordable health insurance. Rising health care costs, in particular, play a key role in rising health insurance costs.

Health costs appear to have increased over time in large part because of complex interactions among health insurance, health care providers, employers, pharmaceutical manufacturers, tax policy, and the medical technology industry. Reducing the growth trajectory of health care costs may require policies that affect these interactions. Policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.

http://www.fas.org/sgp/crs/misc/R40834.pdf

About the Congressional Research Service:
http://www.loc.gov/crsinfo/whatscrs.html

Comment:

By Don McCanne, MD

The Congressional Research Service (CRS) has an outstanding reputation for authoritative, objective and nonpartisan analyses, providing Congress with the analytical support it needs to address the most complex public policy issues facing the nation.

In this 65 page report to Congress on the market structure of the health insurance industry, CRS concludes that “policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.”

The conclusions are certainly no surprise. Every reasonable economist agrees that free market principles do not apply to health care. Yet where is Congress on this? They are moving forward with a proposal that relies heavily on the market of private health plans.

Don’t the members of Congress read their own reports? They need to read this one!