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Many seek to switch to public health insurance

The Local – Germany’s News in English
January 8, 2012

Shocked by premium increases of as much as 50 percent, many Germans with private health insurance are seeking to switch to a national health plan, the news magazine Der Spiegel reported Sunday.

Many private health insurance plans pushed through hefty premium increases at the beginning of the year and that’s behind the move to switch, the magazine said.

“We’ve gotten increased telephone inquiries from those privately insured who want to come to the AOK,” Wilfried Jacobs, the head of the AOK in Rheinland/Hamburg, told the magazine. The AOK, with 15 regional branches and some 24 million members, is Germany’s largest public health insurance organisation. The magazine said other public health insurers have received similar inquiries.

But it’s not so easy to switch once you’ve opted for private insurance. German law only allows people to change from public to private in exceptional situations.

These include when someone has lost their job. You can also switch if you are an employee whose salary falls below the € 45,900 level. Workers who used to be self-employed but now have a full-time position with a similar salary may also change.

But a public health organization manager said, “There are tricks that we can use to help private patients, providing the employer cooperates.”

The Barmer GEK public health organization reported that 27,600 people switched from private competitors in 2011 – nine percent more than in 2010.

http://www.thelocal.de/national/20120108-39989.html

And…

Social Insurance and Individual Freedom

By Uwe E. Reinhardt
The New York Times, December 9, 2011

By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.

Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.

http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/

Comment: 

By Don McCanne, MD

It’s only January, yet Germany already is providing us one of the most important policy lessons of 2012. It may be great politics to allow more affluent citizens to opt out of public health insurance and to express their personal faith in private markets by selecting private plans, but they may decide that it’s terrible policy when the private plans come back to bite them.

In the United States, conservatives continue to push policies that would promote private plans that appeal to the healthier and wealthier sectors of our society. Consumer-directed plans with high-deductibles combined with health savings accounts are such options. Even with Medicare, conservatives have established the private Medicare Advantage plans for Medicare beneficiaries who would prefer to opt out of the public program.

If you just look at the Medicare Advantage plans, we have already seen that the private insurers have gamed the system such that they are receiving $3000 more per patient than the costs for comp[arable patients in the public Medicare program. What if the government required individuals to pay an extra $3000 for the “private upgrade”? It is likely that only the wealthiest and the most passionate anti-government ideologues would stay in the program.

What if, in addition, health care costs increased at rates well in excess of the growth in GDP, and the differences between the higher premiums that would have to be charged by the private plans compared to the more efficient public insurance program had to be paid in full by those enrolled in the private plans? You would see a massive exit from the private plans. Witness the current experience in Germany.

This is not hypothetical policy theory. The Germans fully understand the principles of social insurance. There are clear policy risks in allowing private options to government insurance plans. That is why they did not permit low- and middle-income individuals to make the foolish decision of exiting the public plans. They wanted to ensure both financial security and health security for these more vulnerable populations. If politically-influential wealthier individuals wanted to have the choice of private plans, then so be it, and Germany allowed it.

But no games. If wealthier Germans chose the private plans, then, as long as they maintained their higher incomes, they could not game the system by moving back into the public plan should they lose their bet that they would be better off in the private sector. Many Germans who made that choice are now facing skyrocketing premiums in the private sector. They want back into the public program, but many will have to continue to live with their ill-advised decision to go private.

Another sign of how flawed the private insurance concept is that they are now considering “tricks” that can be used to help private patients. Although tricks may produce winners, they automatically produce losers as well. There is no place for “tricks” in a public insurance program.

What is Germany to do now? It doesn’t seem fair to allow those who made this unwise decision to escape the consequences when it would expose the public program to adverse selection. There would be no problem had the government prohibited the wealthy from making an imprudent decision to go private in the first place, which they could have done simply by requiring everyone to participate in the public program.

For those who say that it is unfair to not allow choice, as mentioned the Germans were smart enough to prohibit that choice for low- and middle-income individuals, saving them from potential exposure to financial hardship. Ensuring security is fair; permitting the choice of insecurity is not fair for those who end up losing.

There may be less sympathy for the wealthy caught in a financial bind of their own making, but there are two important reasons why the wealthy also should be required to participate in the public program: 1) the insurance risk pools (sickness funds) benefit from including the contributions of this wealthier and generally healthier population, and 2) the influence of the wealthy provides greater political support for the public program in which they would be required to participate. Consider the great support for Medicare as opposed to the meager political and financial support for Medicaid.

The obvious lesson for the United States is that we should eliminate the over-priced private insurers and establish a single national health program that covers everyone. We still may have some compassion even for those who want to play their ideological games but then run into trouble when they really need health care, but we should not allow them to escape their obligation to contribute equitably, in advance, to a financing system that many of them someday would have to rely upon.

P.S., Canada, listen up!

Professor Donald Light responds to the Quote of the Day on Francis Fukuyama’s “The Future of History: Can Liberal Democracy Survive the Decline of the Middle Class?” (https://www.pnhp.org/news/2012/january/francis-fukuyama-on-the-decline-of-the-middle-class):

Hi Don,

While I had not thought if it in this frame, the course on comparative health care in advanced capitalist countries at Stanford provides compelling materials for a coherent, liberal platform for the broad working and middle classes. (See STANFORD 2011 Syllabus on Kaiser web: http://www.kaiseredu.org/Syllabus-Library.aspx?sort=topic&pageno=1&school=Stanford+University)

1) For individuals and families to be productive and thrive, they need easy access to good medical services to treat injuries, illnesses, disabilities, chronic conditions, or mental distress. One can make a strong conservative case for universal health care, as most conservatives outside the United States do, based not on solidarity or equity but on individual freedom and responsibility. (For a synopsis, see http://www.healthpaconline.net/rekindling/Articles/Light.htm.  For the article, see ttp://www.thehastingscenter.org/Publications/HCR/Detail.aspx?id=2574.)

2) For infants and small children to begin life feeling confident, trusting (Erik Erickson), and energetic, they and their parents need universal parental and child supports.

3) For children and adults to learn and gain skills for productive work, they need easy access to good, universal education.

4) For workers and managers to focus on productive work rather than on how to keep from being laid off, there needs to be reasonable (but not excessive) job protection and ways of handling recessions that minimize the high economic & emotional costs of unemployment.

5) For the seriously ill, injured, or disabled not to become a heavy financial burden on their families that drags them down towards poverty, they need free medical care and maintenance income. For the elderly and chronically ill not to become impoverished or impoverish their kin, they need universal long-term care.

Most of these services and supports are provided in most affluent countries. They can be called “welfare” or “socialism,” but they are paid for largely by the working and middle-classes through equitable forms of collection such as taxes or mandatory premiums. In a conservative country like the United States where only some of these services and supports are partially provided, much of the direct costs are paid out of pocket by individuals or families affected. This results in serious impoverishment. Far greater would be the indirect costs of skills not learned because they cost too much, opportunities lost because of family burdens, promotions not gained as individuals take up heavy burdens at home with little societal support, unsafe working and living environments, marital disruption and divorce, and higher levels of violence.

If a full empirical assessment were done of such direct and indirect costs not providing the working and middle classes with educational, economic, family, and medical supports, I suspect they would be much greater than the costs of providing.

In this way, I believe a coherent intellectual and societal case can be made for what might be called the “thriving state.”  Perhaps the single best article we read was by Doug Massey, who describes the costs of dismantling what supports the US had and provides some comparisons with other affluent nations. (For a free copy, type in Google: Massey “Globalization and Inequality” and a pdf link will appear.)

With best regards,

Don

Donald W. Light
Professor, UDMNJ-SOM
Lokey Visiting Professor, Stanford University
Visiting Researcher, Center for Migration & Development,
Princeton University

Comment:

By Don McCanne

Donald Light writes that “a coherent intellectual and societal case can be made for what might be called the ‘thriving state.'” As we think about Francis Fukuyama’s essay and about making the case for the “thriving state,” we should think about how we can move beyond simply “occupying” and then going home.

This will be no easy task. I would emphatically second the recommendation of Donald Light to read Professor Douglas Massey’s article, “Globalization and Inequality: Explaining American Exceptionalism” (link below). It discusses the new political economy of poverty, the political economy of affluence, and their roles in American exceptionalism.

After you read Massey’s article you’ll think, “And we thought trying to reform health care was going to be tough!” But it will be very difficult to gain consensus on health care reform until we can address the issues behind Massey’s explanation of American exceptionalism.

European Sociological Review
August 20, 2008
Globalization and Inequality: Explaining American Exceptionalism
Douglas S. Massey
http://www.brynmawr.edu/socialwork/GSSW/schram/masseyglobal.pdf

Additional comment by Quote of the Day subscriber Richard Krasner:

Dr. McCanne,

As a student of American history and politics (BA in Poli Sci/History) and other Social Sciences, and an MA in American History, I am well aware of the ideological underpinnings of American society and why many Americans are loathe to support universal health care and deem it “Socialism”. It is the mere fact that in the late 17th and 18th century political discourse that serves as the basis of American, and even Western European democracy, health care was never mentioned, nor was the issue of caring for the sick, the poor, the orphan, the widow, the unemployed, etc. 

Rather, the focus was on individual liberty and property rights, and on the free market, with all of its attendant low wages, low taxes and high profits for the owners of the means of production. It is not until the mid-19th century that Modern Liberalism, as opposed to the Classical Liberalism (i.e., Libertarianism) of the 18th century, argued strongly for a role for government in improving the lives of its citizens and protecting them from the ills of the free market.

Unfortunately, these arguments fell on deaf ears on this side of the Atlantic because the Founding Fathers had enshrined individual liberty, property rights, and the acquisition of wealth into our laws and social fabric. This was not the case for our neighbors to the north, as Canada received its nominal independence from Britain in 1867, while we made our revolution for independence in the late 18th century. That explains why Canada, and the UK have universal health care, and we don’t. Even the one of the most conservative Prime Ministers of 20th century Britain, Winston Churchill believed in a national health care system… “Our policy is to create a national health service in order to ensure that everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.” 

But our conservatives believe just as many of the GOP candidates have said in the endless round of debates, that people who do not plan for getting sick deserve to die. This is not just cruel, this is part and parcel of the Calvinistic Puritanism that colored, and still colors much of the American mindset even now in the beginning of the 21st century. The Republican Party, and their Christian right allies, are reviving that old Protestant ethic, which never really died, it only migrated out of New England, and transferred from the Puritan church (i.e., Congregationalists) to the Southern Baptist and otehr fundamentalist or evangelical churches through the various Great Awakenings of the past two hundred years.

The only way I can see that this nation will join the other industrialized nations in providing all of its citizens with universal health care is when or if, the current system totally collapses, with or without the ACA being upheld by the Supreme Court later this year. I also recently received my MHA (Master’s in Health Administration) degree, and the ACA was an elective course I took over the summer 2011 semester, so our discussions included whether or not the ACA would be struck down or not. This was also a topic in my Health Law class that was taught by a practicing health care attorney in South Florida.

Fukuyama is known to me, and I find his “end of history” argument to be specious at best, because history never ends until time itself ends. He claims it has ended because we have won the individual liberty and freedom battle that has been part of much of human history for the better part of the last 5000 years. However, and I think you will agree, the one area where we have not been successful has been winning the battle against poverty, lack of adequate and affordable health care, disease, lack of a decent education and meaningful and rewarding employment for all that will create a harmonious and peaceful society and world. Until we accomplish that goal, history can never be said to have ended, because we are leaving millions of our fellow human beings in despair, hopelessness and suffering that will one day cause our civilization to fall, just as invasion or natural disasters did to Rome, the Mayans, Inca, and other ancient peoples.

Thank you for your comments.

By Francis Fukuyama
Foreign Affairs, January/February 2012

Something strange is going on in the world today. The global financial crisis that began in 2008 and the ongoing crisis of the euro are both products of the model of lightly regulated financial capitalism that emerged over the past three decades. Yet despite widespread anger at Wall Street bailouts, there has been no great upsurge of left-wing American populism in response. It is conceivable that the Occupy Wall Street movement will gain traction, but the most dynamic recent populist movement to date has been the right-wing Tea Party, whose main target is the regulatory state that seeks to protect ordinary people from financial speculators. Something similar is true in Europe as well, where the left is anemic and right-wing populist parties are on the move.

The Absent Left

One of the most puzzling features of the world in the aftermath of the financial crisis is that so far, populism has taken primarily a right-wing form, not a left-wing one.

In the United States, for example, although the Tea Party is anti-elitist in its rhetoric, its members vote for conservative politicians who serve the interests of precisely those financiers and corporate elites they claim to despise. There are many explanations for this phenomenon. They include a deeply embedded belief in equality of opportunity rather than equality of outcome and the fact that cultural issues, such as abortion and gun rights, crosscut economic ones.

But the deeper reason a broad-based populist left has failed to materialize is an intellectual one. It has been several decades since anyone on the left has been able to articulate, first, a coherent analysis of what happens to the structure of advanced societies as they undergo economic change and, second, a realistic agenda that has any hope of protecting a middle-class society.

The main trends in left-wing thought in the last two generations have been, frankly, disastrous as either conceptual frameworks or tools for mobilization. Marxism died many years ago, and the few old believers still around are ready for nursing homes. The academic left replaced it with postmodernism, multiculturalism, feminism, critical theory, and a host of other fragmented intellectual trends that are more cultural than economic in focus. Postmodernism begins with a denial of the possibility of any master narrative of history or society, undercutting its own authority as a voice for the majority of citizens who feel betrayed by their elites. Multiculturalism validates the victimhood of virtually every out-group. It is impossible to generate a mass progressive movement on the basis of such a motley coalition: most of the working- and lower-middle-class citizens victimized by the system are culturally conservative and would be embarrassed to be seen in the presence of allies like this.

****

Elites in all societies use their superior access to the political system to protect their interests, absent a countervailing democratic mobilization to rectify the situation. American elites are no exception to the rule.

That mobilization will not happen, however, as long as the middle classes of the developed world remain enthralled by the narrative of the past generation: that their interests will be best served by ever-freer markets and smaller states. The alternative narrative is out there, waiting to be born.

(Francis Fukuyama is a Senior Fellow at the Center on Democracy, Development, and the Rule of Law at Stanford University.)

http://www.foreignaffairs.com/articles/136782/francis-fukuyama/the-future-of-history

Comment: 

By Don McCanne, MD

In this essay, Francis Fukuyama describes the historical background of the middle class, bringing us to the troublesome present in which the stability of the middle class is in question. He suggests that we need a new political and economic ideology that “could provide a realistic path toward a world with healthy middle-class societies and robust democracies.”

The views of Fukuyama are not without controversy. Indeed, he has changed his own views over time (e.g, his views on neoconservatism and the Iraq invasion). Nevertheless, his writings are quite provocative and are helpful in broadening conceptualizations of societal problems and their potential solutions.

It is difficult to provide enough content in a few excerpts to provoke gainful contemplation on how we should approach the middle-class crisis – a crisis which is important to understand if we ever hope to ensure health care justice for all. For that reason, the entire article should be downloaded, savored and shared. Although Foreign Affairs charges $2.95 for the article (link above), this one is worth giving up today’s latte.

When you read it, consider what you already know in disciplines such as economics, political science, and sociology, but do not be bound by them in your contemplation. We have to get beyond simplistic, rigid analyses such as boxing solutions into either a government approach or a private market approach. That type of thinking has resulted in our polarized political gridlock that has prevented us from moving forward with health care reform that would best serve not only the middle class, but everyone.

Think in the broadest terms about what new political and economic ideology might lead us in the right direction. According to Fukuyama, “The alternative narrative is out there, waiting to be born.”

Fukuyama is famous for proposing that liberal democracy represents “The End of History” but not the end of events. Let’s see if we can create the events that would make our democracy work for the betterment of us all, by contemplating “The Future of History” and then acting on our thoughts.

By Imam M. Xierali, PhD, Sarah A. Sweeney, BS, Robert L. Phillips Jr., MD, MSPH, Andrew W. Bazemore, MD, MPH and Stephen M. Petterson, PhD
Journal of the American Board of Family Medicine, January-February 2012

Critical Access Hospitals (CAHs) are geographically isolated, small rural hospitals that are typically the sole source of care for their community, providing not only acute care but a broad spectrum of basic health services. There was a robust increase of CAH designations from 50 in 1998 to 1,310 in 2009.

Rural communities struggle to recruit and retain health care providers. In 2008, 81% of rural counties were or contained areas designated as Primary Care Health Professional Shortage Areas. Encouraging evidence shows that residents trained in a rural setting are much more likely to continue to serve in rural or underserved settings. Analysis of Medicare hospital cost report data suggests that very few CAHs ever have reported intern and resident training. As rural hospitals and as hospitals without prior graduate medical education (GME) programs, CAHs are eligible for starting or becoming funded members of GME training programs.

Increasing the capacity for CAHs to create and expand training programs could improve access to care in rural communities and strengthen existing rural training programs, many of which are threatened or closing. Recent policies promoting primary care training, such as the teaching health center program, also mean opportunity for CAHs to play an important role in GME expansion. Though this role for CAHs requires no legislative changes, CAHs will face additional hurdles related to accreditation and staffing.

http://www.jabfm.org/content/25/1/7.full

And…

Critical Access Hospital (CAH) Graduate Medical Education (GME): Too Little, and Maybe Too Late

By Frederick M. Chen, MD, MPH
Journal of the American Board of Family Medicine, January-February 2012

In the context of national scrutiny on graduate medical education (GME) from both the Medicare Payment Advisory Commission and the Joint Select Committee on Deficit Reduction, Xierali et al, bring our attention to the ongoing needs of rural underserved communities and the potential role of critical access hospitals (CAHs) in training the rural physician workforce. Their analysis demonstrates the minuscule number of CAHs that have reported resident training within their walls. The literature shows that physician training in rural settings is successful in producing rural physicians but also is endangered with the number of rural training tracks and rural residencies in free-fall over the past 10 years.

Although CAHs may be an untapped resource for GME, there are significant barriers to their success. Xierali et al point out the challenges of accreditation and staffing. CAHs, like RTTs, are by definition located in small communities that tend to be under-resourced for physician faculty and other medical education needs. Often the loss of a single physician in these settings results in the loss of the training site.

Financing is always an important consideration. Though CAHs may be eligible for Medicare GME payments because they are free of the resident cap, many CAHs have a low percentage of Medicare inpatients, resulting in payments that are insufficient to cover the costs of residency training. On the other hand, this has not precluded urban hospitals from claiming the time that residents spend in CAHs. Though this enables some residency training time in CAHs, the flow of funds, if any, from the urban hospital to the CAH is unknown, except to hospital financial officers.

Enabling and encouraging more residency training in rural settings is a priority if rural communities are to have adequate access to health care. New training models that encourage community-based training also encourage CAHs to participate in physician training. However, changes to GME financing are needed if CAHs are going to be able to play a larger role in rural physician training.

http://www.jabfm.org/content/25/1/6.full?etoc

Comment: 

By Don McCanne, MD

Critical Access Hospitals serving rural communities provide an opportunity to train physicians who would more likely stay in these communities, many of which are designated as Primary Care Health Professional Shortage Areas.

If our current fragmented system of financing health care were replaced with a single payer national health program – an improved Medicare for all – the coordinated allocation of our health care funds could ensure that these training programs for rural physicians would be adequately funded, not to mention ensuring the perpetuation of Critical Access Hospitals wherever they are obviously needed.

By Arnold S. Relman
The American Prospect, Jan-Feb/2012

Most people assume that insurance is an essential part of the health-care system. Some think it should be provided through public programs like Medicare, while others prefer to see it purchased from private insurance companies, but the majority believe that insurance is needed to help pay the unpredictable and often catastrophic expenses of medical care. That is why so much public policy focuses on extending coverage to as many people as possible and controlling its cost. I think this emphasis on insurance is mistaken. We would have a much better and more affordable health-care system if the reimbursement of medical expenses through public or private insurance plans was replaced by a tax-supported universal access to comprehensive care, without bills for specific services and without insurance plans to pay those bills.

Insurance is not simply a mechanism for spreading financial risks and paying for medical care. Because it usually tries to limit payments to providers, insurance often is an intrusive third party in the doctor-patient relationship and, particularly with private insurance, restricts the freedom of doctors and patients to select the services, specialists, and facilities they want to use.

Furthermore, all insurance plans have administrative expenses, and most private plans take profits that add to the cost of their premiums. The billing and collecting operations that are an integral part of any insured health system are a major expense for doctors and hospitals as well.

For-profit insurance companies, which control most of the private market, are the greatest problem. They have a direct conflict of interest with their customers, because a plan’s net income is increased by avoiding coverage of patients with serious illness (who, of course, are most in need of insurance), restricting access to services, and limiting coverage of expensive medical services.

There is, however, a practical alternative to health insurance and the fee-for-service system with which it is usually associated: a not-for-profit system in which a public single payer provides universal access to comprehensive private care delivered by primary-care physicians cooperating with medical specialists in group-practice arrangements.

I do not underestimate the complexity of the changes I am proposing. The odds against it are daunting. Congress might not even begin to debate major reform until the health system is near collapse. But what seems clear is that the best – possibly the only – hope for achieving universal, affordable care lies in the eventual elimination of private insurance and fee-for-service payment and in the creation of a tax-supported system based on group practice. Although this proposal makes good medical, social, and economic sense, its ultimate fate will be decided in the political arena. It cannot become a reality without an informed and aroused public bolstered by the medical profession’s strong support for the reform.

(Arnold S. Relman is a professor emeritus of medicine and social medicine at Harvard Medical School and the former editor of The New England Journal of Medicine.)

http://prospect.org/ (As of Jan. 3, Jan-Feb/2012 issue not yet posted online)

Comment: 

By Don McCanne, MD

It seems appropriate to begin the new year with the words of the venerable Arnold Relman. Much media attention on reform will be misdirected this year to implementation of the private-insurance-based Affordable Care Act and to its challenge in the U.S. Supreme Court. Dr. Relman reminds us that instead we need to move forward with informing and arousing the public in support of fundamental reform that actually would bring affordable care to all.