PNHP

Private health insurance industry has failed patients

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Private health insurance industry has failed patients

By Dr. Howard Green
Palm Beach Post, Sunday, May 15, 2011

All of the well-publicized political health care programs have one thing in common: They all seek to steer larger portions of Medicare and Medicaid through private insurance corporations. They differ only in their degrees of rationing, with President Obama’s plan restricting rationing for profit and Rep. Paul Ryan’s mandate allowing the most rationing by the health insurance industry.

What Republicans and Democrats fail to disclose is that for more than 40 years the middle man of American health care – the private insurance industry – has failed in almost every capitalistic, economic and medical measure to deliver for the American patient.

Unlike auto insurance, private medical insurance has failed to accept and spread risk, thereby preventing the delivery of quality, affordable health care .

All the private health insurers have failed to prevent personal bankruptcies due to medical illness. The administrative bureaucracy of private health insurers removes $500 billion a year from health care. Managed health care brokered by private insurance companies has failed to improve medical outcomes and lower morbidity (sickness) and mortality (death rates) for all Americans regardless of income, sex or location.

The private health insurance industry has needed massive taxpayer subsidies. It would not be profitable without a federal exemption from antitrust laws combined with a federal ban on collective bargaining by physicians. The private insurance companies would not be able to ration health care for profit without a federal law protecting the companies from malpractice lawsuits.

For over four decades private health insurance companies have decreased reimbursements to individual doctors, hospitals and therapists for care, while failing to lower the cost of care for insured citizens and business.

For 40 years, the private insurance industry has refused to invest in the development of integrated medical records and billing systems to prevent fraud and track outcomes and improve quality of care. Within the health insurance industry there is a failure to compete based on medical, surgical or preventative outcomes (the only product of health care). In addition, the health insurance industry has failed to operate profitably without massive diagnostic, treatment and reimbursement rationing of patient care by non-physician actuaries and insurance bureaucrats.

Private health insurance companies have failed to deliver to Americans low-cost medicines and drugs via competitive capitalistic bidding, even with massive federal Part D subsidies. With no real interest in our future health, the private health insurance industry has failed to contribute to meaningful medical or clinical research.

Health insurance companies can only claim success in diverting hundreds of billions of dollars of public and private money from health care providers and patients to profits and payoffs for their bondholders, shareholders, executives and political patrons.

If any other American industry failed to competitively and profitably provide a quality product for all Americans for 40 years, it would either be outsourced to an emerging nation, or shut down.

Health insurance companies ensure neither quality affordable health care nor quality insurance for most Americans. With no real product to sell, the private health insurance industry would fail to exist without hundreds of millions of dollars in direct and indirect payments to the elected officials in the Congress, state legislatures and the administration.

After 40 years of market and medical failure, America needs to cut out the middle man and move to single-payer national health insurance for all Americans with private doctors, hospitals, clinics, therapists and drug companies competing based on the quality of medical, surgical and preventive outcomes.

Dr. Howard Green is managing partner of Dermatology Associates of the Palm Beaches and director of the Dermatology Division at St. Mary’s Medical Center in West Palm Beach.

http://www.palmbeachpost.com/opinion/commentary/private-health-insurance-industry-has-failed-patients-1477361.html

'What Matters Is What Works': The State and the National Health Service in Scotland and Wales

By Colin Leys

As expert commentators have amply shown, the Coalition’s plan to privatise the National Health Service (NHS) lacks any basis in evidence – no surprise there. What is less well recognised, and so far amazingly unmentioned in the debate – is that powerful evidence against privatization exists on our own doorstep – namely, the fact that in Scotland and Wales the NHS is working well as a publicly provided and managed system, based on planning and democratic accountability.

Marketization was tried, especially in Scotland, and rejected. The purchaser-provider split, which is at the root of the marketization project, was introduced but then abandoned in both countries, and neither Foundation Trusts nor payment by results were introduced in either of them. Private finance initiative (PFI) was used in Scotland under the first Labour government in Holyrood, and one private treatment centre for NHS patients was opened, but the Scottish National Party (SNP) has since scrapped the use of PFI and taken the treatment centre into public ownership. Wales has used neither PFI nor private treatment centres. The NHS in both countries is once again planned and managed through a mix of democratically accountable central and local structures, as it was in England before the 1990s.[1]

Democratic and Accountable Planning

But this doesn’t mean that the NHS in Scotland and Wales has reverted to the past. On the contrary, in both countries the NHS has been modernizing, but under the influence of very different drivers from those being promoted in England. Instead of fragmenting the NHS and opening it to commercial competition, Scotland and Wales have opted for democratic and accountable planning. There, the drivers of change are: a) the input of medical specialists and GPs (rather than businessmen) on the Area and Local Health Boards where key policies are developed; b) the input on the Boards of community health and social care/social work staff, crucial for integrating primary and secondary care efficiently; and c) in Scotland, input from members of the local community, elected to the Boards on a trial basis since 2009.

The restoration of full political responsibility for health services has led to further democratizing or redistributive measures, including the abolition of prescription charges, and the abolition of charges for personal care in Scotland, and their radical reduction in Wales. Equally significant, and contrary to the claims of marketizers in England, health services in Scotland and Wales have steadily improved, on various measures, including waiting times. Scotland’s have been among the shortest in the UK.

The contrast with England – where the NHS is now being driven into decline and, increasingly, into chaos, in the interest of privatization – is dramatic. If ‘what matters is what works,’ as Tony Blair liked to say (confident that the catch-phrase was enough to justify privatization), it is actually publicly-provided and democratically-managed health services that work, and the evidence for this is right here in the UK.

Lessons Learned

There is a wider lesson here for everyone concerned to defend the public sector. It shows the state working in its active role as the agent and shield of the majority. This needs emphasizing. After forty years of ideological onslaught the very idea of ‘the state’ is close to joining others, such as ‘collective’ (not to mention ‘socialist,’ and even ‘left’), in the depository of Unclean Concepts. ‘State bad, private good’ may be a crude slogan but it is the very real starting-point of many politicians and most media commentators and BBC interviewers today, from John Humphrys down.

‘State’ is so often coupled with ‘nanny,’ ‘bureaucratic,’ ‘inefficient,’ ‘wasteful’ or some other negative adjective, that this hardly raises an eyebrow. It is never called ‘rational,’ ‘efficient,’ or even ‘democratic’ – even though commentators and interviewers like to stress the accountability of government (state) to parliament (also part of the state, and always called democratic) when criticizing extra-parliamentary forms of political action.

Elements of the state that the corporate world likes and needs are usually treated as somehow not part of the state. The armed forces, the police, the judiciary, the monarchy and the Church of England are never described as part of the nanny state, or as being bureaucratic or inefficient. The nanny, inefficient, etc. state just means, in practice, those parts of the state which provide social and cultural services for everyone – schools, social services, and not least the NHS – and which the right doesn’t like.

The effect of this incessant drip of denigration is to narrow down our concept of the state to just these parts of it, and to make us at best indifferent toward them. We unconsciously absorb the idea that they are by nature bureaucratic, inefficient, monopolistic, etc. Every fault they exhibit tends to be accepted as evidence of an inherently defective institution. We stop seeing them as the historic collective achievements they are, as expressions of what a mature society can accomplish through collective effort, achievements we have a collective responsibility to protect and sustain. Above all we are conditioned to think that if they need improving, we ourselves can have no role to play in doing so – and that the only route to improvement is via privatization.

Yet the NHS in Scotland and Wales provides a dramatic contradiction of this whole way of thinking. The Scots and the Welsh have used their devolved powers to keep and develop the NHS as part of the state. This is partly a reflection of the stronger hold of solidaristic values in Scotland and Wales – including within the political class and the commentariat, and the medical professions. It is also due to the fact that the voting system in both countries helps the majority to get the policies they want.

It will be very interesting and important to follow what further improvements are achieved in Scotland and Wales – and how what counts as an ‘improvement’ is defined when it is patients’ needs, rather than business values, that are the measure of it. At the same time we should not expect improvements to run ahead of changes in other parts of the state in Scotland or Wales. The state was famously defined by the young Karl Marx as ‘the table of contents of civil society’: it registers the balance of social forces, and the level of democracy and solidarity and civic energy, that exist in the wider society. Without an expansion of the notion of democracy beyond the skin-deep variety, consisting merely of periodic heavily-managed elections, the progress made with the NHS in Scotland and Wales is bound to run up against limits set by the wider context.

Yet the progress already made could itself encourage experimentation in other fields, from education to central government. And it offers a badly-needed antidote to right-wing ‘Anglo-Saxon’ ideology. At the very least, the ‘Celtic’ NHS shows that the state can be a democratic, rational, progressive state – if we want it to be. •

Colin Leys is an honorary professor of politics at Goldsmiths College London, and former Professor of Politics at Queen’s University in Kingston, Canada.

Endnotes:

1. The situation in Northern Ireland is more mixed, but essentially close to the Scottish and Welsh pattern. Further details on the NHS in Scotland and Wales are given in The Plot Against the NHS by Colin Leys and Stewart Player, Merlin Press 2011, but comparative work on what is happening to the NHS in all three countries is urgently needed.

From bad to worse: Medicare proposal will surely lead to de facto 'death panels'

By Robert Kiefner
Concord (N.H.) Monitor, May 14, 2011

Say a patient comes to see us with poor appetite, low-grade temperature and progressive right lower quadrant pain, classic symptoms of appendicitis. The cure will be a date with a good local surgeon, during which he will bid farewell to his appendix and be home in a day or two to resume the joy of living. If the appendix is not removed, he will suffer a miserable death from rupture of the appendix and peritonitis.

Let’s imagine that, for political causes or for reasons of institutional greed, the patient cannot avail himself of the cure. The appendectomy cannot be done because he does not have access to the surgeon or he decided to tough it out because he cannot afford the deductible and co-pays if insured, or the stratospheric costs if uninsured.

I’d like to apply that scenario to our current health care system, where we are, collectively, that patient with health care needs, forced to make life and death decisions based on cost. The Affordable Care Act may improve access to private insurance for a relative few, but does nothing to rein in costs. Our premiums will continue to rise unchecked, mirrored by rising co-pays and deductibles which will price many folks out of even using their insurance.

Now the brilliant Rep. Paul Ryan, whose credentials consist of being a political science major in college, wants to take the most medically vulnerable Medicare population and toss them into the for-profit insurance world with a pittance in their pockets to pay for their care. His plan would surely lead us down the path of de facto “death panels” for the elderly, who would be unable to negotiate the insurance nightmare, let alone afford it.

To be certain, Medicare needs to undergo a major overhaul – but it must be more widely applied, not abandoned. The overhead involved in the redundant hierarchies of private insurers amounts to $400 billion per year, enough to cover all of the uninsured for basic health care needs. For some reason (let me see, maybe the campaign contributions, the umpteen lobbyists, profound ignorance, or perhaps just callous disregard for their constituents), our elected officials continue to support the hideously expensive, inefficient and dangerous network of private insurers in this country.

In comparison with other industrialized countries, we spend twice as much per capita on health care, yet we rank 37th in the world relative to standard measures of health. Health care should not be a partisan issue. We need to do better with an informed citizenry and legislators who are willing to turn away from corporate special interest groups and ignore mind numbingly stupid extremist constituents.

So, back to the bedside of our patient. The doctors and nurses making that decision to take out the appendix need to make the decision to save the patient without regard for anyone’s political or financial interests. And for the rest of us, the collective patient, we need to truly reform health care, break the cost curve, and support universal health coverage, a single payer system which places patients ahead of profits. It is the fiscally and morally responsible thing to do.

Robert Kiefner is a family physician in Concord.

http://www.concordmonitor.com/article/257041/from-bad-to-worse

Corporations, Federal ‘Reform’ Keep Shifting Healthcare Costs to Workers

By Roger Bybee
In These Times, May 13, 2011

Despite its $14.2 billion in profits last year untouched by federal income taxes, General Electric is now demanding that its unionized workers accept a new high-deductible “Health Choice” health savings account plan.

GE’s demands are particularly obscene because it is sitting on $25 billion in savings and is threatening to close more U.S. plants, i.e. move more jobs to Mexico, China and elsewhere. And they’re particularly dangerous because GE is modeling bad behavior for other corporations to emulate.

As UE-GE Conference Secretary Steve Tormey has said, “Nobody is more symbolic of the assault on workers than General Electric.” The United Electrical workers union, one of a handful of unions now negotiating with GE, warned its members:

…numerous studies of these high-deductible plans…reveal that employees forced into plans like Health Choice are “significantly more likely to avoid, skip, or delay healthcare because of costs” than those with more comprehensive insurance. …

What GE is really saying with Health Choice is that medical expenses are no longer primarily their responsibility, but that of GE employees.

But GE is only the latest entrant among employers trying to establish a new healthcare normal by thrusting heavy additional costs onto the backs of working families. And the much-trumpeted federal healthcare “reform” legislation may actually exacerbate this race to the bottom.

(Of course, public employers—like the state of Wisconsin, led by labor’s arch enemy Gov. Scott Walker—have also been pushing to make public workers take up even more of the burden of healthcare costs. This despite the fact that, as David Cay Johnston has pointed out without managing to dent mainstream media coverage, public employees have always been paying 100 percent of their benefit costs. When they gained improvements in health and retirement benefits, they had to sacrifice on wage increases.)

How federal healthcare ‘reform’ helps drives the race to the bottom

The race to the bottom is, unfortunately, likely to be intensified as we get closer to fully implementing the Affordable Care Act in 2014. In fact, the ACA may well tend to establish a bare-bones, high-deductible policy as the new norm. The taxation of perversely mis-labeled “Cadillac” benefits has the very real potential of putting the squeeze on union-won healthcare benefits, especially in high-cost states. 

Despite the efforts of AFL-CIO Richard Trumka and others to limit the damage created when the Obama administration suddenly adopted John McCain’s regressive idea of taxing better benefit plans to fund expanded healthcare coverage for the uninsured, it may not take long before fast-rising medical inflation pushes the dollar value of union-won health benefits up to the Cadillac level, as IUE-CWA Local 201 President Jeff Crosby has noted.

As Dr. David Himmelstein and Steffie Woolhandler wrote recently,

The insurance required under the federal ACA is no better than Massachusetts’ bare-bones plans. And as employers emulate this inadequate coverage, the race to the bottom leaves an increasing number of Americans UNDER-insured. Public workers are just the latest group to see their coverage downsized.

What used to be called “health insurance” is now labeled “Cadillac coverage” – and reserved for those who drive Mercedes.

Himmelstein and Woolhandler remind us that the Democrats’ ACA plan was based on the Massachusetts model passed in 2006 with Gov. Mitt Romeny’s signature, and whose “achievements” are much less than splendid. Bankruptcies caused by catastrophic medical costs, which account for over half of all bankruptcies, are still rising in Massachusetts, they state:

While only 4 percent of the state’s residents remain uninsured, much of the new coverage is so skimpy that serious illness leaves families with crushing medical bills.

For instance, the cheapest (and most commonly purchased) coverage available to a 56-year-old Bostonian through the state’s health insurance exchange costs $5,616. Yet, if you’re sick, the policy doesn’t start paying bills until you’ve paid a $2,000 deductible. And even after that you’re responsible for 20 percent of the next $15,000 in medical expenses.

Insurers try blackmail

By basing itself on the Massachusetts plan which keeps for-profit insurers as the parasitic middlemen at the core of the healthcare system, the ACA sacrificed the potential for comprehensive, high-quality benefits covered from the first dollar.

This potential has been underscored in the fight over retaining ACA’s requirement that 80 percent of premium revenue be used by insurers to provide healthcare and improve quality, freeing up 20 percent for profit, bureaucratic overhead, and sales and promotion.

No less than nine states are seeking waivers from the 80 percent requirement, falling prey to insurers’ blackmail demands. Insurers are threatening to stop selling individual coverage in a number of states unless they can spend, in several cases, just 65 percent on paying for healthcare and quality improvements.

Both the states and the Obama administration are petrified by this coercive technique. The Obama administration’s timid mentality was revealed in this statement by Robert Laszewski, a consultant to the health care industry and a former insurance executive. “The last thing the Obama administration wants is the Des Moines Register writing about 500 people who lost their health insurance in Iowa because of the Obama health plan,” he chortled.

Singe-payer destiny?

The emerging situation is not pretty. Major corporations and right-wing state governments are fighting furiously to shift more costs onto workers and their families. Instead of setting a new, higher standard, ACA effectively serves to reinforce a new lower standard of “acceptable” coverage. Given this, the limitations of the ACA may become very obvious very quickly both to the public and Congress.

There may even be a possibility that that the essential need for maximum-strength single-payer or “Medicare for all” healthcare system—unburdened by for-profit insurers—will become evident much faster than most have imagined. (Sens. Bernie Sanders (I-Vt.) and Rep. Jim McDermott (D-Wash.) introduced  single-payer bills in Congress this week; Vermont has now passed its own single-payer system into law.)

Himmelstein and Woolhandler make the case concisely:

While the ACA can’t live up to its “affordable care” moniker, a single-payer reform could save $400 billion annually on administrative costs, enough to offer every American first-dollar, comprehensive coverage. While U.S. insurers fight tooth and nail against the 20 percent limit on overhead, Canada’s single-payer program runs for 1 percent.

http://inthesetimes.com/working/entry/7298/ge_other_employers_fight_to_set_lower_new_normal_on_healthcare_benefit/

AFL-CIO, NNU Back New Universal Health Care Bill

By Mike Hall
AFL-CIO blog, May 10, 2011

Last year, when Congress passed the Affordable Care Act, it was a “historic milestone on our path toward a more just society,” says AFL-CIO Executive Vice President Arlene Holt Baker. “But we also know that much work is left to be done.”
 
That work includes moving to a single-payer, universal health care model as called for by the AFL-CIO Convention in 2009 and today in the America Health Security Act, introduced by Sen. Bernie Sanders (I-Vt.) and Rep. Jim McDermott (D-Wash.).
 
Speaking at a Capitol Hill press conference, Holt Baker said: “We in the labor movement have long insisted that health care is a fundamental human right and an important measure of social justice. And for more than 100 years, we have fought for universal health care coverage based on a social insurance model, an approach that has proven to be cost-effective and efficient in countries across the globe and in this country to provide health security for seniors.”
 
Jean Ross, R.N., and co-president of National Nurses United (NNU), says the bill will “create a more just health care system.”
 
Providing a single standard of high-quality care for all is a priority for registered nurses who have seen their abilities to act as patient advocates made more difficult as for-profit interests control more patient care decisions.
 
Sanders says the fight for universal health care “is the civil rights battle of our time.”
 
The legislation establishes a national health care program that requires each participating state to set up and administer comprehensive health care services as an entitlement for all through a progressively financed, single-payer system, as administered by the states. Benefits emphasize primary and preventive care, and free choice of providers. Private health insurance sold by for-profit companies continues in the form of supplemental coverage only.
 
Says McDermott: “If an insurance company’s objective is to make a profit rather than deliver health care, a patient’s best interests may not always be in the forefront of their thinking. Decisions are made by accountants and actuaries, not necessarily on the basis of what’s best for the patient.”
 
The program will be progressively financed, including a surcharge on high-income individuals and a tax on securities and other financial transactions.
 
“Let’s face it,” says Sanders in a guest column in the Guardian, “until we put patients over profits, our system will not work for ordinary Americans.”
 
http://blog.aflcio.org/2011/05/10/afl-cio-nnu-back-new-universal-health-care-bill/

Bucking the pushback against federal health care law, Vermont looks to go far beyond it

By The Associated Press
The Washington Post, May 11, 2011

The Census Bureau reported that, in 2007, Vermont ranked sixth in the country in physicians per capita, with 374 per 100,000, versus a national average of 271 per 100,000. And about 90 percent of Vermonters have some form of health insurance already.

But some of those with insurance say it falls far short of what they need.

Heather Loughlin, 42, was working as a vice president at the Sugarbush ski resort when she was diagnosed 2 1/2 years ago with multiple sclerosis. Before long, she found herself no longer able to work and buying insurance with a subsidy from the state under a current program, but with a private insurer.

A thick stack of coverage denial letters later, Loughlin said, she was back living with her parents in Ludlow, who were going into debt in their retirement to help her meet her medical costs.

“It doesn’t matter if you’re paying $300 or $400 a month for insurance,” Loughlin said. “It’s a mirage.” She called the repeated coverage denial letters “mind-boggling and enraging. They just try to wear you down.”

Advocates for changing the system brought hundreds of people with stories like that to hearings and rallies at the Statehouse last year and again this spring.

James Haslam of the Vermont Workers Center, which spearheaded a campaign under the banner “Health Care Is A Human Right,” said the legislation wouldn’t have passed without the grass-roots support.

“If other people want this in their states, they have to start organizing their neighbors,” he said.

The bill indicates that the state would “maximize the receipt of federal funds” to help pay for the new health care system. But Vermont’s prospects of receiving federal money are uncertain amid efforts by Republicans in Congress to chip away at the federal overhaul.

“The big hole in Vermont’s plan has always been its failure to specify a funding source,” said Shawn Shouldice of the National Federation of Independent Business, which opposes the legislation. “The only clearly defined funding element was the federal grant money … and now that could vanish, as well.”

William Hsiao, a Harvard health care economist and consultant to the drafters of Vermont’s legislation, has called for a payroll tax shared by employers and workers. But lawmakers put off a decision on that, some saying they wanted a way to tax non-wage income to support the program as well.

There are also doubts the bill really will move Vermont toward a genuine single-payer system. It leaves room for people to buy supplemental insurance, and among the big questions is whether workers at IBM and some of the major employers in the state, whose self-insurance systems are regulated under federal law, will be allowed to be absorbed into Vermont’s system.

In a move crucial to the project’s success, backers say, the board will design and administer new cost-control measures, including “global budgeting” for hospitals and other health care providers. Instead of the traditional “fee-for-service” system in which doctors are paid by the patient visit or procedure performed, the new system will be designed to pay for providing necessary health care to a given population.

A senior health researcher at the conservative Heritage Foundation in Washington warned, though, that Vermont may want to be careful in playing with the financial incentives that can influence how health care systems develop over time.

In some other countries, Ed Haislmaier of Heritage said, the sort of “global budgeting” Vermont envisions ends up with less acutely ill patients with longer hospital stays. “Hospitals turn into nursing homes,” he said.

The bill calls for maintaining and expanding the state’s Blueprint for Health program, which is designed to streamline and provide better preventive care to people with chronic conditions like heart disease and diabetes.

Rep. Mark Larson, chairman of the Health Care Committee in the Vermont House and a key architect of the legislation, acknowledged that the bill is really a planning document and that its supporters have much left to prove.

After the House gave the bill final approval 94-49 Thursday, he said, “I think today’s vote reflects people saying, ‘OK, you’ve made your case. Now show me.’”

http://www.washingtonpost.com/world/bucking-the-pushback-against-federal-health-care-law-vermont-looks-to-go-far-beyond-it/2011/05/11/AFqnE0qG_story_1.html

Uwe Reinhardt explains the Milliman Medical Index

Would Privatizing Medicare Lead to Better Cost Controls?

By Uwe E. Reinhardt
The New York Times, May 13, 2011

The annual Milliman Medical Index, released earlier this week by Milliman Inc., the Seattle-based employee-benefit consulting and actuarial company, is illuminating, and I highly recommend it. The index is particularly timely as the nation considers proposals to reduce sharply the role of the federal government in financing health care, along the lines proposed by Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee.

The index measures the total cost of health care for a typical American family of four covered by a preferred provider plan, widely known as a P.P.O. The index’s great virtue is that it includes not only the employer’s and employee’s contributions to the premium for P.P.O. coverage but also the out-of-pocket expenses the family has under the plan.

Employers can control the growth of health insurance premiums by shifting more and more of the cost from the insurance policy to the family’s budget, through higher deductibles and coinsurance or by excluding benefits from coverage that had previously been covered.

Thus, the index provides a more accurate picture of the actual burden of health spending for a typical American family than does just the premium for P.P.O. coverage.

The estimated average cost of health spending from all sources for a typical privately insured American family more than doubled in the last decade, to $19,393 in 2011 from $8,414 in 2001. Over the decade, the index exhibited an average compound annual growth rate — widely known in the trade as C.A.G.R. — of 8.8 percent, although, in recent years, that rate has ranged between 7 and 8 percent.

Despite that recent abatement, the growth rate is still more than twice the rate at which total average employee compensation has grown, for all but the top executives among private employers. In recent years, the growth in employee compensation has hovered beneath 3 percent.

In other words, health care is chewing up employees’ paychecks like Pac-Man in the famous arcade game. And there is considerable empirical evidence that the employer’s ostensible contribution to the employee’s health-insurance premiums actually comes out of the employee’s take-home pay.

As noted above, it is not a stretch to argue that the Milliman Medical Index bears directly on the hypothesis that private health insurers are able to control the growth in per-capita health spending better than Medicare can.

At the theoretical level, one might be persuaded to subscribe to that theory, because private nonprofit and commercial health-insurance plans have at their disposal cost-control mechanisms that traditional Medicare has been denied by statute — for example, selective contracting with preferred providers that offer the insurer lower prices, or various direct interventions to control the volume of health services.

In addition, private nonprofit or commercial health insurers can offer other advantages that traditional Medicare has not, like disease management, wellness programs and better coordinated care — advantages that, in principle, are empirically demonstrable if they exist.

But the Milliman data do not suggest that superior control over total health spending — as opposed to controlling premium growth through cost-shifting to private household budgets — is among the industry’s strengths. To argue that the industry can do so is, at this point, faith-based analysis.

It is widely assumed, among both health insurers and the hospital industry, that the more rapidly rising prices paid by private insurers reflect a cost shift from government to the private sector. The theory is that private insurers must compensate with higher prices for the shortfall from actual cost imposed on providers of care by unduly low Medicaid and Medicare payment rates.

With a few exceptions, economists remain skeptical on the validity of the cost-shift theory, although it may operate in some market environments.

But suppose one accepted the cost-shift theory at face value. It implies that in many markets with highly consolidated hospital systems and large physicians’ groups, private insurers simply lack the market power to resist price increases from the more powerful providers of health care for whatever reason — cost shift or otherwise.

For the full article:
http://economix.blogs.nytimes.com/2011/05/13/would-privatizing-medicare-lead-to-better-cost-controls/

Milliman Medical Index:
http://publications.milliman.com/periodicals/mmi/pdfs/milliman-medical-index-2011.pdf

Readers’ Comments:

9. Don McCanne
San Juan Capistrano, CA
May 13th, 2011

Each year we look at the Milliman Medical Index and realize that our current system is still not working. The Affordable Care Act (ACA) provides no realistic hope of slowing costs in the privately insured sector. ACA’s only effective mechanism is the establishment of the Independent Payment Advisory Board, but that would leave private plans alone while risking converting Medicare into an underfunded welfare program.

Looking at the Milliman numbers, it seems so obvious. Instead of privatizing Medicare, we should improve it and then provide it as a public program that covers everyone. Cost escalation would be slowed to sustainable levels while preserving free choice of physicians and hospitals (which would be lost in a privatized Medicare program).

Single payer legislation has already been introduced that would allow us to take a serious look at this concept. In the House, Rep. John Conyers has introduced The Expanded and Improved Medicare for All Act (H.R.676), and Rep. Jim McDermott has introduced the American Health Security Act of 2011 (H.R.1200), which also has been introduced in the Senate by Sen. Bernie Sanders as S.915.

It is no wonder that conservatives often say that if we don’t adopt their less regulated privatization schemes we are going to end up with single payer. They understand the numbers, and they realize that single payer would actually work. It’s time that we look at single payer not as a threat, but as a hope – a hope that we could finally provide affordable health care for everyone.

http://community.nytimes.com/comments/economix.blogs.nytimes.com/2011/05/13/would-privatizing-medicare-lead-to-better-cost-controls/?permid=9#comment9

Reforms Prod Insurers to Diversify

By AVERY JOHNSON
Wall Street Journal, May 12, 2011

Major U.S. health insurers, including Aetna Inc., Humana Inc. and WellPoint Inc., are retooling to become more than just health plans, in the wake of the federal health-care overhaul that is changing the rules for the industry’s core business.

Diversification plans, touted in meetings with investors this year, include stepped up acquisitions and partnerships that will allow the companies to employ doctors directly, deliver health-information technologies, and participate in new hospital-doctor groups known as accountable-care organizations.

Managed-care companies have been on buying sprees before, mostly to gobble up competing insurers and expand their networks and membership. But with the health law stripping thick profit margins from the business of providing health-care benefits, that isn’t such a popular strategy anymore.

Insurance profit margins have historically averaged 7% to 8%, said Carl McDonald of Citigroup Investment Research, but the health overhaul—which requires insurers to spend more on medical care instead of profits—is expected to reduce that to between 3% and 5%.

Meanwhile, health IT, especially, is growing briskly, and can command fat margins because of relatively low overhead. UnitedHealth Group Inc., which until recently has been largely alone in its quest to supplement core insurance operations, is expected to earn margins of about 14% this year on its health IT business, and has earned margins higher than 20% in years past, according to Goldman Sachs.

Since 2010, about 20% of deals by managed-care companies involved health IT firms, up from 7% in 2007, while insurers buying other insurers dropped to 27% of the deals from 39% over the same period, according to FactSet Research Systems, a company that ran an analysis on the market.

At Aetna, new Chief Executive Mark Bertolini is implementing a strategy that will see the Hartford, Conn., insurer get more deeply into health-information technology and run the back-end operations of the new accountable-care organizations, or ACOs.

“Our core business is necessary but not sufficient,” said Mr. Bertolini. He pledged to transform Aetna into “more than an insurance company.”

Earlier this year, Aetna spent $500 million on technology company Medicity, which sells software to securely transmit health data so health-care providers with many different systems can share patient information. Besides commanding higher margins, health IT businesses are expanding due to some $27 billion in federal funding available for hospitals and doctors to computerize their records.

In March, Aetna announced plans to partner with Carilion Clinic in Virginia to build an ACO—a concept outlined in the health law to make the health-care system more interconnected and hold costs down. In late April, Aetna said it was buying Prodigy Health Holdings for $600 million to get more deeply into the business of providing midsized companies with a self-funded insurance option—which Mr. Bertolini pointed to as evidence of further diversification.

In the accountable-care organizations, the hospitals or doctor groups would take on some of the financial risk of caring for patients—the role traditionally played by insurers. Aetna hopes to provide ACOs with the know-how. And even if the law is ultimately repealed, health insurers see opportunities to sell services to help improve how the health system works, which was a major focus of the debate on the overhaul.

“Health-care reform was an action-forcing event: Everyone’s antenna is up and saying, ‘We’ve got to change,”‘ said Mr. Bertolini.Further into the future are plans for a health-care app store. By the end of the year, the insurer hopes consumers will be able to download mobile applications, such as a program that could help patients find doctors much like opentable.com helps diners find restaurants. Already, doctors can install CareSuite, a workflow tool for physician offices. The tools will be available to users regardless of whether Aetna is their insurer.

Reinventing the health-insurance industry has its challenges. Diversification “may take away management focus from the core business and also [runs] the risk that they may not do well in some of these newer areas,” said Matthew Borsch, a Goldman Sachs analyst who follows health insurers.

But industry executives point out that newer areas are growing a lot faster than the traditional core business. For instance, specialty businesses, such as stand-alone dental or vision coverage, command margins over 10%, said Mr. McDonald of Citigroup.

He also pointed to the new frontiers that health plans are exploring to export their model overseas, which can bring margins in the teens.
Michael McCallister, chief executive of Humana, is getting into the business of employing doctors and is eyeing home health care because, he said, “these areas are growing faster than the core and will continue to do so.” Home health, for instance, commands margins in the midteens, said Sheryl Skolnick, an analyst at CRT Capital Group LLC, and also has the benefit for an insurer of keeping patients at home instead of at costly nursing facilities.

Humana in December spent nearly $800 million to buy Concentra, which runs urgent- and occupational-care clinics in about 40 states. Last month, the company reorganized its business units to better reflect its new diversified structure.

Concentra employs about 1,000 primary-care doctors who are near to where three million Humana members live, the insurer said. Humana hopes the centers can provide an alternative to costly emergency-room care for its members: A typical visit to a Concentra urgent-care clinic costs $190 to $200, including an X-ray, according to the company, while a comparable ER visit would range from $350 to $650 or more, with additional services for X-rays.
The Concentra deal is also a way to capitalize on the looming shortage of primary-care doctors when an estimated 32 million additional people gain coverage in 2014 due to the health law.

Meanwhile, WellPoint earlier this year said it is diversifying more heavily into consumer-oriented and health IT businesses. At an investor conference, the company outlined plans to create a “portfolio of new noncore growth businesses.” Chief Financial Officer Wayne DeVeydt said, “WellPoint is actively engaged in a range of partnership discussions with leading technology and consumer companies to redefine health IT.”

Write to Avery Johnson at avery.johnson@WSJ.com

Bernie Sanders introduces single-payer bill in Senate

May 12, 2011

Dear PNHP colleagues,

On Tuesday at a news conference in Washington, Senator Bernie Sanders, I-Vt., announced the introduction of his national single-payer bill, the American Health Security Act of 2011, S. 915, with characteristic flourish.

Sanders’ legislation is a revised version of the bill he introduced last year. It has a companion bill in the House, H.R. 1200, sponsored by Rep. Jim McDermott, D-Wash.

McDermott was also present for the announcement. Speakers in support of the measure included Arlene Holt Baker, executive vice-president of the AFL-CIO, and Jean Ross, R.N., co-president of National Nurses United.

In a Tuesday news release, PNHP welcomed the Sanders and McDermott bills, even though we expressed concerns about some of their provisions (see below).

In many respects, H.R. 676, the Expanded and Improved Medicare for All Act, sponsored by Rep. John Conyers Jr., D-Mich., has stronger provisions. Conyers’ bill also currently enjoys greater congressional sponsorship and wider organizational backing than the Sanders-McDermott legislation.

But having the public’s attention drawn to the benefits of a national single-payer system is a very good thing, particularly at a time when federal health programs are under assault and people are seeking more fundamental remedies to our persistent health care crisis. PNHP also remains supportive of state-based movements for single-payer too, of course.

PNHP chapters and activists are urged to visit or otherwise contact their congressional representatives to urge them to support single-payer legislation in the House (especially H.R. 676) and in the Senate (Sanders’ S. 915).

Finally, these bills, along with the current debate over the future of Medicare and the federal deficit, offer us opportunities to get our single-payer viewpoint published in letters to the editor or opinion pieces in our local newspapers. We encourage you to write one and send it in! (If you need assistance, contact Mark Almberg at mark@pnhp.org.)

Our news release about the Sanders bill appears below, as does an opinion piece by Sen. Sanders that appeared Tuesday in The Guardian (U.K.).

Thanks for all that you do in support of single payer!

Cordially,

Quentin D. Young, M.D.
National Coordinator


Mark Almberg
Communications Director

FOR IMMEDIATE RELEASE
May 10, 2011

Contact:
Garrett Adams, M.D., president PNHP
Margaret Flowers, M.D., congressional fellow PNHP, margaret@pnhp.org
Mark Almberg, communications director PNHP, (312) 782-6006, mark@pnhp.org

Doctors’ group greets single-payer health bill in Senate

Physicians for a National Health Program says Sen. Bernie Sanders’ American Health Security Act would go far beyond federal health law, slash bureaucracy and lay the basis for universal, high-quality care

A national doctors’ group welcomed the introduction in the Senate today of a single-payer health reform bill that it said moves in the direction of providing comprehensive care to everyone, reducing wasteful paperwork, reining in health costs, and delivering better medical outcomes.

This morning Sen. Bernie Sanders, I-Vt., announced the introduction of the American Health Security Act of 2011, S. 915, in the U.S. Senate. Significantly, at Sanders’ side for the announcement was Arlene Holt Baker, executive vice president of the AFL-CIO, among others.

“At a time when the airwaves are filled with talk about cutting or even ending Medicare,” said Dr. Garrett Adams, president of Physicians for a National Health Program, “Sen. Sanders has boldly stepped forward with the seemingly paradoxical proposition that the best way to financially strengthen the Medicare program is to upgrade it and expand it to cover everyone.”

Adams said that the improved-Medicare-for-all approach embodied in Sanders’ bill goes considerably beyond the Obama administration’s health law, which keeps the for-profit private health insurance industry at the center of the U.S. health system. This sacrifices universal coverage, efficiency and cost containment, he said.

“In contrast, Sanders’ legislation would cover nearly all 51 million people who currently lack coverage and improve benefits for everyone by eliminating co-pays and deductibles and restoring free choice of physician,” Adams said. “By slashing private insurance overhead and bureaucracy in doctors’ offices and hospitals, S. 915 would recapture about $400 billion annually that is currently wasted on unnecessary paperwork. That money, in turn, would be channeled back into high-quality clinical care.”

“Further, by using a single-payer system’s bargaining power, we would be able to negotiate lower prices for pharmaceuticals and other goods and services, allowing us to rein in rising health care costs,” he said.

Adams, a pediatric infectious disease specialist in Louisville, Ky., continued: “We are confident that Sen. Sanders’ bill will spur the drive for the only national reform that the evidence shows will work and that poll after poll shows the public supports.”

“To be sure, the bill can still be improved upon,” he said. “For example, the program should cover all residents of the United States, including undocumented immigrants. That’s the right thing to do and it’s also good medicine. Similarly, the bill should exclude for-profit hospitals and other investor-owned providers such as dialysis clinics from the new system. Research has shown for-profit institutions deliver inferior care at inflated prices.”

“That being said, the introduction of this bill is good news for the nation’s health,” he said. “We salute Sen. Sanders for his consistently outstanding leadership on this issue.”

Sanders, who serves on the Senate Committee on Health, Education, Labor and Pensions, is a longtime advocate of fundamental health reform. His bill draws heavily on single-payer legislation introduced by the late Sen. Paul Wellstone, D-Minn., in the early 1990s, and closely parallels similar legislation pending in the House, H.R. 1200, introduced by Rep. Jim McDermott, D-Wash. The program would be federally funded, but administered by the states.

Sanders is also working to get expedited waivers from the federal health law permitting states, including his home state of Vermont, to experiment with their own models of health reform.

A single-payer bill introduced by Rep. John Conyers Jr., D-Mich., H.R. 676, obtained 87 co-sponsors in the House during the last session. It has been reintroduced in the 112th Congress as the Expanded and Improved Medicare for All Act with the same bill number.

******

Physicians for a National Health Program (www.pnhp.org) is an organization of 18,000 doctors who support single-payer national health insurance, an improved
Medicare for all. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Single payer health: it’s only fair

U.S. health care is grossly distorted by waste and profit, while millions go uninsured. Americans deserve full universal coverage

By Bernie Sanders
Guardian, May 10, 2011

The United States is the only major nation in the industrialized world that does not guarantee health care as a right to its people. Meanwhile, we spend about twice as much per capita on health care and, in a wide number of instances, our outcomes are not as good as others that spend far less.

It is time that we bring about a fundamental transformation of the American health care system. It is time for us to end private, for-profit participation in delivering basic coverage. It is time for the United States to provide a Medicare-for-all, single payer health coverage program.

Under our dysfunctional system, 45,000 Americans a year die because they delay seeking care they cannot afford. We spent 17.6 percent of our GDP on health care in 2009, which is projected to go up to 20 percent by 2020, yet we still rank 26th among major, developed nations on life expectancy, and 31st on infant mortality. We must demand a better model of health coverage that emphasizes preventive and primary care for every single person without regard for their ability to pay.

It is certainly a step forward that the new health reform law is projected to cover 32 million additional Americans, out of the more than 50 million uninsured today. Yet projections suggest that roughly 23 million will still be without insurance in 2019, while health care costs will continue to skyrocket.

Twenty-three million Americans still without health insurance after health reform is implemented? This is unacceptable. And that is why, this week, Representative Jim McDermott and I are announcing the re-introduction of the American Health Security Act, recognizing health care as a human right and providing every U.S. citizen and permanent resident with health care coverage and services through a state-administered, single payer program.

Let’s face it: until we put patients over profits, our system will not work for ordinary Americans.

It is incomprehensible that drug companies still get away with charging Americans twice as much, or more, than citizens of Canada or Europe for the exact same drugs manufactured by the exact same companies. It is an outrage that insurers still often hike premiums 20 percent, 40 percent and 60 percent a year on individual policy holders; and some insurers still spend 40 cents of every premium dollar on administration and profits while lavishing multimillion-dollar payouts on their CEOs.

It boggles the mind that approximately 30 percent of every health care dollar spent in the United States goes to administrative costs, rather than to delivering care. We must do better. Taiwan, for example, spends only a little over 6 percent of GDP on health care, while achieving better health outcomes on some key indicators than we do; yet they spend a relative pittance on administrative costs.

I am very proud that my home state of Vermont is now taking big steps to lead the nation in health care by moving forward on a plan to establish a single payer health care system that puts the interests of patients over chasing profits. The American Health Security Act would make sure every state does the same – taking profits out of the equation by implementing a single payer system, but letting each state administer its own program, according to strict standards, in a way best suited to its needs.

The goal of real health care reform must be high-quality, universal coverage in a cost-effective way. We must ensure, to as great a degree as possible, that the money we put into health coverage goes to the delivery of health care, not to paper-pushing, astronomical profits and lining CEOs’ pockets.

Bernie Sanders is U.S. senator from the state of Vermont.

http://www.guardian.co.uk/commentisfree/cifamerica/2011/may/10/healthcare-congress

The Milliman Medical Index ($19, 393) in perspective

2011 Milliman Medical Index

Milliman
May 2011

The annual Milliman Medical Index (MMI) measures the total cost of healthcare for a typical family of four covered by a preferred provider plan (PPO).

2011 cost is $19,393 (an increase of $1,319, or 7.3% over 2010)

83.1% – Actuarial value of an employer-sponsored PPO

Relative proportions of medical costs

59% ($11,385) – Employer contribution
24% – ($4,728) – Employee contribution
17% – ($3,280) – Employee out-of-pocket

http://publications.milliman.com/periodicals/mmi/pdfs/milliman-medical-index-2011.pdf

Comment:

By Don McCanne, MD

Under the Affordable Care Act (ACA) the largest sector of health care coverage – employer-sponsored plans – remains relatively unchanged. The Milliman Medical Index is a measure of health care costs in the employer-sponsored plan sector, so it is important to understand what the number – $19,393 – really means.

In 2011, $19,393 is the average amount paid for health care for a family of four insured by an employer-sponsored preferred provider organization (PPO). Keep in mind that this large sector is composed of members of the relatively healthy workforce and their young healthy families. It represents what we are paying for health care in the best of circumstances.

It is important to understand that the $19,393 is only the amount paid for actual health care and does not include the administrative costs of the insurers or the employers. It does not include the 15 or 20 percent of the premium that the insurer would consume under the ACA guidelines. However, the $19,393 does reflect the discounts that the PPO receives by contracting with the various providers, so list prices are not taken into consideration.

Milliman does split the costs into 1) the employer contribution to costs paid through insurance (which is not the same as the premium, as explained above), 2) the employee contribution to costs paid through insurance (ditto), and 3) the employee contribution to costs paid out-of-pocket (including deductibles, coinsurance, and co-payments).

Thus the employees’ average payment for actual health care costs is about $8000 or 40 percent of total average health care spending for a family of four. Yet these plans are better than the gold plans under ACA since they have an actuarial value of 83 percent (the insurance pays an average of 83 percent of the costs). Under ACA, most will purchase plans with actuarial values of 60 or 70 percent, so the patient will be responsible for even more of the costs (albeit with inadequate subsidies).

When you consider that the median household income is $50,221 (2009), $8000 is quite a bite out of the household budget, but most economists don’t buy this number. They calculate the employer contribution as having been paid by the employee in forgone wage increases. So it is the employee who is actually paying the full $19,393 in health care costs, plus the expenses consumed by the insurers that don’t appear in this number. Though an apples to oranges comparison, $20,000 in family health care costs and $50,000 median household income are not a dire prediction for the future. Those are today’s numbers!

In a society in which we have expanded the ongoing transfer of wealth up to the top of the chain, the only way we are going to be able to pay this staggering bill is through progressive financing. Middle-income individuals and families are no longer able to pay for their proportionate share of health care. We can do this simply, equitably, efficiently and transparently through the tax system (a tax-financed single payer system), or we can attempt to do it through a fragmented, inequitable, expensive, opaque, complex maze of private and public plans (ACA), acknowledging that we’ll fall far short of covering everyone while threatening hard working, middle-income Americans with financial hardship should they need health care.

So why isn’t this in the forefront of the national dialogue on health care spending? Do we really want the debate to be over slashing Medicare? That framing of the problem is getting us nowhere. Do we continue to let them control the framing as we stand on the sidelines taking potshots? Or do we finally take over the framing and debate the real issues that concern all of us? It’s our choice.

Clarification

In today’s message on the Milliman Medical Index, I stated, “Though an apples to oranges comparison, $20,000 in family health care costs and $50,000 median household income are not a dire prediction for the future. Those are today’s numbers!”

The “apples to oranges” referred especially to two issues: 1) the family of four with an employer-sponsored PPO is not necessarily the same as a median household, and 2) $11,385 in health care paid by the employer, according to the view of most economists, should be added to the household income, but to the household income of the family of four with an employer-sponsored PPO (a number that I don’t have) and not to the median household with an income of $50,221.

The numbers are still valid.

The average costs of health care, with insurance administrative costs added, is about $20,000 for a four person family in the workforce.

Median household income is about $50,000.

You can adjust these numbers all you want to try to align them better (sort apples from oranges), but you will still end up with the fact that middle-income Americans need more help with their health care costs.

Nine states appeal federal rule limiting health insurers' profits

By Julie Appleby, Kaiser Health News
McClatchy Newspapers, May 10, 2011

WASHINGTON — In a move that could absolve health insurers of paying more than $95 million in consumer rebates, nine states are pressing for relief from a federal rule limiting insurers’ profits and administrative costs.

State regulators say they fear insurers would flee their markets and leave some individuals without coverage options if the rule isn’t eased. But consumer groups say there’s little evidence insurers would bail out.

If the rule is relaxed, “the end impact will be to deny consumers the millions in rebates they expect to get on this year’s premiums,” says Carmen Balber, Washington director of the advocacy group Consumer Watchdog.

Under the 2010 federal health law, insurers must spend at least 80 percent of premium revenues on medical costs or quality improvements; the remainder can go toward administrative costs, sales commissions and profits. Plans that fail to meet the standard must pay rebates to policyholders.

Many health plans, but not all, already meet that target. Data provided by states seeking to relax the rule show a wide range of spending on medical care: Several insurers spend only slightly more than half of their premium revenues on care. Potential rebates across the nine states total more than $95 million for policies in effect this year.

The Department of Health and Human Services is expected to rule soon on requests from New Hampshire and Nevada to ease the rule. Other states that have applied are Florida, Kentucky, Louisiana, North Dakota, Georgia, Kansas and Iowa.

The spending requirement, called the “medical loss ratio,” applies to all health plans, except those offered by self-insured employers. However, the exceptions sought by the states would affect only individual policies bought by people who don’t get coverage through their jobs. Nationwide, more than 18 million Americans purchase their own policies.

As many as 9 million Americans with individual policies and in group plans could be eligible for rebates, according to government estimates.

HHS already has approved Maine’s request to lower the target to 65 percent for each of the next three years. The state’s second-largest insurer — MegaLife, a subsidiary of HealthMarkets — had threatened to withdraw if the target isn’t reduced. The insurer, projected to spend 68 percent of its revenues on medical care this year, was facing an estimated $1.9 million in rebates to policyholders.

HHS officials said they granted Maine’s request because a pullout by MegaLife could have forced up to 13,700 policyholders to go uninsured or buy coverage from the other two insurers, which sell policies that are more comprehensive, but also much more expensive.

The insurance industry says the 80 percent rule, which went into effect in January, was adopted too quickly and that insurers should be allowed to ramp up over three years. By “going into effect overnight this year, it has the potential for some significant unintended consequences, including driving plans out of the marketplace,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.

But Balber counters that most insurers can already meet the standard and that the regulation will prod the rest to hold down costs. “Insurers can address this in a very simple way, by lowering premiums,” she said.

In deciding whether to lower the target in some states, the administration will weigh how many insurers might leave a market, how many people would be affected and whether policyholders have other options, such as special insurance pools for people with health problems, says Steven Larsen, deputy administrator of the Center for Consumer and Insurance Oversight at HHS.

He says deciding on the states’ requests is a balancing act: While insurers should be pushed to spend more on medical care, it “might not be in consumers’ best interest” to drive them out of the marketplace.

Because of that, some analysts predict that the administration will grant most of the states’ requests.

“The last thing the Obama administration wants is the Des Moines Register writing about 500 people who lost their health insurance in Iowa because of the Obama health plan,” says Robert Laszewski, a consultant to the health care industry and a former insurance executive.

While each state has its own issues, officials have some common concerns. They fear the threat of rebates will cause insurers to pull out of their markets, stop writing new policies, cut sales commissions for agents — or all three.

In Florida, officials want the target set at 65 percent of revenues for three years. Of the 21 insurers that sell individual policies, nine reported they expect to spend less than 80 percent on medical care and quality this year. Based on those reports, state officials estimate those insurers would owe at least $25 million in rebates to consumers, under the current rule.

Analyst Carl McDonald of Citi Investment Research wrote in a recent report that Florida’s request looks weak because “none of the six largest plans in the state will drop out” as a result. But if the requirement is softened, he says, it will boost insurers’ earnings. He suggested that HHS will take a lenient approach: If Florida is approved, “it’s hard to think of a situation where HHS doesn’t grant a waiver.”

In Georgia, regulators have asked for targets of 65 percent this year, 70 percent next year and 75 percent in 2013.

At least five of the 18 insurers included in the state’s request estimate they will spend less than 60 percent of their revenue on medical care and quality this year. Rebates could total more than $33 million this year without a waiver.

In its filing, Georgia officials say nearly 29 percent of the 344,000 people in the state who buy their own policies are in plans offered by insurers that might leave the state without an adjustment. Like some of the other states, Georgia does not have a high-risk pool, meaning there would be little choice for people with medical problems. A federal pool is available, but consumers would have to be uninsured for six months before qualifying, leaving them “at substantial financial and medical risk,” the filing says.

(Kaiser Health News is an editorially independent news service of the Kaiser Family Foundation, a nonpartisan health care policy organization that isn’t affiliated with Kaiser Permanente.)

http://www.mcclatchydc.com/2011/05/10/113996/nine-states-appeal-federal-rule.html